Here’s What a $1 Million Retirement Looks Like in America (2024)

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Here’s What a $1 Million Retirement Looks Like in America? ›

Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.

In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.

A $1 million retirement account gives you around $40,000 per year for the first few years of your retirement. Once Social Security kicks in, this will give you on average anywhere from $65,000 to $95,000 per year depending on your lifetime earnings and when you began collecting benefits.

Historically, the stock market has an average annual rate of return between 10–12%. So if your $1 million is invested in good growth stock mutual funds, that means you could potentially live off of $100,000 to $120,000 each year without ever touching your one-million-dollar goose. But let's be even more conservative.

In some states, like Mississippi and Oklahoma, a $1 million retirement fund would last about 22 years. In other states like New York and Hawaii, which already have high cost of living expenses, the $1 million retirement fund would last less than 15 years.

According to Schwab's 2023 Modern Wealth Survey, Americans perceive an average net worth of $2.2 million as wealthy​​​​. Knight Frank's research indicates that a net worth of $4.4 million is required to be in the top 1% in America, a figure much higher than in countries like Japan, the U.K. and Australia​​.

Average Net Worth by Age

Average net worth surges above the $1 million mark between 55 to 64, reaching $1,566,900. Average net worth again rises for those ages 65 to 74, to $1,794,600, before falling to $1,624,100 for the 75 and older group.

This number has been cited so often that investors may feel as if they're failing if they don't reach it. But that shouldn't be the case. In fact, statistically, just 10% of Americans have saved $1 million or more for retirement. Don't feel like a failure if your nest egg isn't quite up to the seven-figure level.

1,821,745 Households in the United States Have Investment Portfolios Worth $3,000,000 or More.

What is the 4 rule in retirement? ›

The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.

This rule is based on research finding that if you invested at least 50% of your money in stocks and the rest in bonds, you'd have a strong likelihood of being able to withdraw an inflation-adjusted 4% of your nest egg every year for 30 years (and possibly longer, depending on your investment return over that time).

While retiring at 55 with $1 million may be possible, it requires planning and a watchful financial eye. "Most people are living into their 90s, so the $1 million will have to last 35-plus years," says Aviva Pinto, managing director of Wealthspire Advisors in New York City.

Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.

Out of all 50 states, the Sunshine State topped WalletHub's list of best states to retire, but with Florida's considerably high cost of living -- some might wonder why it's still the favorite among retirees. Get South Florida local news, weather forecasts and entertainment stories to your inbox.

Financial planners often recommend replacing about 80% of your pre-retirement income to sustain the same lifestyle after you retire. This means that, if you earn $100,000 per year, you'd aim for at least $80,000 of income (in today's dollars) in retirement.

Top 2% wealth: The top 2% of Americans have a net worth of about $2.472 million, aligning closely with the surveyed perception of wealth. Top 5% wealth: The next tier, the top 5%, has a net worth of around $1.03 million. Top 10% wealth: The top 10% of the population has a net worth of approximately $854,900.

Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.

Let's break it down with a cold splash of truth. There are about 22 million people in the US sitting on a net worth of over $1 million. That might seem like a hefty squad of millionaires to you, but let's put things into perspective. That's less than 7% of the U.S. adult population, my friend.

The number of adults with assets of more than $1 million fell from 62.9 million at the end of 2021 to 59.4 million at the end of 2022, according to the UBS's annual wealth report—and it's the sharpest fall since the 2008 financial crash.