The grim retirement reality

How much is enough to retire? About $1.2 million, according to 1,500 investors surveyed in March and April by asset manager Schroders. But here’s the rub: Only 30% of those polled think they’ll even reach the $1 million mark before they call it quits.

This retirement readiness gap looks even uglier if you look at what folks actually expect to have saved up. More than half (51%) plan to have less than $500,000; 24% say they’ll fall below $250,000.

Many blame this shortfall on rising prices: 55% of pollees said socking away 10% of their paychecks for their golden years was impossible due to competing expenses. Meanwhile, 27% of folks have curbed their contributions, with 70% doing so in the past two years. Plus, 27% have borrowed money from their retirement funds.

All told, 69% say retirement is simply out of reach for their entire generation, period.

The widening wealth divide

These dashed retirement hopes and dreams are just another symptom of the K-shaped economy, which keeps cranking out AI millionaires at the top and causing panic attacks over the grocery bill at the bottom. Yet the economy has kept chugging along as wealthy folks’ swelling portfolios have them dropping cash on everything from superyachts to tickets into space.

Economists have dubbed the phenomenon of rising asset prices coinciding with rising spending the “wealth effect,” and it’s driven about one-third of the increase in consumer expenditures since the Covid-19 pandemic. One rule of thumb is that every $1.00 uptick in a household’s stock portfolio ends up boosting their spending by $0.05. Multiply that by the many millions minted for investors in Anthropic, Micron, and other tech companies, and it becomes clear why the economy seems fine but is hiding some serious cracks underneath.

JPMorgan Chase CEO Jamie Dimon says this widening divide between the haves and have-nots has sparked a fresh wave of “anti-rich” resentment, and he doesn’t blame people for being ticked off.

“If you were the average citizen here and you say, ‘These wealthy people are getting unbelievably wealthy, and this segment’s been left behind,’ that’s kind of annoying.”

Yes, being unable to retire is kind of annoying.—JD