The average retired household has a net worth of more than $1 million. There's no ideal net worth for all retirees, but there are some things to keep in mind when looking at yours, such as potential income streams in retirement.
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.
Defining Economic Classes in Retirement
Middle-Class Retirees: Making up the 50th percentile, with a median net worth of approximately $281,000, this group usually includes home equity, retirement savings and a 401(k) plan. Upper Middle-Class Retirees: These retirees possess a net worth between $201,800 and $608,900.
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.)
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.
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.
As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient.
The average American spends $4,345 per month in retirement, according to the Bureau of Labor Statistics. That's $52,141 per year.
$2.6 million
That lofty sum represents the net worth of the median American family in the upper 10% of income, a range that most of us would deem wealthy.
When it comes to saving for retirement, the common advice is to aim for $1 million. This number has been cited so often that investors may feel as if they're failing if they don't reach it. But that shouldn't be the case. In fact, statistically, just 10% of Americans have saved $1 million or more for retirement.
What Is the Average Retirement Income? The average monthly retirement income adjusted for inflation in 2023 is $4,381.25, according to a 2022 U.S. Census Bureau report. The average annual income for adults 65 and older in 2023 is $75,254 – or $83,085 when adjusted for inflation.
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
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.
A plurality of older Americans, 40.2 percent, only receive income from Social Security in retirement. Roughly equal numbers of older Americans receive income from defined benefit pensions as from defined contribution plans.
As of 2022, the median household income in the U.S. was $74,580, according to the U.S. Census Bureau. Assuming a middle-class retiree earned this salary and retired at age 65 — specifically 65 and 11 months — their Social Security benefit would be $1,867 per month.
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
Therefore, you should consider the role of home equity and mortgage payments in your real estate allocation. According to some experts, the optimal range for home equity is between 20% and 50% of your net worth. Cash flow and rental income: Cash flow is the difference between the income and expenses of a property.
After all, you'll need somewhere to live in retirement. And your family may be depending on you to keep the house. Financial advisors typically don't count house value as part of retirement income.
Household total net worth represents the total value of assets (financial as well as non-financial) minus the total value of outstanding liabilities of households (including non-profit institutions serving households).
The above chart shows that U.S. residents 35 and under have an average of $30,170 in retirement savings; those 35 to 44 have an average $131,950; those 45 to 54 have an average $254,720; those 55 to 64 have an average $408,420; those 65 to 74 have an average $426,070; and those over 70 have an average $357,920.
Looking to retire on $4 million? If you leave work at 61, the average retirement age as of the latest Gallup data, you'll have more than enough to see you through to a life expectancy of 90 or even 100. Across 29 years, $4 million could equate to a generous $11,494 a month.
Financial professionals break down the category into three classifications of wealth: High-net-worth individuals. HNWIs are people or households who own liquid assets valued between $1 million and $5 million. Very-high-net-worth individuals.