The Growing Income Gap: 1 million dollars doesn't mean financial security anymore

[ck4829]

Conventional wisdom says you need to save $1 million for retirement.

That target may be easy to remember, but it falls short of the true cost of what's required for post-career comfort. Longer life spans, the threat of inflation and the uncertain future of Social Security benefits make this long-touted savings advice inadequate for most, advisers say.

Scottrade recently polled 226 registered investment advisers on the topic and found that 71% don't believe $1 million is enough for the average American family. Most said families need to save double, or more than triple, the amount.

"Younger generations, especially, need to set their retirement goals higher than other generations and start saving as early as possible," says Craig Hogan, Scottrade's director of customer-relationship management and reporting.

http://finance.yahoo.com/focus-retirement/article/109077/1-million-doesnt-cut-it-for-retirement?mod=fidelity-buildingwealth

Most of us, anywhere, won't see even close to 1 million dollars pass through our hands. And that doesn't even equate to financial security anymore.

[Oregone]

1. Why do you need more than that if you want a rancher and to enjoy Medicare?

Seriously? Is it because consumerism is drainging the rest? Do people want too much?

[sneezepaddle]

2. So Michael Steele was right for once...wow!

[Warpy]

3. I love the way financial experts tell me I should have started

saving $2000 a year when I was 20 in order to fund my own retirement.

When I was 20, I barely made over $2000 a year, and taxes ate a good part of it up. Then there were those pesky items like food and rent.

None of these financial whiz kids ever heard of indexing to inflation, or of inflation, itself.

They won't figure it out until they're old, too.

[enough]

4. It would be interesting to know what percentage of the population has 1 mil at retirement

Or two or three million?

[LiberalLoner]

5. I'll bet less than 5 percent will have that.

[pitohui]

8. probably but they were advising you needed 2 million to retire even in the 1990s

this advice is not new

many older people supplemented soc. security w. income from CDs and treasury bills, with interest rates near zero, this means they are earning almost nothing extra and have to eat up the principal -- by the time interest rates recover (IF they ever do, consider japan) then they will have much less capital remaining to be able to generate any income

if your money is losing money to inflation, rather than gaining value from a good strong interest rate, you need a LOT of money because it's GONNA run out

most of us, thru no wrong doing of our own, are going to be poor in old age, simple as that, since i see no honest method for most of us to acquire such sums

[Speck Tater]

6. Due to circumstances beyond my control...

I retired with ZERO in the bank. I've been retired for three years now and I'm getting along just fine on nothing more than my monthly social security check. What kind of insane life style requires a million or more dollars in the bank? I truly don't understand. Have these people completely lost touch with reality?

(ed: typo)

[pitohui]

7. the kind of insane lifestyle while you plan to actually eat AND be able to take yr medicine

my projected soc. security payment will supposedly be $700 a month, even w. a paid off home i can't pay property taxes, insurance, and utilities, AND still continue to eat on that income (my home is paid off, how many older people w. children, esp. college bound children, can even say THAT much?)

you must have been a high earning individual if your soc. security payment alone is enough to keep you, yeah, some people get more than $2K a month but i'm not too sure how this can be the norm

for many people soc. security is no more than a very basic cushion, but it is in no way enough to get along "just fine" w.out some other income

not even close!!!

many medications are several hundred dollars a month!!!! sure, we all plan to give up medicine and alternative supplements which are themselves over 100 a month when we're old, but c'mon, that isn't getting along "just fine," that is dying quite a bit earlier than need be because of lack of $$$

there's a reason the rich die in their 90s and the poor die years if not decades younger-- medical technology, supposed extras like decent food and a glass of red wine every day etc. -- all that stuff is not just frills -- it prolongs life AND it costs a lot of money

i just bought some vit. E on my doc's advice, it cost over $8 for one small bottle -- and that's only one OTC supplement (i stopped taking the others long ago for cost reasons but apparently i need this one temporarily for a recent medical issue)

electricc bill alone is $200-$300 a month for a small house, how much more must it cost in the north and for larger houses, and how much more will it cost as energy costs increase over the years before i retire

[Speck Tater]

12. Those are some scary numbers.

My monthly meds run $8.00 for two scripts. I grow a lot of my own food and have freezers in the garage. My electric bill runs around $40/month in the summer, twice that in the winter. (It rarely snows here in the Willamette Valley OR) My pay-as-you-go cell phone averages $6 to $8 a month. My luxuries are a NetFlix subscription and I share the cost of DSL Internet with two housemates. I bought the house and land (several acres) many years ago, long before the RE bubble. It's not paid off but the mortgage is very low by today's standards. I grocery shop once a month at a wholesale supply house and buy everything in bulk quantities (25 pound bags of pinto beans, 50 pound bags of rice and bread flour, etc.) I drive a 92 Mazda that gets great mileage. (I bought from a friend 7 years ago for $100 cash.) My SS is nowhere near the 2K you mention; half that is closer. I've been lucky not to have any major medical expenses (knock on wood), but you're right. Any really major medical expense would leave me living in a cardboard box behind the WallMart. As it is, it takes me 6 months to pay off my annual physical exam.

So I'm doing fine. For now. It's true my position is a bit precarious, and depends on continued good health, but I have a family history of good health and longevity, so I'm crossing my fingers.

[PSPS]

9. "Scottrade recently polled 226 registered investment advisers"

Scottrade recently polled 226 registered investment advisers on the topic and found that 71% don't believe $1 million is enough for the average American family. Most said families need to save double, or more than triple, the amount.

I'm sure it is a paltry sum to this polled group, what with all their houses and the staff, groundskeepers and other expenses associated with them. Then, when you throw in the new Mercedes every year, the viagra and the trophy wife's GED and boob job, you're stretched pretty thin.

On the other hand, it serves them well to put this idea into the media. It helps generate their income from "churning."

[roamer65]

10. 1 million in 1940 dollars = approximately 10 to 15 million in 2010 dollars.

That's how much inflation we've had since 1940.

[spinbaby]

11. We have no chance of getting to a million before we retire

And we're better off than most in that we've held steady jobs with 401ks over the last two decades. How they expect the "average" American to save that much, I don't know.