Yahoo Finance Want To Retire Rich? You’ll Need Nearly $4 Million, Wealthy Americans Say
Whether you’re nearing retirement or still decades away, you may already be looking ahead to carefree years full of travel, time with family or dedicating time to your hobbies. Whatever your ideal retirement looks like, you’ll need money to fund it — but just how much you need depends on the lifestyle you want to live.
Learn More: Cutting Expenses in Retirement: 6 Home Items to Stop Buying
For You: One Smart Way To Grow Your Retirement Savings in 2024
The average American now believes you’ll need $1.46 million to retire comfortably, but wealthy Americans hoping to maintain their lifestyles believe they will need more than double that, a new Northwestern Mutual study found. High-net-worth (HNW) individuals — people with more than $1 million in investable assets — said they would need $3.93 million to retire comfortably.
Here’s a look at why you might need $4 million to retire rich, and how the wealthy are working toward achieving that lofty savings goal.
Sponsored: Credit card debt keeping you up at night? Find out if you can reduce your debt with these 3 steps
What Does a $4 Million Retirement Look Like?
High-net-worth individuals have much higher retirement savings goals than the average American because many plan to live a more luxurious lifestyle in retirement.
“Many high-net-worth individuals may be accustomed to a more expensive lifestyle than others, and the objective in retirement is to maintain, or even enhance, that lifestyle,” said John Roland, partner and private wealth advisor with Northwestern Mutual’s Beyond Financial Advisors.
“For example, they may consider a vacation property, more significant travel, event tickets or pricier hobbies after decades of time in the workforce,” he said. “Many HNW individuals think of retirement as the opportunity to spend their time doing the things they don’t currently have time to do, and often that means spending a bit more than they did during their working years.”
Read Next: $3 Million in Retirement Savings: Here’s How Much You Could Withdraw Per Year
In addition to funding their own lifestyle in retirement, many wealthy Americans hope to leave wealth for future generations.
“High-net-worth individuals may have loftier legacy goals than others,” Roland said. “They may aim to pass on an inheritance to loved ones or provide generous financial gifts to beloved philanthropic causes.”
How the Wealthy Are Building a $4 Million Nest Egg
Accumulating $4 million in retirement savings may be out of reach for the average American, but for many high-net-worth individuals, saving has long been part of their financial plan.
“Most of our clients have become high-net-worth simply by having established the habit of saving from an early age,” Roland said. “It’s the behavior of saving and investing over many decades — while living within their means — that has allowed them to accumulate more money than many of them could have imagined.”
Roland said that many of his high-net-worth clients are “extraordinarily disciplined.”
“They spent their professional lives investing in themselves, their long-term financial plans and often their businesses to accumulate wealth,” he said. “In fact, many HNW individuals have a hard time allowing themselves to spend down what they’ve saved without feeling guilty. Over decades, they tried to make the most financially responsible decisions they could.”
As for the methods high-net-worth individuals employ to build up retirement savings, Roland said they are in line with methods utilized by average earners.
“While many of the strategies are similar across demographics — 401(k) [plans], IRAs and a general investment portfolio — HNW individuals are often more sensitive to the tax considerations of their strategy and tend to use more tax-advantaged accounts to accumulate wealth,” he said. “We’ve also found many of them recently have shifted a portion of their retirement assets to other solutions as they near retirement to provide lifetime income and take advantage of the higher interest rate environment we’re in currently.”
More From GOBankingRates
Dave Ramsey: Why You Shouldn't Buy a New Car/Take Out an Auto Loan This Year
5 Reasons You Should Consider an Annuity For Your Retirement Savings
This article originally appeared on GOBankingRates.com: Want To Retire Rich? You’ll Need Nearly $4 Million, Wealthy Americans Say
