There are many references in pop culture, from famous people such as Howard Hughes to movie characters, which I will share below, who all lament that “a million dollars doesn't go as far as it used to…”
Source A-Z Quotes
The line " A million dollars ain't what it used to be" appears in the 1988 movie Coming to America, when King Jaffe Joffer, Eddie Murphy's dad, played by the late great James Earl Jones, tries to buy a wife for his son. A similar sentiment shows up in the 1997 movie Austin Powers: International Man of Mystery, when Doctor Evil's sidekick, Number 2, played by Robert Wagner, states that they should ask for a higher amount of ransom, as $1 million is not exactly a lot of money these days, as you can see in the YouTube clip below.
Source: Rotten Tomatoes
One Million Dollars - Austin Powers: International Man of Mystery (2/5) Movie CLIP (1997) HD
It seems that in addition to $1 million not being worth as much as it used to be, there are more millionaires in the United States than we have ever had. According to data from the Credit Suisse Global Wealth Report, there were just under 30 million millionaires in the United States in the calendar year 2023. That is the highest level ever recorded, equating to nearly 9% of the 337 million people who make their homes in America.
An article in October 2024 from CNBC.com, 40% of Americans plan to retire with $1 million or more. However, many fear this may not be enough to meet their retirement income goals. Today, just 16% of retirees indicate they have saved that much, according to a recent retirement survey conducted by CNBC and SurveyMonkey. The survey also shows that 57% of those still working expect to save less than $1 million. It is not clear if they believe they will be able to get by on less money during their retirement life expectancy.
Please remember that retirement success comes from a combination of having enough income resources, such as Social Security and pensions, for those lucky enough to still receive a monthly check from their employer when they retire, along with enough asset resources, such as 401Ks, IRAs, and personal savings, to create the income they will need to do what is meaningful for them during their retirement years.
Many of you have heard the CFPs of Impel Wealth Management talk about a 4% withdrawal rate over a 30-year retirement. Having $1 million in retirement savings at a 4% withdrawal rate would equate to $40,000 per year of investment income plus any Social Security or pension income you have over and above that. The big question for most people moving toward retirement is whether that will be enough to help them live the life they want to live once they stop working.
As inflation continues its ongoing battle against the value of a dollar, we know that it takes $1.23 today to purchase what a dollar would have bought in 2019. That also means you would need $1,230,000 today to equal $1 million just five years ago. If we go back 95 years, to just before the Great Depression, there were approximately 21,000 millionaires in the United States against a population of roughly 123 million. However, in today's dollars, you would need more than $18,400,000 to equal what $1 million would have been able to purchase in 1929.
As you can see in the chart below from Visual Capitalist and the Bureau of Labor Statistics, since 1913, the cumulative and compounded effect of inflation has decreased the value of a dollar by 96% over the last 110 years. Inflation is real, and we pay enormous attention to it as we help clients prepare for a retirement life expectancy that could last 30 years or more.
There may be more millionaires in the United States than ever before. They are just living more modestly than they did twenty, fifty, or one hundred years ago. Our goal is to help you accumulate the resources you will need to live your best life during your retirement years, regardless of inflation. As always, if you have questions about your unique situation, our team of CFPs is here for you as we continue “Moving Life Forward.”
© 2024 Jesse Hurst
Senior Wealth Manager
The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice. This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
Investors cannot directly invest in indices.
Featured Blog Image Source: iStock.com/twilightproductions