A million dollars isn't the symbol of wealth that it used to be, but saving that much for retirement is still rare. Just 16% of retirees say they have more than $1 million saved, including all personal savings and assets, according to the recent CNBC Your Money retirement survey conducted with SurveyMonkey.
Rich retirees: In the 90th percentile, with net worth starting at $1.9 million, this group has much more financial freedom and is able to afford luxuries and legacy planning.
The typical American has an average retirement savings of $489,170. Americans in their 60s have the most saved for retirement with average balances close to $1.2 million. Average account balances more than double between those in their 20s vs their 30s.
While $1 million may be enough for many retirees to cover their costs during retirement, it may not be enough for everyone.
Let's say you consider yourself the typical retiree. Between you and your spouse, you currently have an annual income of $120,000. Based on the 80% principle, you can expect to need about $96,000 in annual income after you retire, which is $8,000 per month.
Nearly half of Americans retiring at 65 risk running out of money, Morningstar finds.
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).
According to data from the Social Security Administration, as of January 2024, the average monthly retirement benefit payment was $1,909.01, which comes to about $22,322 per year.
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. Moving down to the middle class, things get a bit more varied. The upper-middle class folks have an average net worth of around $300,800.
The $1,000 per month rule is designed to help you estimate the amount of savings required to generate a steady monthly income during retirement. According to this rule, for every $240,000 you save, you can withdraw $1,000 per month if you stick to a 5% annual withdrawal rate.
How Much More Social Security Do the Richest Retirees Get Compared to the Average American? Rich retirees get more Social Security than those who didn't earn as much throughout their career. And that makes sense since benefits are based on your earnings history.
To crack the top 10% of retirees, your net worth needs to hit around $1.9 million, according to Federal Reserve Board survey data. For those aged 65-74, that figure jumps to about $2.63 million; for retirees 75 and older, it climbs even higher to $2.86 million.
According to estimates based on the Federal Reserve Survey of Consumer Finances, a mere 3.2% of retirees have over $1 million in their retirement accounts. The number of those with $2 million or more is even smaller, falling somewhere between this 3.2% and the 0.1% who have $5 million or more saved.
What are the average and median retirement savings? The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.
Your home is likely your most valuable asset, and the value that you assign to it will have a great impact on your net worth calculation. A qualified real estate professional can give you an estimate of your home's value, or you can research online real estate aggregators such as Trulia or Zillow.
According to some experts, the optimal range for home-ownership is between 10% and 30% of your net worth. Rental properties and passive income: Rental properties are another common and attractive form of real estate.
Should Your Net Worth Calculation Include Your Car? When calculating your net worth, subtract your liabilities from your assets. Since your car is considered a depreciating asset, it should be included in the calculation using its current market value.
Having no savings means that you will be forced to rely on your Social Security benefits for income in retirement. According to the Social Security Administration (SSA), among Social Security beneficiaries, 12% of men and 15% of women rely on Social Security for 90% or more of their income.
According to the latest data from the Federal Reserve, the median net worth for Americans aged 65 to 74 was $409,900. For those 75 and older, it was $335,600. This makes sense, as older retirees generally spend more than they earn and draw down their retirement nest egg as they age.
The average household retirement income in the United States is $27,617, according to an analysis by Wisevoter of data from the U.S. Census Bureau's American Community Survey. However, depending on where you live, your local average may be much higher or lower.
It's Possible To Retire on a $1,500 Monthly Budget
But with a little creativity and flexibility, you may find a new home with everything you want, including a good climate, welcoming community and affordable lifestyle.
Outside the most expensive parts of the United States, $5,000 per month is typically enough to cover rent or mortgage payments and other lifestyle expenses if you're mindful of your budget.