This Is How Retirees Live on $1 Million Dollars
For most, the word "millionaire," a term coined by a Frenchman in the 18th century, calls to mind images of lavish wealth and extravagant lifestyles. These days, millionaire describes a financial status nowhere near as prosperous as it was decades or centuries ago. The definition of the word is simple: A millionaire is a person whose net worth – assets minus liabilities – is $1 million or greater.
Simply having this much money once represented a ticket to life on easy street. As of 2016, thanks to inflation, cost-of-living increases and lifestyle changes, retiring on $1 million isn't as carefree. It now requires smart budgeting to ensure this nest egg lasts for a retiree's remaining years.
Though it does not provide for the sumptuous lifestyle of years past, having $1 million for retirement is still a blessing. Many retirees have nothing or next to nothing in liquid assets and have to rely on Social Security benefits to pay the bills each month (see What is the size of the average retirement nest egg?). This is a big reason why the poverty rate for Americans 65 and over is frighteningly high. A retiree with exactly $1 million may not be spending much time at the Breakers on Palm Beach, or the Plaza Hotel i New York, but invested smartly, this sum should ensure he can live in a typical U.S. big city, such as Chicago, Los Angeles or Houston, without worrying about poverty or inability to pay the bills.
Let's take a closer look at two of the key strategies shrewd retirees employ to stretch $1 million throughout the retirement years. One technique is to purchase an immediate annuity, which converts the retiree's lump sum into a guaranteed monthly paycheck for the remainder of his or her life. Another is to invest the money in a standard portfolio, typically one diversified with mutual fund, stock and bond investments, then withdraw a fixed percentage of that portfolio each year to pay living expenses.
http://www.investopedia.com/articles/personal-finance/102715/how-retirees-live-1-million-dollars.asp
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