What is considered wealthy in retirement?
$1 million, $5 million, $10 million
Top 2% wealth: The top 2% of Americans have a net worth of about $2.472 million, aligning closely with the surveyed perception of wealth. Top 5% wealth: The next tier, the top 5%, has a net worth of around $1.03 million. Top 10% wealth: The top 10% of the population has a net worth of approximately $854,900.
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.
| Age Range | Median Net Worth | Average Net Worth |
|---|---|---|
| 55-64 | $212,500 | $1,175,900 |
| 65-74 | $266,400 | $1,217,700 |
| 75+ | $254,800 | $977,600 |
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.
Overall, to have a top 1% net worth in 2023 requires having at least $13 million according to the Federal Reserve. $13 million is $3 million above the ideal net worth amount for retirement based on a poll I conducted a couple of years ago that had thousands of entries.
On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.
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.
Let's break it down with a cold splash of truth. There are about 22 million people in the US sitting on a net worth of over $1 million. That might seem like a hefty squad of millionaires to you, but let's put things into perspective. That's less than 7% of the U.S. adult population, my friend.
1,821,745 Households in the United States Have Investment Portfolios Worth $3,000,000 or More.
What is a good net worth by age?
Average Net Worth by Age
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. Average net worth surges above the $1 million mark between 55 to 64, reaching $1,566,900.
Only a small fraction of retirees — around 8% to 10% — have successfully saved $1 million or more.
The average net worth considered "wealth" was $1.9 million this year, down from $2.6 million in January 2020. The average net worth for "happiness" was $1.1 million, down from last year's $1.75 million. The amount for "financially comfortable" was $624,000, down from $934,000 last year.
Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year. The top 5% of income earners make $335,891 per year.
Estimate Your Income
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. Combining these two sources of income gives this average couple a total of $5,100 per month or $61,200 in retirement income per year.
Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.
Inflation has made the cost of just about everything in the U.S. more expensive — including retirement. A new study published by Northwestern Mutual found the "magic number" that Americans believe they need in order to retire comfortably hit $1.46 million this year, the highest level on record.
You may have to rely on Social Security
Many retirees with little to no savings rely solely on Social Security as their main source of income. You can claim Social Security benefits as early as age 62, but your benefit amount will depend on when you start filing for the benefit.
To feel wealthy, Americans say you need a net worth of at least $2.2 million on average, according to financial services company Charles Schwab's annual Modern Wealth Survey.
| Age Range | Median Net Worth | Average Net Worth |
|---|---|---|
| 55-64 | $212,500 | $1,175,900 |
| 65-74 | $266,400 | $1,217,700 |
| 75+ | $254,800 | $977,600 |
How much of net worth should be in house at age 65?
The rule of thumb: A common rule of thumb for real estate allocation is to invest no more than 25% to 40% of your net worth in real estate, including your home.
Middle class: Those in the 40th to 60th percentile of household income, ranging from $55,001 to $89,744. Upper middle class: Households in the 60th to 80th percentile, with incomes between $89,745 and $149,131. Upper class: The top 20% of earners, with household incomes of $149,132 or more.
You need more money than ever to enter the ranks of the top 1% of the richest Americans. To join the club of the wealthiest citizens in the U.S., you'll need at least $5.8 million, up about 15% up from $5.1 million one year ago, according to global real estate company Knight Frank's 2024 Wealth Report.
| 2022 AVERAGE ANNUAL WAGES | |
|---|---|
| Top 5% | $170,000 to $174,999 |
| Top 10% | $120,000 to $124,999 |
| Top 15% | $95,000 to $99,999 |
| Top 20% | $80,000 to $84,999 |
| Age | Income | Net Worth |
|---|---|---|
| 20 | $25,000 | $50,000 |
| 25 | $35,000 | $87,500 |
| 30 | $50,000 | $150,000 |
| 50 | $55,000 | $275,000 |
