Many people view retirement as a wonderful time, where years of hard work have hopefully led to a relaxed and financially secure life. But what does it mean to actually be wealthy in retirement? Is it just about how much money you have, or is there more to being rich in your golden years?
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A 2024 study by the National Institute on Retirement Security indicated that there’s a high level of retirement anxiety among Americans, which is exacerbated by inflation. This is no surprise as retirees (and soon-to-be retirees) grapple with the financial reality of record-high inflation over the past several years.
In a YouTube video from Holy Schmidt!, award-winning author and international speaker Geoffrey Schmidt, CPA discusses what “wealthy” means in retirement. Let’s explore the complexities of retirement wealth and help you determine which percentile you fall under.
Retirement Planning: Whether you’re planning for retirement, dealing with a significant life event or simply looking to make smarter financial decisions, a financial advisor can offer the expertise and guidance you need. Here are some compelling reasons why you should consider a financial advisor — even if you’re not wealthy.
What Is Retirement Wealth?
Retirement wealth is not simple — the concept ranges from small savings to enormous fortunes. To see where you are on this scale, you must first understand percentiles and net worth.
Figuring out wealth depends on household net worth. This number equals all assets (like homes, investments, savings) minus debts (mortgages, loans), according to the Federal Reserve Board’s survey data. Let’s take a closer look at each of the wealth groups.
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Retirement Percentiles Defined
The 20th Percentile
With a $10,000 net worth, this group struggles financially. Any assets are often offset by liabilities. Homeownership and investments are rare in this percentile.
The 50th Percentile
Valued at $281,000, this cohort leads a secure middle-class existence. Home equity and moderate nest eggs facilitate occasional luxuries and social engagements.
The 90th Percentile
With a net worth of $1.9 million, retirees in this percentile are deemed well-off, enjoying a lifestyle enriched by extensive savings and investments. This includes bucket-list travels, charitable endeavors and legacy planning.
The 95th Percentile
At $3.2 million, individuals in this percentile are firmly entrenched in the wealthy category. They have the financial freedom to engage in comprehensive wealth planning, sometimes including multiple properties, advanced investment portfolios, and professional advisory services.
The 99th Percentile
At $16.7 million, retirees here are the epitome of financial success. Their affluent lifestyles often define extravagance, from luxury travel to investments, reflecting a life of financial security and riches.
Understanding Retirement Wealth Beyond Numbers
While your net worth percentiles define your financial standing in your golden years, true retirement wealth transcends just the money in your accounts. It encompasses a sense of security, freedom, and fulfillment derived from advanced financial planning and a life well-lived.
Whether you find yourself in the 20th or 99th percentile, retirement wealth is strongly affected by wealth management, thoughtful decision-making and a clear vision for the future. By understanding where you stand on the wealth spectrum, you can chart a course toward a retirement that aligns with your aspirations and values. Are you ready to embark on the path to retirement wealth?
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This article originally appeared on GOBankingRates.com: Are You a ‘Wealthy’ Retiree? How To Tell If You’re in the 1% Without a Salary
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