If you have multiple income streams, a detailed spending plan and keep extra expenses to a minimum, you can retire at 55 on $2 million. However, because each retiree's circumstances are unique, it's essential to define your income and expenses, then run the numbers to ensure retiring at 55 is realistic.
Bottom Line. Retiring at 65 seems like a typical target, but it takes careful planning and a sufficient nest egg to pull off. If you accrue $2 million during your career, you can pay yourself $80,000 annually without touching your principal, which translates to a healthy monthly budget.
According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more. However, there's a surprising amount of information to unpack.
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
Schwab's survey showed Americans' conception of being rich means having a net worth of $2.2 million. This number represents a $300,000 increase from the survey's results last year. Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million.
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.
$2.2 million
That's how much net worth an American needs to be considered wealthy in 2023, according to the Charles Schwab Modern Wealth Survey.
According to Schwab's 2023 Modern Wealth Survey, its seventh annual, Americans said it takes an average net worth of $2.2 million to qualify a person as being wealthy. (Net worth is the sum of your assets minus your liabilities.)
Dated ways of describing someone worth n millions are "n-fold millionaire" and "millionaire n times over". Still commonly used is multimillionaire, which refers to individuals with net assets of 2 million or more of a currency.
1,821,745 Households in the United States Have Investment Portfolios Worth $3,000,000 or More.
$3 million could also be enough for you to retire even earlier, at 40 or even 30, depending on the kind of retirement lifestyle you're after and the sorts of expenses you'll face month to month. Let's look at some calculations. Say you want your $3 million to last until you reach the age of 80.
Among the 47 million households headed by someone age 60 or older, 7% had household investable assets of at least $2 million, Drinkwater said. Only 6% of the 89 million households in the U.S. headed by someone 40 to 85 years old has that amount, Drinkwater said.
At the 4% annual withdrawal, a retiree with $2 million would generate $80,000 per year or $6,666 per month. “This must cover mandatory monthly spending, mandatory annual spending (like property taxes and insurance if you own your own home) and also income taxes,” Wagner says.
As a general rule, most retirees and pre-retirees underestimate what their expenses will be. A $2 million nest egg is substantial and can provide financial security for many couples, but whether it's enough for you depends on various factors. First, consider when you plan to retire.
If you pay off your mortgage and debts before retiring, you could live on smaller portion of your preretirement income. Based on this rule, if your annual preretirement income was $100,000, you need $80,000 a year in retirement to cover your expenses.
Some sources define upper middle class as anyone who's making a lot of money but hasn't quite crossed the threshold to become truly wealthy yet. These individuals often have a net worth of at least $500,000 to $2 million.
At its most basic, net worth is everything you own minus everything you owe. To calculate your net worth, tally the value of all or your assets, including bank accounts, investments, and perhaps the value of your home or vacation home.
To feel wealthy, Americans say you need a net worth of at least $2.2 million on average, according to financial services company Charles Schwab's annual Modern Wealth Survey.
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.
How much is too much? The general rule is to have three to six months' worth of living expenses (rent, utilities, food, car payments, etc.) saved up for emergencies, such as unexpected medical bills or immediate home or car repairs. The guidelines fluctuate depending on each individual's circumstance.
Conversation. What does it mean to be "rich" in the United States? Net-worth percentile breakdowns: Top 1% = $10.8 million Top 2% = $2.5 million Top 5% = $1.03 million Top 10% = $855,000 Top 50% =$522,000 Do these numbers surprise you?
We can also define middle class in terms of net worth. According to the U.S. Census data, the average net worth for U.S. households in 2022 is about $300,000. The median net worth is about $110,000 in 2024. In other words, wealth is concentrated at the top.