Your net worth is the total of your savings, investments, and assets minus debt, and in retirement it’s one of the most accurate measures of your financial health after you stop working. Unlike income, which tends to decrease in retirement, net worth reveals how secure your finances are and where you fall into the wealth bracket.
Here are the net worth ranges for retirees so you can know whether you belong to the poor, middle class, or wealthy class.
After retirement, your economic class can be broadly divided into four distinct groups, each defined by their net worth and financial capabilities, ranging from retirees with limited resources to wealthy individuals. According to Moneywise, here are the net worth categories of poor, middle class (and upper-middle class), and wealthy people:
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Poor retiree: Poverty retirees fall below the 20th percentile and may have a net worth of about $10,000. This often comes without property ownership, forcing many to rely primarily on Social Security or minimum pensions.
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Middle class retirees: This group consists of the 50th percentile, with a median net worth of approximately $281,000, which typically includes home equity, retirement savings, and 401(k) plans.
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Middle and upper-class retirees: The retirees’ net worth ranged from $201,800 to $608,900. They have diversified assets and enjoy a comfortable retirement cushion.
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Wealthy retirees: In the 90th percentile, net worth starts at $1.9 million, a group with more financial freedom and the ability to afford luxury goods and estate planning.
Find out: How much monthly retirement income is a good amount?
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According to the Federal Reserve, the average net worth of people ages 65 to 74 is $1,794,600, more than four times the median net worth of $409,900. This significant difference is because the average level of the ultra-rich is much higher.
While $409,900 may seem like a sizable amount of savings, it doesn’t provide enough retirement income for most Americans. For example, if you invested that amount at a 5% interest rate, you would only generate $20,495 in income per year, as GOBankingRates previously reported.
Where you live and your lifestyle also play a big role in how much your money goes. In higher-cost-of-living states like California or New York, nearly $20,500 per year isn’t enough. Social Security can help, but it may not be enough.
Many financial advisors say you need at least 80% of your pre-retirement income to live comfortably. According to the Federal Reserve report, based on the U.S. median household income of $70,300, the average American needs at least $56,240.
