A 2024 study by the National Institute on Retirement Security indicated that there’s a high level of retirement anxiety among Americans, which is exacerbated by current inflation. This is no surprise as retirees (and soon-to-be retirees) grapple with the financial reality of record-high inflation over the past several years.
In a YouTube video from Holy Schmidt!, award-winning author and international speaker Geoffrey Schmidt, CPA discusses what “wealthy” means in retirement. Let’s explore the complexities of retirement wealth and help you determine which percentile you fall under.
Retirement wealth is not simple — the concept ranges from small savings to enormous fortunes. To see where you are on this scale, you must first understand percentiles and net worth.
Figuring out wealth depends on household net worth. This number equals all assets (like homes, investments, savings) minus debts (mortgages, loans), according to the Federal Reserve Board’s survey data. Let’s take a closer look at each of the wealth groups.
Retirement Percentiles Defined
The 20th Percentile
With a $10,000 net worth, this group struggles financially. Any assets are often offset by liabilities. Homeownership and investments are rare in this percentile.
The 50th Percentile
Valued at $281,000, this cohort leads a secure middle-class existence. Home equity and moderate nest eggs facilitate occasional luxuries and social engagements.
The 90th Percentile
With a net worth of $1.9 million, retirees in this percentile are deemed well-off, enjoying a lifestyle enriched by extensive savings and investments. This includes bucket-list travels, charitable endeavors and legacy planning.
The 95th Percentile
At $3.2 million, individuals in this percentile are firmly entrenched in the wealthy category. They have the financial freedom to engage in comprehensive wealth planning, sometimes including multiple properties, advanced investment portfolios, and professional advisory services.
The 99th Percentile
At $16.7 million, retirees here are the epitome of financial success. Their affluent lifestyles often define extravagance, from luxury travel to investments, reflecting a life of financial security and riches.
Understanding Retirement Wealth Beyond Numbers
While your net worth percentiles define your financial standing in your golden years, true retirement wealth transcends just the money in your accounts. It encompasses a sense of security, freedom, and fulfillment derived from advanced financial planning and a life well-lived.
Whether you find yourself in the 20th or 99th percentile, retirement wealth is strongly affected by wealth management, thoughtful decision-making and a clear vision for the future. By understanding where you stand on the wealth spectrum, you can chart a course toward a retirement that aligns with your aspirations and values. Are you ready to embark on the path to retirement wealth?
A high-net-worth individual (HWNI) is an individual who generally has liquid assets of at least $1 million after accounting for their liabilities. 1 The term HNWI is commonly used within the financial industry to identify individuals who need tailored financial and money management services.
Even $800,000 in retirement savings doesn't necessarily mean you're wealthy — it just means you'll have enough to retire comfortably for 25 to 30 years. According to some surveys, you need at least $2 million in net worth to be considered wealthy.
The estate tax exemption amount limit is currently $13.6 million per person in 2024. My guide uses a top one percent income of $650,000 and my ideal income multiplier by age to calculate a top one percent net worth by age. By around 60, a top net worth for this age hits $13,000,000.
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.
In the U.S., it may take you $5.81 million to be in the top 1%, but it takes a minimum net worth of $30 million to be considered among the ultra-high net worth crowd. As of the end of 2023, this ultra-high net worth population is on the rise, reaching 626,000 globally, up from just over 600,000 a year earlier.
According to a 2020 working paper from the Center for Retirement Research at Boston College, the top 1% of retirees-which a retiree with $4 million in assets would fall into-can expect to pay about 22.7% in state and federal taxes.
The main measure of wealth is net worth: the total value of your household's assets (like houses and savings), minus debts (like mortgages and student loans).
Being rich currently means having a net worth of about $2.2 million. However, this number fluctuates over time, and you can measure wealth according to your financial priorities. As a result, healthy financial habits, like spending less than you make, are critical to becoming wealthy, no matter your definition.
Household wealth or net worth is the value of assets owned by every member of the household minus their debt. The terms are used interchangeably in this report. Assets include owned homes, vehicles, financial accounts, retirement accounts, stocks, bonds and mutual funds, and more.
The average net worth of someone younger than 35 years old is $183,500, as of 2022. From there, average net worth steadily rises within each age bracket. Between 35 to 44, the average net worth is $549,600, while between 45 and 54, that number increases to $975,800.
However, not a huge percentage of retirees end up having that much money. In fact, statistically, around 10% of retirees have $1 million or more in savings.
With proper planning and management, $3 million is ideal for a relaxing, financially stable retirement. That said, if, for any reason, you do want to increase your retirement savings, here are some options you can consider: Considering higher-risk investments, which also come with potentially higher returns.
However, not a huge percentage of retirees end up having that much money. In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
There are also those who have several million dollars in savings for their senior years -- but it's a really small percentage. In fact, only 0.1% of U.S. savers have a nest egg worth $5 million or more.
In order for someone to be considered an “ultra-high-net-worth individual,” they typically need to have at least $30 million worth of net investable assets to their name.
Address: Apt. 935 264 Abshire Canyon, South Nerissachester, NM 01800
Phone: +9752624861224
Job: Forward Technology Assistant
Hobby: Listening to music, Shopping, Vacation, Baton twirling, Flower arranging, Blacksmithing, Do it yourself
Introduction: My name is Nathanial Hackett, I am a lovely, curious, smiling, lively, thoughtful, courageous, lively person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
