What is the average upper class retirement nest egg? Here’s a look at what the richest 20% have stashed away
You’re scrolling through social media and another friend is showing off his latest Mediterranean cruise. It’s hard not to wonder: Are they living the dream or ignoring the whole “retirement savings” thing?
If they are upper class, chances are they have the money to finance both their vacations and their future. But how much have they saved for retirement? And where are you?
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What is considered ‘upper class’?
Before we examine the numbers, it’s important to understand what “upper class” actually means.
According to Pew Research, the average income for an upper-class three-person household in 2022 was $256,920. However, income is only part of the equation. Wealth – defined as net worth – is an important factor, especially when it comes to retirement savings.
A New York Times analysis shows that the top 20% of families have a wealth-to-income ratio of about 3 to 1. A household earning $256,920 has a net worth of about $770,760.
Now let’s compare that to data from the Federal Reserve. According to their latest Survey of Consumer Finances:
The top 10% of households have an average net worth of $2.7 million.
The next bracket (11th – 25th percentile) has a median net worth of just over $790,000.
So whether you use income or wealth as a benchmark, the upper class is miles ahead of the national average.
Trending: Many use this retirement income calculator to check if they’re on track –here’s an overview of what’s behind this formula.
The average retirement savings for the upper class
When it comes to retirement savings, the upper class does not disappoint. According to data from The Motley Fool:
The top 10% of earners have an average retirement savings balance of $900,000.
Those in the next tier (75th – 89.9th percentile) have a median balance of $269,000.
Because the upper class typically includes the top 20%, a reasonable estimate of their average retirement savings is between $400,000 and $500,000. Although exact figures are not available for the entire group, their savings are well above the national median:
Median retirement savings for all U.S. households: $87,000.
Households under 35: only $18,800.
If your retirement savings are in the six figures, you’re closer to the upper-class average than most people. If not, there is still time to improve your game.
How do the richest 20% collect so much more for their pension? It’s not just about higher salaries. This is what sets them apart:
Higher incomes = greater savings: Yes, they earn more, but they also save more.
Investing like professionals: The richest 10% control nearly 93% of the stock market, using long-term growth to their advantage.
Consistent Saving Habits: It is not sporadic. For them, saving is a disciplined, ongoing process.
Maximizing Tax Benefits: From 401(k)s to IRAs, they know how to use the system to their advantage.
Access to financial advice: With professional guidance, they make smarter, more strategic financial decisions.
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How can you close the gap?
If your retirement account isn’t where you’d like it to be, don’t panic. Here are some practical steps to build your savings:
Start saving today: even small contributions can grow thanks to compounding.
Max Out Employer Matches: It’s essentially free money – don’t leave it on the table.
Open an IRA: Traditional or Roth, these accounts add flexibility to your savings plan.
Diversify your investments: stocks, bonds, investment funds – spread your risk.
Increase your savings rate: If you get a raise, increase your contributions.
Catch-up contributions: If you’re over 50, take advantage of higher contribution limits.
Comparing your retirement savings to the upper class can seem intimidating, but don’t let it overwhelm you. The key is not in achieving a magic number, but in making steady progress. Start where you are, make smart decisions and focus on building a retirement fund that supports your goals.
After all, the real dream isn’t just offering a Mediterranean cruise – knowing you’ll feel comfortable long after the vacation photos are posted.
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