Having a million dollars come retirement age will no longer cut it, experts warn.
Instead, Americans should have $1.5 million put back to retire comfortably, according to Rebecca Walser, a financial planner and tax lawyer.
Walser told the New York Post: ‘It is really bad out there – so bad, in fact, I feel like I am sitting on a mountain and screaming at America to wake up.’
She explained that the decades-long advice to have $1million saved for retirement is no longer valid due to Americans’ lifespans increasing, the uncertainty of Social Security and low interest rates on savings.
One financial planner and tax lawyer is now suggesting that Americans save $1.5million for retirement (file image)
Her theory was backed up by financial planner Philip Kiernan, Jr.
‘The premise is correct. Historically, low interest rates require more capital at retirement to generate the same amount of income that you’re accustomed to,’ Kiernan, who works at Highlander Capital Management, told the New York Post.
Walser said that saving 25 per cent of your pre-tax income is a safe way to ensure that you will have enough at retirement age.
This is opposed to the 10 per cent of pre-tax income that many choose to save.
Walser cited the US federal debt, which is now more than $21trillion, as one of the reasons for her fears about having enough money to retire.
Additionally, the Social Security system, among other government programs, complicates the situation.
She predicts that the program might soon fail and also mentioned the possibility of taxes being hiked up to straighten out the government’s finances.
Walser said her recommendations – to have $1.5million ready at retirement age, to be savvy with your finances and to seek strong tax advice – are the new path to a healthy 25-year retirement period.
She added that even though the Federal Reserve System is trying desperately to raise US interest rates, they could remain low for some time. The results will be hard on taxpayers, Walser said.
Her new book, called Wealth Unbroken: Growing Wealth Uninterrupted By Market Crashes, Taxes And Even Death, explains her reasoning for having $1.5million put back for retirement.