Omnia Family Wealth in U.S. News & World Report: How to Retire at 65 with $2 Million

Accumulating $2 million in savings for retirement might seem like a significant achievement, but in today’s inflationary and volatile environment, it likely won’t get you as far as it used to – especially if you manage it incorrectly. Considering that U.S. retirees now often live two to three decades post-retirement, this financial risk is substantial. Fortunately, there are strategies to ensure that your retirement fund can go the extra mile. U.S. News & World Report turned to Michael Wagner, co-founder and chief operating officer of Omnia Family Wealth, to uncover what you need to know.

Firstly, Wagner believes it is important for retirees to maintain a reasonable annual withdrawal rate. A typically effective rule of thumb is maintaining a 4% annual drawdown rate starting at 65. “I am still comfortable with the 4% rule,” says Wagner. “I’m always more comfortable with people underwriting a lower withdrawal rate in retirement.”

However, Wagner cautions that if you take out 4% annually, it is important to maintain an average of annual returns that ensures you have enough growth left over to reinvest into your portfolio. “You have to be aware of your portfolio composition,” he explains. “Is it set up in a way that you can reasonably expect to earn 7% returns after taxes and fees over a market cycle? Chances are, you can’t be totally out of risk assets like stocks.”

Another important aspect to help ensure your wealth lasts throughout retirement is to set a budget to meet your unique financial needs. By building a proper retirement budget, you will be able to determine the amount of income your portfolio needs to generate since you can no longer rely on bi-weekly paychecks.

“This must cover mandatory monthly spending, mandatory annual spending (like property taxes and insurance if you own your own home) and also income taxes,” Wagner tells the publication. “Many Americans have all their retirement in IRAs (pretax). If that’s the case, that $80,000 per year may be subject to 22% or more in income taxes.”

While sticking to the 4% rule and building a retirement budget are two crucial steps to maintaining a fruitful environment, having proper asset allocation is of utmost importance as you approach your golden years.

“If you’re in your early 60s and you want to retire in the next few years, pay attention to what’s going on in the financial markets. Remember, what happens in the last few working years can have a huge effect on the rest of your financial path in life,” says Wagner. “If you have a lot of money in the wrong investment bucket and the U.S. economy enters a ‘Great Recession’ scenario, you might end up with $1 million instead of $2 million, and you might have to end up working a bit longer because the market took away half of your retirement savings.”

It’s also crucial to regularly vet and optimize your portfolio’s asset allocation both before and during retirement. “In doing so, remind yourself of the amount of risk you’re willing to take on because odds are, it’s a lot lower now than when you started saving for retirement,” Wagner adds.

Click here to read the entire U.S. News & World Report article.