By Linda Lovely
This month’s topic revolves around what you might do if you were a millionaire. But, is that really wealthy these days?
Maybe not if you’re either looking to retire or have recently retired. If you fit in one of these groups and have actually managed to amass a net worth of $1 million (excluding your home), the answer could be you should either keep saving or at least stay on budget.
Why? In South Carolina, where I live, one study predicts a million dollars will last an average retiree 22 years and two months. If you retire at age 63, that would get you to age 85 before you need to move in with relatives. Twenty-two years also is approximately the average amount of time a 63-year-old woman is expected to live. So you might squeak by with a million. Unless you live in a higher-priced locale, like Hawaii where a million is expected to last only 13 years and one month. Or you have good genes and expect to beat the life expectancy averages.
Then there’s an estimate by Fidelity Investments that a retired couple is likely to spend about $250,000 just on health care during their golden years.
Of course, these financial equations don’t take individual situations into account, like pension income, low-cost lifestyles, and paid-off mortgages. In other words, you need to do your own financial homework.
But let’s go back to the starting point. How much money would you need to consider yourself truly wealthy? One survey of 432 “millionaire” retirees found that 70 percent didn’t feel wealthy and about half felt they’d need at least $5 million to have true wealth.
Here are a few more interesting statistics from recent studies:
There were 10.8 million U.S. millionaires in 2016,
The upper middle class accounts for about 29.4% of US population ($100,000-$350,000 income for a three-person family)
I also listened to a recent NPR radio show that discussed the relationship of money to happiness. One of the experts studying this conundrum concluded that money could buy happiness if you spent it wisely. And topping his list of wise happy money decisions was spending money on others.
That leaves some hard decisions. How much money should we save to reduce the chances of being a burden on our relatives? And how much money can we afford to devote to causes or activities that bring us joy?
Have you solved the equation?