To millionaires: Count your pennies

Mar 19, 2007 @ 6:57 am

By Brooke Southall

SAN FRANCISCO — Being a retired millionaire at 60 could lead to poverty if it means that you have only $1 million on which to live until you die, Mary Witwer, director of business development with Bell Investment Advisors Inc., warned in a recent letter to clients. The Oakland, Calif., firm manages about $410 million.

The blunt warning is aimed at the 8,000 baby boomers turning 60 every day this year, Ms. Witwer said.

“We want a light bulb to go on,” she said. “A million dollars may have been more than enough for Mom and Dad. Thinking $1 million is enough today is really dangerous.”

That danger is real, because investors are caught in the vise grip of rising annual spending needs and increased life expectancy.

“With a $1 million portfolio, a prudent investor could withdraw up to $50,000 each year and have a high probability of not outliving the money,” Ms. Witwer wrote.

The problem is that many people would find it difficult live on $50,000. For instance, a survey by Bell found that the average West Coast retiring couple felt that they needed $81,359, Ms. Witwer wrote — which means that the couple would need at least $2 million to meet their objectives.


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