The more I think about this "survey" the more I conclude that it tells us a lot more about financial advisers and other folks involved in money management than it tells us about retirement needs.
The median
household income in this country is
44,389. The survey is suppose to be about the average family's need, so for simplicity sake lets say average=median.
The average retired couple receives $1,735/month from
Social Security or just over $20K if we assume that for 62+ year old that $1,000,000 has a SWR of 4% that means that a couple with $1 Mil +SS = $60K/income. 60K/income is more than 63% of households in the country make. From a disposal income perspective 60K in retirement is worth a least 5-6K more than 60K in wages due to not paying FICA/Medicare and the more favorable tax treatment of Dividends and SS income.
Another way to look at the problem is how much money to do I need to supplement social security to have an average household income. Today that number is 44K-20K= 24K/year in pension benefits or $600K in assets. So how much inflation do we need end up with 600K? for someone 10 years from retirement it needs to be 5.2% or less for someone 20 years away 2.6%. So for people in their 40s and 50s $1 million is fine, especially if you have a paid off house and/or pension.
What about young folks. If we assume an inflation rate of 3% for the next 40 years, some one in their mid twenties would need to save just under $2 million to have the equivalent of 600K in today's dollars.
Now obviously if you want to live an above average lifestyle than you need to save more. The real problem is that a "average" financial adviser having two,three, or four or more times more than the median income, living on 44K a year is incomprehensible.
The danger of these type of survey is that a $1 million seems an impossible goal to the vast majority of Americans. Telling them that it isn't enough even when it is just discourages people to save anything at all, and puts additional pressure on the fragile safety net.
What about for