Can you guess what percentage of people actually retire with a $2 million Nest Egg? Here’s a hint – Aim really low

Imagine sitting on a beach with the waves lapping gently on the shore as you sip a drink with a tiny umbrella. This is the $2 million retirement dream. The idea of ​​relaxing without worry because you’ve saved enough to enjoy your golden years in style. But here’s the twist: How many people achieve that dream? Can you guess what percentage of retirees manage to invest $2 million before giving up?

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Spoiler alert: it’s a small fraction

The dream of retiring with $2 million is just that for most – a dream. According to the Federal Reserve’s Survey of Consumer Finances, only about 3.2 percent of retirees have more than $1 million in their accounts. And if you’re aiming for the $2 million club? Well, the number that do is even smaller. We’re talking about a sliver—somewhere between the 3.2 percent and the 0.1 percent who have $5 million or more.

See also: Can you guess how many retire with a $5,000,000 nest egg? – How does it compare to the average?

How does $2 million stack up against average savings?

Average retirement savings for people 65 and older? Just $232,710 as of 2022, according to Vanguard. That’s less than a tenth of $2 million! Even if you look at different age groups, it’s clear that the $2 million mark is out of reach for the vast majority. Those aged 65 to 74 averaged around $609,230; for those over 75, it drops to $462,410. Both numbers are impressive compared to the general population, but they’re still a long way from that magic $2 million mark.

What sets the $2 million apart?

So what’s the secret to the few who have hit $2 million? It’s not just luck – although that never hurts. Several key factors play a role:

1. Early start: Time is your friend when it comes to saving for retirement. Start at age 25 and you’d need to save about $5,677 annually to reach $2 million by age 72, assuming a 7% annual return. Delay, and the numbers get much scarier.

1. Consistency is key: It’s all about regular contributions. Financial professionals often recommend saving 10-15% of your income for retirement. It’s not glamorous, but it works.

1. Smart Investing: It’s not just about saving, it’s about making your money work for you. Stocks, index funds, ETFs – these instruments have historically provided the best returns. Just letting the cash sit in a savings account won’t cut it.

The story continues

1. Higher incomes, higher savings: Whether you like it or not, those with higher incomes find it easier to save time. The top 10% of households have an average of $769,000 saved for retirement.

1. Education matters: College graduates tend to have more than three times the retirement savings of those with just a high school diploma. It’s a reminder of how education can affect your financial future.

1. Help with Home Ownership: Homeowners typically have much more in retirement savings – 267% more, to be exact. They saved an average of $303,000 compared to renters.

Trends: Number of “401(k)” millionaires up 43% over last year – Here are three ways to join the club.

Is $2 million enough?

Here’s the verdict: Even if you hit $2 million, is that enough? The answer is not unique. It depends on where you live, your lifestyle, your health care needs and whether you plan to continue working part-time. For some, $2 million might be more than enough. For others, it might just scratch the surface.

But one thing’s for sure: hitting that $2 million mark puts you in an elite group of retirees. If it is enough? That depends on you and your unique situation. It might be a smart move to discuss your goals with a financial advisor. These experts can help you develop a game plan to reach your retirement or any other financial goals.

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This article Can You Guess What Percentage of People Actually Retire With a $2 Million Nest Egg? Here’s a hint – Aim Really Low originally appeared on Benzinga.com

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