What proportion of retirees accumulate at least $1 million in savings? Only approximately 10% of American retirees have successfully saved $1 million or more, as indicated by the most recent Survey of Consumer Finances conducted by the Federal Reserve.
If you can keep your expenses between $30k and $40k per year then historically speaking $1 million is more than enough for an unlimited-length retirement. This has always been the standard FI mentality.
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.
Let's start with the average income for a retired couple. Per the United States Census Bureau, the median before-tax income for all households in 2023 was $80,610. However, it may be more helpful to look at the median income for married couples 65 and older. That number was $84,670 in 2023.
The average American spends $4,345 per month in retirement, according to the Bureau of Labor Statistics. That's $52,141 per year. Retirement planning means making sure you can afford your lifestyle after you stop working.
Other factors
According to the Employee Benefit Research Institute, retired couples can expect to need anywhere between $184,000 to $383,000 in savings to be able to mostly cover their medical expenses, depending on their Medicare coverage level. This amount is likely to increase over time.
As of June, there were roughly 497,000 so-called retirement-created millionaires in the U.S., according to the wealth management firm, which analyzed balances across 26,000 of its customers' accounts. Nearly 399,000 Americans also have a least $1 million in an individual retirement account.
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.
Only one-third of American millionaires — or those with at least $1 million in investible assets — consider themselves "wealthy," according to a new study from Northwestern Mutual, a financial services firm.
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.
The 4% rule suggests that a $1.5 million portfolio will provide for at least 30 years approximately $60,000 a year before taxes for you to live on in retirement. If you take more than this from your nest egg, it may run short; if you take less or your investments earn more, it may provide somewhat more income.
For example, if you have retirement savings of $1 million, the 4% rule says that you can safely withdraw $40,000 per year during the first year — increasing this number for inflation each subsequent year — without running out of money within the next 30 years.
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).
$1 million doesn't go nearly as far in retirement as it once did. In fact, a recent survey found that investors believe they'll need at least $3 million to retire comfortably. But retiring with $1 million is still possible, even as early as age 55, if you're smart about it.
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 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.
Believe it or not, data from the 2022 Survey of Consumer Finances indicates that only 9% of American households have managed to save $500,000 or more for their retirement. This means less than one in ten families have achieved this financial goal.
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. In fact, among those currently saving for retirement, 57% say the amount they're hoping to save is less than $1 million.
It has become especially popular because it can potentially be a gateway to millionaire status. The famed wealthy entrepreneur Andrew Carnegie famously said more than a century ago, “Ninety percent of all millionaires become so through owning real estate.
The ideal monthly retirement income for a couple differs for everyone. It depends on your personal preferences, past accomplishments, and retirement plans. Some valuable perspective can be found in the 2022 US Census Bureau's median income for couples 65 and over: $76,490 annually or about $6,374 monthly.
Bottom line. “It is most definitely possible to retire on $1 million,” says Delgado. “However, doing so depends on each individual.” Stretching that retirement money may involve some changes, such as moving out of high-cost cities in favor of moderately priced areas or downsizing your home.