You've saved $2 million for retirement — but these 5 traps could be quietly devouring your nest egg
Sigrid Forberg and Vishesh Raisinghani
Tue, September 15, 2026 at 12:00 PM GMT+3 7 min read
You've got $2 million saved for retirement — now you need to watch out for these 5 traps that'll devour your nest egg
If you've got $2 million tucked away for retirement, you're sitting well above where most Americans think they need to be.
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The average U.S. adult now pegs the "magic number" for a comfortable retirement at $1.46 million, according to Northwestern Mutual's latest retirement savings study — up sharply from the year before as inflation, longer lifespans and Social Security uncertainty push expectations higher. High-net-worth Americans set the bar even higher, at $2.67 million on average.
At this point, you've got savings on lock. But even $2.67 million could be insufficient if you're not thinking now about wealth preservation.
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. Here's what you need to know.
'Knowing your number' matters more than having one
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's study (1), consider themselves "wealthy."
Many high-net-worth individuals haven't taken the time to plan their retirement budget and lifestyle needs. Nearly half of millionaires told Northwestern Mutual their financial planning could use improvement, and their top concerns center on the impact of taxes in retirement, the risk of outliving their savings and long-term care costs.
Don't fall into the same trap. And remember that you don't have to figure out your budget needs on your own — a financial advisor can help you craft a budget that you can stick to easily.
Forgetting tax time bombs in your 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.
Without a proper forecast of these taxes and a strategic plan to minimize taxes, you'll end up with a thinner-than-expected safety net in retirement.
Work with an expert to see if you can pull off strategies such as Roth conversions or tax gain harvesting to minimize these costs.
Focusing on the wrong asset allocation
With $2 million in retirement savings, you have more capacity to take risks than the average investor. But that doesn't necessarily mean you should.
The best approach is generally somewhere between aggressive growth and conservative fixed income. Finding the right balance for you will depend on your age, risk appetite and target returns.
Most millionaires seem to understand this. High-net-worth investors today put roughly 50% of their portfolios into public stocks, 28% into private market and alternative investments, and the remaining 10% into bonds and cash, according to Long Angle's 2026 High-Net-Worth Asset Allocation Report (2), an annual benchmark survey of 233 high-net-worth investors with an average net worth of $17 million. (The remaining 10% is held in home equity.)
That allocation to alternatives grows with wealth — from 24% of net worth in the $2 million-to-$10 million bracket up to 34% above $25 million — driven mostly by private company equity.
Investing across different asset classes and countries can help stabilize your multi-million-dollar portfolio so that an economic crisis in a country or a correction in any specific market doesn't have to derail your retirement plans completely.
Getting distracted by exotic assets
As a multi-millionaire, you may be tempted by seemingly exotic asset classes typically reserved for the ultra-wealthy. Private equity funds, litigation finance, music royalties, private credit funds and hedge funds might reach out to seek some investment from you.
The pitch usually centers on returns, but your real risk here is liquidity. Most of these products only let you cash out on a fixed schedule — often just a few percent of your stake per quarter — and that limit can bind hardest exactly when you need the money most.
For a retiree relying on a fixed withdrawal each year, the money you need on a schedule might not be the money you can actually get, forcing you to sell your liquid stocks instead — often at the worst possible moment, like during a downturn.
And then don't forget about fee drag. Research from the Harvard Law School Forum on Corporate Governance found that non-traded business development companies (3) — a common "private credit" wrapper sold to individual investors — report unusually smooth, low-volatility returns because they're priced off internal estimates rather than market trades, which can lead to underestimating how risky they really are.
Simply put, you don't need fancy investment strategies. Working with your financial advisor, identify some time-tested, simple and cheap index fund or bond fund — ones you can actually sell on a Tuesday if you need to at that.
Neglecting to think about your legacy
If your portfolio exceeds $2 million, you might even have more saved than you'll be able to get through in retirement. In other words, you may leave money behind for your children and loved ones.
It would be wise to legally document how you want your assets to be distributed when you pass as soon as possible.
A surprisingly high number of wealthy people don't have a formal estate plan in place. That may be a reflection of how many feel they won't be able to afford that: Only about half of American millionaires (53%) expect to leave an inheritance or charitable gift as part of a documented estate plan, according to Northwestern Mutual's study.
Among the general population, the gaps are even wider: 61% of U.S. adults have no will at all, according to the same study.
With $2 million or more saved, you're in a strong position for a comfortable retirement. None of these five traps require a complicated fix — a written budget, a tax plan, a properly diversified portfolio, some skepticism toward whatever's being pitched to you this quarter, and a signed estate plan will cover most of it.
The hardest part is often just getting around to taking these steps before the wealth you built does the work of disappearing on its own.
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Article Sources
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Northwestern Mutual (); Long Angle (); Harvard Law School Forum on Corporate Governance ()
This article originally appeared on Moneywise.com under the title: You've saved $2 million for retirement — but these 5 traps could be quietly devouring your nest egg
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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