Got $2M saved for retirement? Get ready for everything to change, and not always for the better. Dodge 5 money traps now

Moneywise

Sun, July 5, 2026 at 7:10 AM PDT 9 min read

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If you have $2 million in retirement savings, congratulations. That's well above the $1.26 million that Americans believe is needed to retire comfortably, according to a 2025 Northwestern Mutual study (1).

At this point, you have probably overcome the challenge of saving enough. Now, your next mission is wealth preservation. Higher taxes and the wrong lifestyle choices can quickly erode what seems like a huge treasure trove.

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Shifting your perspective from building wealth to protecting it isn't easy. But the journey could be less treacherous if you avoid these five common money traps that high-net-worth individuals sometimes fall into.

1. Not knowing your true lifestyle budget

If you follow the 4% rule, $2 million in retirement savings would give you $80,000 a year, adjusted for inflation. That could either be too much or too little, depending on where you live and how much you spend.

Lifestyle inflation — where your spending habits change with the size of your portfolio and paycheck — is a real risk. It's perhaps one of the reasons why only 36% of American millionaires, according to Northwestern Mutual, consider themselves "wealthy."

Among these millionaires, those who don't work with a financial advisor feel less prepared for retirement and expect to retire two years later than those who do. In other words, some high-net-worth individuals haven't taken the time to properly plan their retirement budget and timeline.

While $2 million sounds like a lot, it can quickly disappear and might not be enough for everyone.

Read More: Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going

2. Tax time bombs in IRA or 401(k)

If much of your wealth is in tax-advantaged retirement accounts such as 401(k) plans and IRAs, you need to prepare for the tax consequences of making withdrawals in retirement.

In 2024, less than half (49%) of millionaires without a financial advisor told Northwestern Mutual they consider how much taxes could eat into their retirement savings (2). Without a proper forecast of these taxes and a strategic plan to minimize taxes, you could end up with a thinner-than-expected safety net in retirement.