Retiring at 55 with $2.5 million is certainly feasible, as evidenced by the fact that this is far more than the vast majority of people have when they stop working. Only about 1 in 10 retirees have even $1 million saved, according to the Federal Reserve's Survey of Consumer Finances.
According to this model and conventional wisdom, a 4% withdrawal rate will allow a portfolio to last for at least 30 years. This would permit a 65-year-old retiree to maintain consistent purchasing power until age 95 and beyond.
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.
That's not chump change, but it's also not the $5-$10 million range some financial gurus – like Suze Orman – insist you must live comfortably. If you're dreaming of $3 million or more, though, you're officially aiming for a financial VIP club that represents less than 1% of retirees.
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In 2024, Americans stated that the average net worth they consider “wealthy” is $2.5 million.
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).
Retirement Income From $2.5 Million
A retirement nest egg of $2.5 million can likely produce an annual income of $100,000 for as long as you are likely to live. This is using the 4% withdrawal rate that many advisors consider safe.
The suggested savings guidelines say you need about ten times your annual salary in savings as you reach your full retirement age. The median salary of a 65-year-old is $54,000 per year — which means you'd need approximately $540,000 saved if you want to retire at 65.
Since 2017, Schwab has collected data annually on Americans' perspectives on saving, spending, investing, and wealth. This year's study reveals that Americans now think it takes an average of $2.5 million to be considered wealthy – which is up slightly from 2023 and 2022 ($2.2 million).
With careful planning, $2.5 million can fund a comfortable retirement starting at age 60. But as with any major life transition, retirees must weigh a complex set of variables from taxes to healthcare to ensure their nest egg lasts decades.
While it's difficult to pinpoint an average retirement income, the most recent Census Bureau data indicates that people 65 and older have a median annual income of approximately $54,700 or nearly $4,560 per month. A financial advisor can help you create a retirement plan for the future. Speak with an advisor today.
The 4% rule is a popular retirement withdrawal strategy that suggests retirees can safely withdraw the amount equal to 4% of their savings during the year they retire and then adjust for inflation each subsequent year for 30 years.
A nest egg of $2.5 million is likely to be adequate for most retirees to retire in comfort for as long as they live. Variables that could affect this include healthcare costs, inflation, market downturns and life expectancy.
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.
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.
What percentage of retirees have $2 million dollars? According to the Federal Reserve Survey of Consumer Finances, only 3.2% of retirees possess more than $1 million in their retirement accounts. In fact, only about 1 in 10 retirees have even $1 million.
“You could call healthcare the biggest retirement expense people fail to plan for. Many folks just assume Medicare is going to pay for everything but, in reality, it only covers about two-thirds of your costs.”
Millennials think it takes $2.2 million to be wealthy. And the Gen Z generation comes in low at $1.2 million. Where you live can skew the numbers, too. People who live in expensive locales like San Francisco and New York City say it takes $4.4 million and $2.9 million, respectively, to be considered wealthy.
Probably 1 in every 20 families have a net worth exceeding $3 Million, but most people's net worth is their homes, cars, boats, and only 10% is in savings, so you would typically have to have a net worth of $30 million, which is 1 in every 1000 families.
Ultimately, $2.5 million can reasonably support retiring at 60 if assumptions around withdrawal rates, taxes, healthcare costs and other factors hold up. Being flexible about expenses and having some income options as a potential backup provide wiggle room in case things don't work out exactly as expected.
Americans say you need a net worth of at least $2.5 million to feel wealthy, according to Charles Schwab's annual Modern Wealth Survey, which surveyed 1,000 Americans ages 21 to 75 in March 2024.
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.
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.