According to Federal Reserve data, the average retiree’s net worth is $1.79 million. Sounds impressive, right? But here’s the catch: that number doesn’t tell the whole story. A small group of ultra-wealthy individuals significantly skews the average, making it more of an illusion than a reality for most.
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The median net worth for retirees aged 65 to 74 is just $409,900 – less than a quarter of that lofty $1.79 million. And it gets worse for those 75 and older, whose median net worth drops to $335,600. These figures paint a much more realistic picture of what the average retiree is working with.
Why does this matter? While $1.79 million sounds like a comfortable retirement, $409,900 is far less than most experts recommend saving for retirement. In reality, not everyone has a million stashed away; only about 10% of retirees reach this milestone.
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Financial advisors often recommend saving at least 10 times your annual salary by age 67 to maintain your lifestyle in retirement. They suggest benchmarks to get there: save 1x your salary by 30, 3x by 40, 6x by 50 and 8x by 60. For example, if you earn $100,000 a year, you should ideally have $300,000 saved by 40 and $1 million by 60. Compare this to the median net worth of retirees and most Americans are falling behind.
The reality is even starker when you look at the broader population. Nearly half American households have no retirement savings at all. For those who do, the average 401(k) balance for people nearing retirement (ages 60–69) is just $182,100, according to Vanguard data. Even among diligent savers, these numbers fall well short of the 6x or 8x benchmarks recommended by experts.
A median net worth of $409,900 might seem like a solid foundation, but it doesn’t stretch as far as you hope. For instance, if you invest it and generate a 5% return, that’s about $20,500 annually. Add in Social Security, which averages around $20,000 annually and your total is roughly $40,500 annually.
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In a low-cost area, this might be manageable – but it’s far from luxurious. Add in inflation, rising health care costs and the unexpected, like needing long-term care and it quickly becomes clear that $409,900 is not enough.
