Are You On Track To Retire Richer Than 75% Of People? Here's The Nest Egg You'll Need To Be Considered A Wealthy Retiree

Retirement planning often involves setting financial goals and determining how much you need to save to achieve them. But how much is enough to be considered wealthy in retirement? According to a recent study by the Federal Reserve Bank of St. Louis, the median wealth of families aged 60-79 in the U.S. was $404,000 in 2022. However, to be considered wealthy, you might need to aim higher.

Geoffrey Schmidt, CPA, analyzed data from the 2019 Survey of Consumer Finances (SCF) to determine the household net worth needed at age 65 or older to reach various percentiles of wealth in the U.S. To be considered wealthy, you would need a household net worth of $3.2 million. This level of wealth allows you to worry less about day-to-day financial planning and start thinking about wealth planning.

But how do you build such a nest egg? Here are some strategies to help you get on track to retire richer than 75% of people:

1. Maximize your retirement accounts: Contribute the maximum amount allowed to your 401(k), IRA, or other retirement accounts. Traditional accounts reduce your taxable income now, while Roth accounts offer tax-free withdrawals in retirement. If your employer offers a 401(k) match, ensure you contribute enough to take full advantage.
2. Save a consistent percentage: Aim to save at least 10% to 15% of your income for retirement. Start with what you can afford and increase it over time. Even a small increase in your savings rate can make a significant difference in the long run.
3. Boost your income: Look for ways to increase your income, such as negotiating a raise, pursuing a promotion, or exploring side hustles. A higher income allows you to save more for retirement.
4. Control your spending: Pay close attention to your fixed costs, such as housing, car payments, and childcare. These expenses should ideally be no more than 60% of your income, leaving room for saving and discretionary spending. Small lifestyle tweaks can add up over time.
5. Invest wisely: Diversify your portfolio across various asset classes, sectors, and geographies. Consider working with a financial advisor to optimize your portfolio and make informed investment decisions.

Remember, everyone's financial situation is unique, and there's no one-size-fits-all approach to retirement planning. Focus on steady progress and making informed decisions based on your individual circumstances and goals.

In conclusion, to be considered a wealthy retiree, you would need a household net worth of $3.2 million at age 65 or older. To achieve this, focus on maximizing your retirement accounts, saving a consistent percentage of your income, boosting your income, controlling your spending, and investing wisely. By taking these steps, you can work towards retiring richer than 75% of people and securing a comfortable financial future.