If you have $400,000 in the bank you can retire early at age 62, but it will be tight. The good news is that if you can keep working for just five more years, you are on track for a potentially quite comfortable retirement by full retirement age.
The average retirement savings for a person about to retire are approximately, $225,000, equal to $450,000 combined for a couple that has saved equally. Following the conservative rule of thumb and withdrawing 4% a year will provide this couple with another $1,500 monthly or $18,000 a year.
According to data from Edward Jones, by age 62 you should have $435,000 to $530,000 in savings. Since your net worth is more than just your savings, you can add to that base amount (and subtract liabilities) based on your lifestyle and what you think it'll look like in retirement.
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.
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.
According to the SSA's Office of the Actuary, retired-worker beneficiaries who were 62 years old in December 2023 received an average check of $1,298.26.
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.
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.
A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent. Starting to receive benefits after normal retirement age may result in larger benefits. With delayed retirement credits, a person can receive his or her largest benefit by retiring at age 70.
You can get Social Security retirement or survivors benefits and work at the same time. But, if you're younger than full retirement age, and earn more than certain amounts, your benefits will be reduced.
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 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).
Here's how the maximum Social Security retirement benefit breaks down in 2024: Retired at earliest retirement age (62): $2,710 per month. Retired at full retirement age: $3,822 per month. Retired at age 70: $4,873 per month.
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.
In simplest terms, take a $2,500 mortgage payment out of the picture and you've just reduced your annual expenses by $30,000. Now, factor that against the amount of money you'll need to manage retirement: between 55% to 80% of your current annual income, according to Fidelity.
Those facing financial emergencies, such as a layoff or debt, may benefit from accessing Social Security early. If you retire early and need extra income, Social Security benefits can provide supplemental funds to support your new lifestyle, hobbies or retirement activities.
If your spouse dies, do you get both Social Security benefits? You cannot claim your deceased spouse's benefits in addition to your own retirement benefits. Social Security only will pay one—survivor or retirement. If you qualify for both survivor and retirement benefits, you will receive whichever amount is higher.
Using the 4% Rule, we find that Upper-Middle Matt will need a retirement portfolio of approximately $2 million in ten years.
Yahoo Finance
In 2024, Americans stated that the average net worth they consider “wealthy” is $2.5 million.