Average retirement savings is a popular topic. But, new analysis using the Survey of Consumer Finances (SCF) data reports on what it takes to be in the top 1%, 5%, 10%, and 50% of wealthiest retirees. Scroll down to see how you compare.
Defining Retirement Wealth
Before taking a look at what it takes to be among the wealthiest of retirees, let’s first understand how to define wealth.
There are different measures of wealth with the most popular being: income, savings, and net worth. Of those three, net worth is considered to be the most accurate or all encompassing measure. It is defined as the total value of all assets minus the total value of all liabilities.
Other factors that are important to consider are age or how “retirement” is being defined and whether you are measuring household or an individual’s wealth.
How is “retirement wealth” defined?: When talking about wealth in this article, we are referring to: Net worth by household (not individual) for people who are over 65 years of age (regardless of whether they are working or not).
What Does it Take to Be Among the Wealthiest Retirees?
To be among the wealthiest retirees, it takes millions. However, it might be less than you think.
To be in the top 1% for retirement wealth, you need to have a net worth $16.7 million
The top 5% have an average of $3.2 million
The wealthiest 10% have $1.9 million
Retirement wealth drops significantly from there.
The top 50% have an average net worth of $281,000
And, the poorest 20% have an average net worth of $10,000
Who Are the Wealthiest Retirees?
You might think that the wealthiest retirees are trust fund heirs or high powered senior executives. However, the reality is that most wealthy retirees are regular people who had regular jobs. They just saved diligently and invested wisely over a long period of time.
The top five professions for millionaires are engineers, accountants, teachers, managers, and attorneys.
They are college educated, but most graduated from public universities and state schools
Only 20% of the millionaires received an inheritance
A mere 15% of millionaires were in senior leadership when they were working
70% earned less than $100,000 a year on average when working
How do millionaires grow their net worth?
Here are five key take aways:
Millionaires used their company retirement 401k or other plan and saved as much as they could
They also saved and invested outside of their company plan
The wealthiest retirees invested broadly and did not focus on single stocks
They started saving and investing early in their careers (Although, it is important to note that it is never too late. See 28 ways to grow wealth, even after 50)
Consistency was key
What is the Average Net Worth of a Boldin Subscriber?
The average net worth of a Boldin subscriber is just over $3 million.
It should be no surprise that the top 5% are using the most powerful retirement planning tool available online. It isn’t just saving and investing that grows net worth. Building and maintaining a financial plan that enables you to make better financial decisions with regards to all aspects of your fiscal health is also an important factor.
You Don’t Have to Be Anywhere Close to a Millionaire to Have a Secure Retirement
It actually doesn’t matter if you are a millionaire now. It doesn’t even matter if you are on track to becoming one or not. Everyone can have a secure retirement, it just takes having a plan.
You can use the Boldin Retirement Planner to create or update your plan for the secure future you want. Whether that means living on Social Security alone, working past the age of 65, or retiring in your 40s.
We’ll help you develop a plan for the secure retirement you want.
And if you're aiming for the $2 million club? Well, the number of those who make it is even smaller. We're talking about a sliver of a sliver – somewhere between that 3.2% and the razor-thin 0.1% who've got $5 million or more.
Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year. The top 5% of income earners make $335,891 per year.
Home equity and moderate nest eggs facilitate occasional luxuries and social engagements. With a net worth of $1.9 million, retirees in this percentile are deemed well-off, enjoying a lifestyle enriched by extensive savings and investments. This includes bucket-list travels, charitable endeavors and legacy planning.
Only one in six Americans retire as millionaires. Achieving such savings is a gradual process that typically involves starting early and leveraging the benefits of compound interest.
Data from the Employee Benefit Research Institute, which utilizes the Federal Reserve's Survey of Consumer Finances, indicates that only about 0.1% of retirees have over $5 million saved for retirement. Additionally, about 3.2% have savings exceeding $1 million.
According to Schwab's 2022 Modern Wealth Survey, the average American thinks being rich means having a net worth of $2.2 million. However, wealth has no universal definition. Just as beauty is in the eye of the beholder, being rich depends on your personal definition and circ*mstances.
If you're in the upper class, you're sitting pretty. The top 10% of earners have an average net worth of $2.65 million. Even if you're squeaking into the upper class (the 80-90% range), you're looking at about $793,000.
Your net worth is what you own minus what you owe. It's the total value of all your assets—including your house, cars, investments and cash—minus your liabilities (things like credit card debt, student loans, and what you still owe on your mortgage).
MORE LIKE THISInvestingSocial Security. A good monthly retirement income is typically 80% of pre-retirement income; advisors often suggest a range between 70% and a more conservative 90%. Median income for households headed by someone over 65 was $50,290, or $4,191 per month, in 2022 according to the U.S. Census Bureau.
Nearly 399,000 Americans also have a least $1 million in an individual retirement account. The key to stashing away such sums? Start early and contribute to your retirement plan consistently over many years, Fidelity said.
The Employee Benefit Research Institute (EBRI) estimates that 3.2% of retirees have over $1 million, and a mere 0.1% have $5 million or more, based on data from the Federal Reserve Survey of Consumer Finances. 2. What is the estimated amount of money needed to retire at age 60?
Specifically, those with over $1 million in retirement accounts are in the top 3% of retirees. The Employee Benefit Research Institute (EBRI) estimates that 3.2% of retirees have over $1 million, and a mere 0.1% have $5 million or more, based on data from the Federal Reserve Survey of Consumer Finances.
Top 2% wealth: The top 2% of Americans have a net worth of about $2.472 million, aligning closely with the surveyed perception of wealth. Top 5% wealth: The next tier, the top 5%, has a net worth of around $1.03 million. Top 10% wealth: The top 10% of the population has a net worth of approximately $854,900.
You retire at 40 – With an estimated life expectancy of 90, you need 50 years of income. Across those years, $2 million could equate to approximately $40,000 annually or $3,333 monthly. This should be enough to cover you, but things may be tight if your outgoings are high as a retiree.
Key Points. The average American household reported a retirement account balance of $333,940 and a net worth of $1.06 million in the 2022 Survey of Consumer Finances (SCF). The median American household reported a retirement account balance of $87,000 and a net worth of $192,700 in the 2022 SCF.
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