When it comes to retirement savings, hitting the $5 million mark is like joining a super club—so exclusive that less than 0.1 percent of retirees achieve it.
A small number of Americans have amassed retirement savings that most can only dream of, according to data from the Employee Benefit Research Institute based on the Federal Reserve’s Survey of Consumer Finances. Even reaching the $1 million milestone is rare, with only 3.2% of retirees achieving it.
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So who are these rare individuals with $5 million in reserves? Surprisingly, many people don’t have this goal in mind in the first place. What makes them unique is their consistent savings habits, modest lifestyle, and willingness to continue working, even if only part-time, into retirement. Discipline and smart choices build up over time.
For context, let’s talk about averages. Vanguard data for 2022 shows the typical retirement account balance for an individual age 65 and older is just $232,710. That means someone with $5 million has more than 21 times as much savings as the average retiree. Meanwhile, the median retirement savings for all U.S. households is just $87,000, according to the Federal Reserve. Half of American households do not have a retirement account, and another 22% have less than $50,000 in savings.
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This gap makes you stop and think: How are they doing it differently?
Many people who manage to save millions for retirement start saving and investing early, allowing compound interest to work its magic over decades. Consistency is also key: While employees contribute an average of 7.4% of their salary to a 401(k), and employers typically contribute 4.6%, high-net-worth individuals generally have higher savings rates.
But it’s not just about saving. These retirees often diversify their income streams through investments, rental properties or part-time employment. They are also tax savvy and use strategies to make more of their money work for them.
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The reality is that a $5 million retirement nest egg isn’t a realistic goal for most people—and that’s okay. A comfortable retirement is still within reach if you plan wisely and exercise discipline. This is where a financial advisor can play a huge role. They can help you create a personalized plan that meets your income, savings and lifestyle goals, maximizing your chances of being financially secure in retirement.
