An overwhelming majority of U.S. households with $2 million or more in investable assets are confident they won’t run out of savings if they live to 90 years old, says LIMRA. The problem is, most households don’t have that level of savings.
LIMRA recently surveyed Americans ages 40 to 85 with at least $100,000 in household investable assets to explore their perceptions about retirement income and their confidence in their retirement security.
LIMRA found between 80% and 90% of households with $2 million plus strongly agree (51%) or somewhat agree (32%) they are confident they won’t run out of money by age 90, said Matt Drinkwater, LIMRA’s corporate vice president of Annuity and Retirement Income Research.
But that kind of confidence begins to drop off significantly for investors who have between $1 million and $2 million saved. In that group, only 28% strongly agreed and 42% somewhat agreed. Not surprisingly, confidence sinks further for those with only $100,000 to $249,000 in investable assets — only 12% strongly agreed and 29% somewhat agreed that their “savings and investments won’t run out if I live to be 90 years old.”
Relatively few households with enough assets
Among the 47 million households headed by someone age 60 or older, 7% had household investable assets of at least $2 million, Drinkwater said. Only 6% of the 89 million households in the U.S. headed by someone 40 to 85 years old has that amount, Drinkwater said.
He added that percentage drops to 4% when all 128 million U.S. households are included. Investable assets primarily include investment accounts, IRAs and defined contribution plans. The figures are based on LIMRA’s 2019 Survey of Consumer Finances, adjusted to 2022 asset levels.
Income expectations dropping
Among retirees who responded to the recent survey, 70% say that their households receive enough income from various sources to cover the household’s basic living expenses. But for future retirees, only 44% expect to receive enough income from Social Security, traditional defined-benefit pension plans, and/or lifetime-guaranteed annuities to cover their household’s basic living expenses.
Regardless of their household income sources, workers overwhelmingly agree that lifetime-guaranteed income can provide peace of mind. LIMRA research shows this sentiment is on the rise. Among both retired and non-retired Americans surveyed, a larger proportion (86%) in 2022 said having lifetime-guaranteed income gives them peace of mind in retirement, compared with 76% in 2018.
Rising interest in annuities
LIMRA research shows interest in annuities had been level or down for much of the last decade, reaching a low of 33% in 2018. But in 2022, for the first time, a majority of workers (51%) said they would consider converting a portion of assets into a lifetime-guaranteed annuity in retirement. In 2022, annuity sales hit records and commission-free products grow in popularity.
“The ongoing decline in pensions could partly explain why workers feel they will not have enough income, but other factors like uncertainty about Social Security benefits, market volatility, and the rising cost of living, are undoubtedly playing a role,” Drinkwater said. “There has been significant disruption in the economy and the finances of many Americans over the past several years, so it is to be expected that workers nearing retirement will increasingly feel uncertain about their ability to make ends meet throughout their retirements. In a time of extreme instability, the perceived value of investments offering stability, and the peace of mind that comes with it, can’t be underestimated.”
LIMRA research indicates that 49% of immediate annuity buyers in 2020 were age 71 or older; only 5% were under age 55, Drinkwater said. But deferred income annuity buyers skew younger, with 23% under age 55, and only 6% age 71 or older, Drinkwater said.
FAQs
LIMRA found between 80% and 90% of households with $2 million plus strongly agree (51%) or somewhat agree (32%) they are confident they won't run out of money by age 90, said Matt Drinkwater, LIMRA's corporate vice president of Annuity and Retirement Income Research.
Is $2 million enough to retire today? ›
If you have multiple income streams, a detailed spending plan and keep extra expenses to a minimum, you can retire at 55 on $2 million. However, because each retiree's circ*mstances are unique, it's essential to define your income and expenses, then run the numbers to ensure retiring at 55 is realistic.
Do most people have a million dollars when they retire? ›
The typical senior with a retirement account has about $200,000 saved, according to data for households in the 65-74 age range from the 2022 Survey of Consumer Finances. But only about half of those households report having retirement accounts at all.
How many people have $3 million? ›
There are estimated to be a little over 8 million households in the US with a net worth of $3 million or more.
What is the ideal net worth for retirement? ›
By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10 to 12 times your income at that time to be reasonably confident that you'll have enough funds. Seamless transition — roughly 80% of your pre-retirement income.
What percentage of Americans have $2 million in retirement? ›
According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.
What percentage of retirees have $3 million dollars? ›
Specifically, those with over $1 million in retirement accounts are in the top 3% of retirees. The Employee Benefit Research Institute (EBRI) estimates that 3.2% of retirees have over $1 million, and a mere 0.1% have $5 million or more, based on data from the Federal Reserve Survey of Consumer Finances.
What does the average American retire with? ›
Savings for Retirement Fall Short
| Age Group | Average Retirement Savings | Median Retirement Savings |
|---|
| 45-54 | $313,220 | $115,000 |
| 55-64 | $537,560 | $185,000 |
| 65-74 | $609,230 | $200,000 |
| All families | $333,940 | $87,000 |
2 more rowsMay 14, 2024
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
What percentage of Americans have a net worth of over $1,000,000? ›
Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.
Super wealthy (99th percentile): $16.7 million. Wealthy (95th percentile): $3.2 million. Well off (90th percentile): $1.9 million. Middle class (50th percentile): $281,000.
Does net worth include home? ›
Household wealth or net worth is the value of assets owned by every member of the household minus their debt. The terms are used interchangeably in this report. Assets include owned homes, vehicles, financial accounts, retirement accounts, stocks, bonds and mutual funds, and more.
What is top 1 net worth by age? ›
Average net worth by top percentile and age
| Age | Top 1% net worth |
|---|
| 18-24 | $653,224 |
| 25-29 | $2,121,910 |
| 30-34 | $2,636,882 |
| 35-39 | $4,741,320 |
3 more rowsMar 27, 2024
Across those years, $2 million could equate to approximately $68,966 annually or $5,747 monthly. This should serve you incredibly well and make you feel comfortable and cushioned, especially if you have relatively low expenses as a retiree and a normal lifestyle.
How much does a $2 million dollar annuity pay per month? ›
The amount a $2 million annuity pays depends on factors such as whether you want your monthly lifetime income payments to start immediately or, say, 10 years from now. Currently, a $2 million annuity will likely pay between $10,000 to $20,000 a month for the rest of your life.
Can you retire at 70 with $2 million dollars? ›
A financial advisor can help you determine an appropriate financial strategy for your retirement. Get matched with a fiduciary advisor today. Yes, retiring at 70 with $2 million in the bank is possible. It will require diligent planning and a good hard look at your expenses in retirement.
What is the new rule of thumb for $3 million retirement? ›
Summary. $3 million should be more than enough to fund your retirement, even if you choose to retire early. A number of factors are at play when determining how long $3 million will last, including your investment strategy and retirement lifestyle.
