Many people dream of early retirement with a substantial bank balance to sustain a comfortable lifestyle. Until 2020, Americans aimed for a retirement fund of $1.5 million.
However, the situation has changed due to inflation reaching an all-time high in America. Formerly affluent individuals now feel like upper middle class, while those in the middle class are nearing the poverty line due to widening income and expenditure disparities.
"I'm now paying four times the price for my standard food at Denny's compared to 2020," says Susan Whitmarsh, a Baltimore resident.
"Rental prices in SFO are skyrocketing. They've nearly doubled or tripled compared to 2019," says Daisy Campbell, a research scholar.
Given this scenario and considering age 65 as retirement age, what should be the ideal retirement fund to ensure a happy life thereafter?
The retirement number serves as a starting point for discussions on managing finances at present to meet the future requirement. Fidelity Investments, a leading provider of some plans, no longer offers universal retirement estimates.
Many insurance officials stress on personalization in retirement planning. Factors like income, desired lifestyle, location, healthcare, and lifespan impact retirement needs.
Wealth accumulation, often unnoticed, stems from disciplined saving habits, not extravagant spending. Incremental increases in savings can lead to substantial wealth accumulation over time.
Looking at the scenario, it's clear that one cannot simply retire at 65 and expect to live comfortably even with a $2 million fund. With the unpredictability of inflation and global economic and political changes, relying solely on a fixed amount isn't wise.
The current quadrupled inflation woes are a result of the excess currency printed and distributed during the COVID pandemic. Without this intervention, the situation would be even worse. No one knows when such a situation would arise again!
Therefore, it's advisable to continue working as long as one's body and mind allow, retiring naturally when necessary. Depending solely on saved funds without working may not be a feasible option for everyone.
So thinking about a figure to save for retirement life is fine but not at the cost of not-working-anymore idea.