Average retirement savings is a popular topic. But, new analysis using the Survey of Consumer Finances (SCF) data reports on what it takes to be in the top 1%, 5%, 10%, and 50% of wealthiest retirees. Scroll down to see how you compare.
Before taking a look at what it takes to be among the wealthiest of retirees, let’s first understand how to define wealth.
There are different measures of wealth with the most popular being: income, savings, and net worth. Of those three, net worth is considered to be the most accurate or all encompassing measure. It is defined as the total value of all assets minus the total value of all liabilities.
Other factors that are important to consider are age or how “retirement” is being defined and whether you are measuring household or an individual’s wealth.
How is “retirement wealth” defined?: When talking about wealth in this article, we are referring to: Net worth by household (not individual) for people who are over 65 years of age (regardless of whether they are working or not).
To be among the wealthiest retirees, it takes millions. However, it might be less than you think.
To be in the top 1% for retirement wealth, you need to have a net worth $16.7 million
The top 5% have an average of $3.2 million
The wealthiest 10% have $1.9 million
Retirement wealth drops significantly from there.
The top 50% have an average net worth of $281,000
And, the poorest 20% have an average net worth of $10,000
You might think that the wealthiest retirees are trust fund heirs or high powered senior executives. However, the reality is that most wealthy retirees are regular people who had regular jobs. They just saved diligently and invested wisely over a long period of time.
What do wealthy retirees look like?
A large research study found that:
The top five professions for millionaires are engineers, accountants, teachers, managers, and attorneys.
They are college educated, but most graduated from public universities and state schools
Only 20% of the millionaires received an inheritance
A mere 15% of millionaires were in senior leadership when they were working
70% earned less than $100,000 a year on average when working
How do millionaires grow their net worth?
Here are five key take aways:
Millionaires used their company retirement 401k or other plan and saved as much as they could
They also saved and invested outside of their company plan
The wealthiest retirees invested broadly and did not focus on single stocks
They started saving and investing early in their careers (Although, it is important to note that it is never too late. See 28 ways to grow wealth, even after 50)
Consistency was key
The average net worth of a NewRetirement subscriber is just over $3 million.
It should be no surprise that the top 5% are using the most powerful retirement planning tool available online. It isn’t just saving and investing that grows net worth. Building and maintaining a financial plan that enables you to make better financial decisions with regards to all aspects of your fiscal health is also an important factor.
It actually doesn’t matter if you are a millionaire now. It doesn’t even matter if you are on track to becoming one or not. Everyone can have a secure retirement, it just takes having a plan.
You can use the NewRetirement Planner to create or update your plan for the secure future you want. Whether that means living on Social Security alone, working past the age of 65, or retiring in your 40s.
We’ll help you develop a plan for the secure retirement you want.