Out With the $1 Million Goal for Retirement: What You Will Really Need

From the U.S. News & World Report website

In the past, saving $1 million for retirement was considered a benchmark to help you enter retirement comfortably. But times have changed, and that figure may no longer be accurate. “Boomers and the subsequent generations are dealing with a different puzzle than their parents,” says Steven Barrett, a financial consultant with Xceed Wealth Management Group in El Segundo, California. Many companies no longer offer a traditional pension plan to employees. Instead of relying on a pension, most people entering retirement will depend on what they have saved in a 401(k) plan and IRAs.

“This shift in retirement funds alone is enough to upset the longstanding $1 million milestone, but when you add in the low interest rate environment we’ve been in for quite some time, it’s important to build savings rather than relying solely on the interest growth,” Barrett says. Longer life expectancies, along with potential obligations to care for older or younger family members, could further shift the amount you’ll want to set aside.

Here are some guidelines to use when defining how much you need in your retirement nest egg.