The road is paved with tales of retirees who were too frugal in retirement. Even though they have the means to splurge and reap the rewards of years of working hard, saving and planning, they are reluctant to spend their hard-earned money in retirement.
This frugality comes as the number of 401(k) millionaires among baby boomers is growing. As of the end of 2024, Fidelity Investments found that 41% of baby boomers had $1 million or more in their retirement savings accounts. Generation X — or those between the ages of 45 and 60 — accounted for 57% of all 401(k) millionaires.
The fear of running out of money can be paralyzing, especially when the stock market goes south.
To overcome those concerns, Eric Herzog, a financial advisor at Prime Capital Financial, says it’s important for people to look at retirement as climbing a mountain.
“We do a lot of educating on the front end to help them understand the probability of the financial plan working out and what the success rate looks like,” says Herzog. “The best advice I give them is to be clear about the amount of money they are willing to draw down and to identify the amount of money they want to leave to family, charity or whoever it may be at death.”
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