When $1 Million Just Isn’t Enough

Libby Kane
Posted

retirement savingsWhat would you do with $1 million?

If you said something like “pay off my student loans and put the rest into my retirement account,” you get extra LearnVest brownie points.

But it’s O.K. if you didn’t. As The New York Times says, “A million dollars isn’t what it used to be.” In the past, the idea of having $1 million in your retirement account seemed like the ultimate goal—after all, what couldn’t you afford?

Nowadays, not much. Between inflation and the financial crisis, it’s no news that retirement savings took a hit across the board. But now there’s the added complication of low interest rates in the bond market, which has traditionally been considered a safe investment, recommended for those nearing retirement who can’t afford the risks of the stock market.

Though the outlook is bleak when it comes to saving enough for retirement, experts do have a few recommendations for how a retiree-to-be can keep her portfolio in good health. The first is diversifying your investments—that is, expanding your portfolio to include various securities that will offer different returns. (You can learn more about diversification through Start Investing Bootcamp.)

Another solution is to work past the traditional retirement age of 65—not revolutionary, but effective. It also isn’t surprising: The Times reports an annual survey for the Employee Benefit Research Institute found that 36% of workers expect to retire after 65, and 7% expect not to retire at all.

But it appears that everyone agrees—one of the absolute best things you can do to be financially secure in retirement is to start saving as early as possible. Have you started yet?

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  • Leah Manderson

    The Number I’ve always had in my head is $2.5 million. I think my husband and I can comfortably retire on that, and maybe leave a small sum to our families. It’s a pretty terrifying number though! It requires saving some 30% of my salary (savings accounts, investing accounts, retirement accounts, etc.) for pretty much the rest of my life.