According to a recent MLIV Pulse survey—a weekly survey conducted by Bloomberg’s Markets Live team—the 553 investors who responded believe you need somewhere between $3 million and $5 million to retire, reports an article in Bloomberg. A third of those surveyed said $3 million while another third said $5 million, with the rest somewhere in between. However, most of the investors surveyed were optimistic that the year ahead would bring them closer to their retirement goals than 2022, when high inflation and rising interest rates deflated stocks as well as bonds. The average 401(k) account in the U.S. dropped 20% last year, according to data from the Vanguard Group.
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But both institutional and individual investors believe the stock market will resume its traditional trajectory, with stocks and bonds moving in opposite directions and fixed income once again serving as a safe haven against losses from riskier assets. However, less than half of the survey’s respondents were certain that they’d retire with enough money to maintain their current lifestyle—understandably, given the impact that inflation will have on retirement funds. And a 7-figure nest egg is a far reach for many future retirees, given that roughly two-thirds of private-sector employees in the U.S. have any access to employer-provided retirement plans. According to the Vanguard Group’s data, the 5 million plans they had access to study contained an average balance of $112,572 and a median balance of $27,376, the article details.
Whether investors expect to gain retirement funds from investments or contributions wasn’t clear from the responses. Given that a significant portion of retirement savings are invested in index funds like the S&P 500 and actively managed equity funds, which were battered last year after a decade-long bull market, 58% of those surveyed believe that new market leaders will begin to supplant the FAANG tech giants. And this year, foreign assets—especially in Asia—are expected to outperform U.S. stocks, fueled by China’s reopening, the article maintains.
But in spite of the uncertain economy and recent volatility, most investors aren’t changing their retirement plans. 56% of those surveyed indicated that they were staying the course with their plans, and 8% said that they were considering not retiring, ever.