The idea of becoming a millionaire may seem like a pipe
dream.
When it comes to retirement, most Americans doubt
they've saved or invested enough to retire comfortably, let alone reach that
million-dollar milestone. A new AP-CNBC poll finds nearly one-third (31
percent) of U.S. residents believe they would need a minimum savings of
$100,000 to $500,000 if retiring this year in order to be confident of living
comfortably in retirement, and 22 percent believe the minimum is $1 million or
more to retire comfortably.
Only one-fifth of U.S. respondents think it's
likely that their net worth will total at least one million dollars in the next
10 years, while 62 percent said that is "very unlikely." The
consensus from the majority of respondents (61 percent): It is
"extremely" or "very difficult" to become a millionaire in
the United States today.
But many are still trying to hit that
million-dollar mark — and millions of Americans have already attained that
goal.
The number of millionaires in the country is
growing. The U.S. has more than 10 million. Despite the European debt crisis
and worries about the U.S. economy, a May 2011 report from the Deloitte Center
for Financial Services projects that the number of millionaire households in
the U.S. will more than double to 20.5 million in 2020, with combined wealth of
$87 trillion, up from $39 trillion in 2011.
Money makes money, but it can be tough to make
that money grow in these rocky financial markets. The AP-CNBC poll found six in
10 U.S. residents (62 percent) say their confidence in investing has been
shaken by recent volatility in the stock market. That sentiment has increased
over the past 12 months. Today, 65 percent of those who own stocks, bonds and
mutual funds are less confident about investing, compared with 61 percent last
year.
Respondents in the AP-CNBC poll say they're
making saving and investing a top priority. The survey asked people what they
would do with a million dollars and found, on average, that Americans would
spend 31 percent on saving or investing; 17 percent on giving to family; 14
percent on spending; 13 percent on paying down debt; 12 percent on buying real
estate and 11 percent on charitable donations. Unfortunately, the reality is that
mounting expenses, lower wages and job losses require many Americans to dip
into those savings to pay for household bills or pay down debt.
The reality is that investors who stayed the
course and did not pull their money out of the market in the last few months
may actually have fared pretty well. Despite an almost 8 percent decline since
mid-July, the broader stock market, represented by the S&P 500 Index, is up
nearly 8 percent over the past 12 months. Certainly it's been a rough few years
with the S&P 500, down 8 percent in five years. But over the past decade,
the broader stock market is up by more than 10 percent.
In most cases, the road to financial security in
retirement comes with steady savings, strategic investing, and probably a later
retirement date than you may have envisioned at the start of your career. Keep
these three rules in mind: First, you need to live within your means. Next, you
have to commit to saving a certain amount every month and stick to that goal.
Then, you have to make sure your investments are in a diversified portfolio — a
mix of stocks, bonds, and alternative investments (commodities and real estate)
and rebalance that mix to attain your goals for growth.
So how long will it take until you're a
millionaire?
If you start with an initial $10,000 investment
and your portfolio grows by 5 percent every year, here's how much you need to
save each month to reach your $1 million goal by age 70, according to
Bankrate.com's calculator.
• 25-year-olds have to save $450 a month. That's
just $15 a day for the rest of your working years.
• 35-year-olds have to save $850 a month.
• 45-year-olds have to save $1,700 a month.
• 55-year-olds have to save $4,000 a month. (Of
course, with an average inflation rate of 3 percent, that $1,000,000 nest egg
will only be worth $642,000 in today's dollars. So that means you'll likely
wind up having to save even more.)
Still, for those who start early and save often,
becoming a millionaire doesn't have to be a pipe dream.
No comments:
Post a Comment
THANK YOU FOR TAKING THE TIME OUT TO COMMENT AND LETTING YOUR FEELINGS BE HEARD!