When $1 Million Isn't Enough
Is a million dollars enough to retire comfortably on? Many baby boomer millionaires don't think so, especially once recession fears come into play. Almost 30 percent of 60-year-old baby boomers with investable assets of $1 million or more say they feel more financial stress now than six months ago, according to a new survey from Bell Investment Advisors and Opinion Research Corp.
The admittedly small survey of 500 boomers born in 1948 found that 40 percent are "downsizing" their lifestyles this year by contributing less to charity (22 percent), canceling, shortening, or postponing vacation plans (21 percent), reducing retirement savings (18 percent), or putting off retirement altogether (11 percent).
Of course, a millionaire also has the luxury of rejiggering investments to try to come out ahead. And 54 percent of affluent boomers cited chasing higher returns on investments as a primary goal for the next five years.
But even millionaires aren't immune to making irrational investment choices as the media endlessly report a looming recession. Some 23 percent of affluent boomers say they are planning to change their investment strategy in response to a potential recession, with 69 percent seeking more conservative investments like money market funds and bonds. Only 21 percent said they would invest more in stocks or stock mutual funds.
That could be a mistake, says Jim Bell, founder and president of Bell Investment Advisors. In many cases, these conservative investments barely keep pace with inflation, especially as interest rates on consumer products like certificates of deposit have dropped with each Federal Reserve cut in interest rates.
"Bonds and cash have the false allure of safety since their principal fluctuates less than that of equities, but equities along with commodities will better allow boomers to maintain their standard of living over decades," Bell says. "Boomers must learn to live with the volatility of equities if they want to keep their purchasing power intact."
Most financial advisers will tell you that a sound investment strategy and diversified portfolio will create regular returns if you don't mess with it too much, which Bell reiterates: "The key to navigating the slowdown is to remain rational and stick to a plan, rather than letting emotions steer you off track."
Tell us: Is a million bucks enough to retire comfortably? Or does it depend upon how the money is invested?
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Reader Comments
A million would be enough if we could have a stable economy
I think a million bucks would be enough if you have social security and a pension from your employer. If, however, inflation isn't stopped, 2 million want be enough.
If inflation continues, people should start looking for a peaceful place - probably in the South or Midwest and start raising their own veggies, et al.
The Fed has lowered the interest rates from 5 percent to 2 percent, which knocks a hole in Money Market funds and CDs. Meanwhile, the Fed is pumping our money into banks who have made bad investments.
I don't know if I'm for bailing out the bad loans, since it would also bail out the people who sold you the mortgage rate. Also, since the middle class would be the ones who would get hurt since they're the ones who are being taxed to death.
A little history. When the Regain Administration was in office, Reagan choose
our good friend, Mr.Greenspan to form a committee to reform Social Security. Well, they choose to lower the percentage that the rich would which dropped their bracket from about 70 percent to 28 percent. To offset that, he raised the amount for the poor and middle class from 11 percent to 15 percent. The money raised was supposed to make sure the Baby Boomers would be sure to have enough money in the SS fund to pay for their retirement. In other words the baby boomers were paying for their own retirement. By the way, Mr Greenspan came back a few
years later and wanted to do away with SS.
Well, Mr. Greenspan, after screwing the poor and Middle Class give additional to the rich, is in high cotton. He just made about 7 million to write a book full of lies.
Everytime I go to the Library, there's Mr. Greenspan's book - rusting away on the shelves of Libraries. That's were we are today, the rich are getting richer and the poor getting poorer.
The rich were suppose to ivest that money in the US, but, instead they are buying
beach houses in foreigh exotic Islands, et al. So much for Mr. Reagan and Mr Greenspan!
Is a million bucks enough to retire comfortably?
If you constantly require more than you need, the answer is NO.
If you're concerned with status, the answer is NO.
If you're not happy with what you have, the answer is NO.
Only in this country would people actually worry that a million is not enough.
Now, ask some poor slob in Africa if a million is enough to retire.
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