One of the most controversial financial questions is: How much is enough to be comfortable when you retire?
The answer is between US$3 million and US$5 millionaccording to 553 investors from around the world who shared their views in the latest MLIV Pulse survey.
About a third of the Investors put the figure at $3 million and about another third at $5 million. Most respondents are optimistic that they will move closer to their retirement goal by ending 2023 with a higher retirement savings balance than at the end of 2022.
(Read: This is how you can make your money work in times when ‘everything is expensive’).
Last yearinflation and rising borrowing costs hit stocks And as bond prices also plummeted, the average US 401(k) retirement account dropped 20% on the planes Vanguard Group keeps records on.
This year, both professional and retail investors expect stocks and bonds to resume their traditional relationship of moving in opposite directions, with fixed income serving as a cushion for any potential losses in riskier assets.
Respondents weren’t so sure if they would ultimately have enough money saved to support their lifestyle in retirement. Less than half of investors said the chances of that were 100%.
That uncertainty is also likely to reflect the economic outlook, given shrinking corporate profits and the possibility of a recession for this year. It’s not clear if the expected increase in 401(k) account balances will come from investments or contributions.
A lot of savings for lat retirement are invested in index funds that track the S&P 500 index and, particularly for older savers, in actively managed stock funds with a large weighting in the top stocks in the index.
(See: Financial Tips for Taking a Gap Year.)
During the bull run, mega-cap tech stocks such as Apple Inc., Microsoft Corp., Amazon.com Inc., Alphabet Inc., and Meta Platforms Inc. came to dominate the index, creating highly concentrated investment portfolios for many savers. . These stocks started the year with a strong rally after a dismal 2022.
However, investors expect those market leaders to be supplanted. When asked if the same broad group of tech stocks will drive US stock market performance over the next three years, 58% said they expect new leaders to emerge.
Most investors aren’t adjusting their retirement plans despite uncertain economic prospects and recent account losses. About 56% of those surveyed said they were sticking with their retirement plan.
MLIV Pulse is a weekly survey for Bloomberg News readers in terminal and online.
(Keep reading: How much Colombians enjoyed the pension).
Bloomberg