Retirement is the ultimate goal for many people, and what better way to welcome that stage of life than with a million dollars in savings? But in reality, how achievable is a seven-figure retirement account balance?
What percentage of retirees have a million dollars saved for their golden years? While it can be hard to find exact numbers due to evidence being scattered across various sources, this article will provide insight into the financial well-being of today's retirees regarding having one million saved.
Readers can expect an overview of general trends broken out by age groups and some predictions on which direction these figures may go in the future.
Overview of Retirement Savings for Retirees
Though there is no definitive answer to the question of what percentage of retirees have saved at least one million dollars, certain trends can be observed. Studies conducted by Bankrate and the Wall Street Journal both show that those who are 65 years old or older are more likely to have seven-figure savings than their younger counterparts.
The data also shows that retirement savings vary widely based on income level. Those with a higher income are more likely to have one million or more in savings, while those with lower incomes tend to have much less.
When looking at retirement savings broken out by generation, Baby Boomers (born between 1946 and 1964) had the highest savings levels at retirement age compared to the other generations.
They were found to have an average of $1.2 million saved at retirement age, followed by Gen Xers (born between 1965 and 1980) with an average of $1 million in savings, and Millennials (born after 1980) who had the lowest amount saved on average ($500,000).
What Does the Average Retiree Have Saved?
Though the exact percentage of retirees with one million in savings is still being determined, it can be inferred that most retirees have fewer savings.
According to a report from The Economic Policy Institute (EPI), the median retirement account balance for US households aged 56-61 was only $17,000 in 2018. This means half of all households saved less than $17,000 for retirement.
In addition to median retirement account balances being lower than one million dollars, most retirees also rely on Social Security as their main source of income in retirement. Nearly 90% of all retirees receive a portion of their income from Social Security benefits.
What Is the Average Retiree's Net Worth?
While the average retiree does not have one million dollars saved, they may still have considerable wealth. According to the Federal Reserve's Survey of Consumer Finances, the median net worth of US households aged 65 and older was $331,200 in 2016.
This includes liquid assets, investments, and tangible property like real estate. When looking at households headed by someone 75 or older, the median net worth increases to $675,000.
Factors Contributing to Retirement Savings Success
1. Saving Early and Often
The earlier a person begins saving for retirement, the more they will be able to accumulate over time due to the power of compound interest. Additionally, putting away small amounts regularly can add up quickly when done consistently.
2. Investing Wisely
Diversifying investments across multiple asset classes can help retirees earn higher returns on their investments. Additionally, retirees should consider investing in low-cost index funds or ETFs to reduce management fees and boost total return.
3. Taking Advantage of Tax Breaks
Retirees can take advantage of tax breaks offered by the government, such as contributions to a 401(k) or IRA. This can help lower taxable income and increase the money saved for retirement.
4. Sticking to a Budget
Creating and adhering to a budget can help retirees stay on track with their savings goals. By cutting unnecessary expenses, retirees could free up more money to contribute to retirement accounts.
5. Relying on Multiple Sources of Income
Retirees should consider ways to generate income from sources other than Social Security. This could include taking on part-time work, renting a room in their home, or starting a small business.
What Percentage of Retirees Have a Million Dollars in Savings?
Though there is no definitive answer to this question, the available data shows that most retirees still need to have one million dollars saved when they reach retirement age. With proper planning and strategizing, however, achieving a seven-figure nest egg and enjoying financial security in retirement is possible.
By saving early and often, investing wisely, taking advantage of tax breaks, sticking to a budget, and relying on multiple sources of income, retirees can work towards reaching their retirement savings goals.
With the right tools and techniques, anyone can set themselves up for financial success in retirement.
Is $1 Million Enough for Retirement?
Though having one million saved can provide cushioned retirement, the truth is that it still may not be enough for many. It is important to factor in Social Security and other sources of income, as well as life expectancy and inflation rates when calculating how much money a retiree will need for their golden years.
The best way to determine if $1 million is enough for retirement is to consult a financial advisor and create a comprehensive retirement plan.
The data shows that while having one million dollars saved at retirement age can provide much-needed security, it is more likely that most retirees will have much less when they reach this milestone.
However, retirees can work towards achieving their retirement savings goals by taking advantage of available resources and planning. Anyone can work towards a more secure financial future with the right strategies.
Strategies for Increasing Your Retirement Savings
1. Set Clear Goals
It is important to have a plan for how much you want to save and how you will go about achieving your goals. Setting clear retirement savings goals can help focus your efforts and provide motivation when times get tough.
2. Create an Emergency Fund
Having some extra money set aside in case of emergencies can reduce the likelihood of tapping into retirement savings during unplanned events.
3. Automate Contributions
Setting up automated contributions to your retirement accounts can help ensure you regularly save for the future.
4. Utilize Employer Match Programs
Many employers offer matching programs on 401(k) and IRA contributions, so take advantage of this free money to increase your savings.
5. Take Advantage of Tax Breaks
Contributing to retirement accounts such as a 401(k) or IRA can lower taxable income and potentially increase the money saved for retirement.
6. Diversify Investments
Spreading investments across multiple asset classes can help maximize returns and reduce risk in the long term.
7. Consider Other Sources of Income
Retirees should consider ways to generate income from sources other than Social Security. This could include taking on part-time work, renting a room in their home, or starting a small business.
FAQs
How many people have a million dollars to retire?
The precise number of people with a million dollars in retirement savings is hard to pinpoint, as that information is not consistently tracked or reported. However, research suggests that only a small percentage of retirees have seven-figure retirement savings.
How much money do most retirees have?
Most retirees have between $100,000 to $500,000 saved for retirement. This number depends on age and other factors such as income and lifestyle. Retirement accounts are also subject to market fluctuations, so that balances can vary over time.
Is USD 1 million enough to retire in us?
It depends on your lifestyle and other factors like inflation. A million dollars is a good starting point, but it's important to consider long-term planning and expenses when deciding if it's enough for a comfortable retirement.
Conclusion
Retiring with a million dollars in savings is achievable but not the norm. While only around a quarter of individuals aged 65 and older have a million dollars saved, those with higher incomes and more investments have the best chance of hitting that goal. No matter your age or retirement savings goals, planning and being mindful of your financial choices is the key to a successful retirement.
