When it comes to retirement savings, we all hear about the elusive ‘top 3%’. But how much does it cost to get there? Turns out the number might surprise you.
According to data from the Federal Reserve and the Employee Benefit Research Institute, only 3.2% of retirees have saved more than $1 million. That’s not a huge change, but it’s also not the $5 to $10 million limit that some financial gurus – like Suze Orman – claim you should live comfortably. However, if you’re dreaming of $3 million or more, you’re officially aiming for a financial VIP club that represents less than 1% of retirees.
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The numbers speak volumes
For context, the average American household’s net worth (including home equity, investments and other assets) is approximately $1.06 million. But here’s the kicker: average wealth – the point at which half of households fall below – is much lower. Translation? Most people don’t even reach millionaire status. And for those that do, most don’t feel it. In fact, a study by Northwestern Mutual found that only a third of millionaires classify themselves as “wealthy.”
Now, if you’re eyeing $4 million or more, you’re stepping into a truly rarefied realm. Less than 0.1% of retirees reach the $5 million+ mark, so $4 million likely represents an even smaller portion.
Related: It’s No Wonder Jeff Bezos Owns More Than $70 Million in Art — this alternative asset has outperformed the S&P 500 since 1995, with an average annual return of 11.4%. Here’s how regular investors get started.
Why do so few make it?
Achieving these numbers isn’t just about luck or earning a six-figure salary. It requires discipline, strategy and patience.
Here’s what the financial elite does differently:
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They start early: The magic of compound interest isn’t just a cliché; it’s a game changer.
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They are consistent: Regular contributions, even when the market is down, add up over time.
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They diversify: a well-balanced portfolio can protect against recessions and benefit from growth.
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They live below their means: nice cars and oversized houses may look good now, but they eat up future wealth.
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They avoid debt: interest payments are the enemy of savings.
Trending: Can you guess how many people retire with $5,000,000 in savings? The percentage may shock you.
Is $1 Million Enough?
This is where it gets tricky. Although €1 million puts you among the top retirees, the amount you need depends on your lifestyle, location and goals. Someone living in an expensive city like New York might find that $1 million doesn’t go as far as it does in rural Montana.
