When it comes to retirement savings, hitting the $5 million mark is like joining an ultraexclusive club – so exclusive that less than 0.1% of retirees manage to achieve it.
According to data from the Employee Benefit Research Institute, based on the Federal Reserve’s Survey of Consumer Finances, this tiny fraction of Americans have amassed retirement savings that most people can only dream of. Even reaching the $1 million milestone is uncommon, with just 3.2% of retirees achieving that goal.
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So, who are these rare individuals sitting on $5 million nest eggs? Surprisingly, many didn’t start with this goal in mind. What sets them apart are consistent saving habits, modest lifestyles and a willingness to keep working – even if only part-time – well into their retirement years. A mix of discipline and smart choices adds up over time.
For context, let’s talk averages. Vanguard’s 2022 data shows that the typical retirement account balance for individuals aged 65 or older was just $232,710. That means someone with $5 million has over 21 times the savings of the average retiree. Meanwhile, according to the Federal Reserve, the median retirement savings for all U.S. households sits at just $87,000. Half of American families don’t have retirement accounts and another 22% have less than $50,000 saved.
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This kind of gap makes you stop and think: What are they doing differently?
Many of those who manage to save millions for retirement start saving and investing early, letting compound interest work its magic over decades. Consistency is key too: while the average 401(k) employee contributes 7.4% of their salary, often matched by 4.6% from their employer, high-net-worth individuals typically save at even higher rates.
But it’s not just about saving. These retirees often diversify their income streams with investments, rental properties or part-time work. They’re also savvy about taxes, using strategies to keep more of their money working for them.
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The reality is that a $5 million retirement isn’t a realistic goal for most people – and that’s okay. A comfortable retirement is still within reach if you plan wisely and stay disciplined. This is where a financial advisor can make a huge difference. They can help you craft a personalized plan that aligns with your income, savings and lifestyle goals, maximizing your chances of financial security in retirement.
