And if you're aiming for the $2 million club? Well, the number of those who make it is even smaller. We're talking about a sliver of a sliver – somewhere between that 3.2% and the razor-thin 0.1% who've got $5 million or more.
You retire at 55 – With an estimated life expectancy of 90, you need 35 years of income. Across those years, $2 million could equate to approximately $57,143 annually or $4,762 monthly.
The answer depends on various factors such as your lifestyle, location, and expected expenses. If you plan on living modestly, $2 million might be enough to retire at 60. However, for those with higher expenses or dependents, it may not be sufficient.
If you guessed "very few," you're right. Less than 1% of retirees hit this milestone, according to data from the Federal Reserve and the Employee Benefit Research Institute. To put that into perspective, even saving $1 million is a challenge – only 3.2% of retirees manage that.
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.
That's about 6% of the population. So if there's 100 people standing in front of you, 6 of them might have $2M and you won't even know.
Yes, it is possible to live off the interest of $2 million, but it depends on your lifestyle, expenses, and how the money is invested. If you were to invest in a diversified portfolio with an average return of 4%, you could generate around $80,000 annually in interest.
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.
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. That's up slightly from $2.2 million, compared with last year's survey results.
As the phrase goes, “That depends!” If your portfolio averages a 4% return every year and your expenses stay static, $2 million should last a lifetime, no matter how many years that is.
For example, the actuaries at Social Security publish a table that shows the expected remaining years of life at various ages. According to their table, for instance, the average remaining lifespan for a 65-year-old woman is 19.66 years, reaching 84.66 years old in total.
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).
Meanwhile, a $2 million retirement account will provide you 25 years of $80,000 in annual income -- based on the 4% retirement rule. In general, the rule says that you should only withdraw up to 4% of your retirement savings each year, and adjust for inflation annually, to make your savings last for about 30 years.
What Is the Average Net Worth at Retirement? According to recent data from the Federal Reserve, the average net worth for those aged 65 to 74 was $1,794,600, which is more than four times the median net worth of $409,900. This significant difference is because the super-wealthy skew the average much higher.
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 Wealth and Society, while there aren't any legal definitions of wealth, there are some widely accepted ranges: High Net Worth Individuals (HNWI) have an investable net worth of $1 million to $5 million. Very High Net Worth Individuals (VHNWI) have an investable net worth of $5 million to $30 million.
According to recent data from the Federal Reserve, a net worth of at least $3,795,000 places you among the coveted top 5% of U.S. households. While this may seem like a substantial sum, it pales compared to the ultra-affluent's stratospheric wealth.
While $2 million significantly exceeds the average retirement savings in the US, it can indeed provide a comfortable and fulfilling retirement. For example, retiring at 50 with $2 million could potentially yield an annual income of $50,000.
For simplicity's sake, let's assume your portfolio of bonds, certificates of deposit (CDs), cash and dividend stocks will average a 4% return per year. Now, take your desired annual income of $60,000 and divide it by the interest rate (0.04). The result would be a savings goal of $1.5 million.
A retirement fund of $2 million can generate approximately $6,666 per month. However, if your retirement plans include activities like extensive travel abroad, you may require a higher monthly income. Additionally, your life expectancy should also be considered when planning your finances for retirement.
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).
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.