$1 MILLION NOT WHAT IT USED TO BE
March 22, 2007
To people living paycheck to paycheck or who haven't saved much, $1 million seems very far out of reach. But a growing number of Americans are accumulating that amount and more, says the Associated Press.
According to research from Merrill Lynch & Co. and Capgemini, some 2.9 million people in the United States and Canada have net worths of $1 million, counting all financial assets except a primary residence. But having that much money doesn't necessarily mean financial concerns are over. The fact is $1 million doesn't go as far as it used to, says the Associated Press:
- For one thing, it's vulnerable to inflation -- someone who bought $1 million worth of goods in 1957 would need $7.3 million to buy the same goods today, according to Federal Reserve figures.
- It's also vulnerable to longevity; Americans are living much longer than they used to and that means they need larger nest eggs to get them through retirement.
It has been workers' focus on saving for their retirement that has lead to the growing number of Americans who will achieve the million-dollar milestone, says Dan Sontag of Merrill Lynch. Many baby boomers have been contributing to company-sponsored 401(k) retirement plans and similar employer-backed programs for 25 years and those account balances have mushroomed.
But David Bach, author of financial advice books, points out that 99 percent of Americans don't have a million dollars -- and to them, a million dollars is a fortune. So while Bach believes $1 million is an achievable goal, especially for those who save persistently, he also believes it shouldn't be the only goal that's held out.
Source: Editorial, "$1 million is just not what it used to be," MSNBC.com, March 21, 2007.
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