Are You On Track To Retire Rich? Here's The Nest Egg You Need To Be Considered a Wealthy Retiree

Retirement planning feels like solving a puzzle with half the pieces hidden. You know you're supposed to save, but how much is enough to secure a comfortable – or even wealthy – retirement? Here's what you need to know to set yourself on the right path.

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What Does It Mean to Be "Wealthy" in Retirement?

In retirement, "wealthy" is more about peace of mind than yachts and fancy cars. It means having enough to enjoy life without worrying about outliving your money. Financial experts often define a "wealthy" retirement as having $1 million or more in net retirement assets, excluding your primary residence. This means investments, savings and property – minus any outstanding debts.

According to a 2024 survey from Northwestern Mutual, most Americans believe they need an average of $1.46 million to retire comfortably. But the actual average retirement savings? Just $88,400. That gap shows many Americans are far from feeling financially secure about their golden years.

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Where Do You Stand? Average Retirement Savings by Age

Curious if your retirement savings are on track? Here's what the 2022 Federal Reserve Survey of Consumer Finances says the average savings look like at each age range:

Under 35: $49,130

35 to 44: $141,520

45 to 54: $313,220

55 to 64: $537,560

65 to 74: $609,230

75 and over: $462,410

These numbers reflect an increase in savings with age but are still well below that ideal $1.46 million benchmark. Only 10% of people approaching retirement have at least $1 million in their retirement accounts, according to The Pew Charitable Trusts.

What Wealthy Retirees Have Saved

The numbers are a bit higher to be in the top 10% of retirees by net worth. According to a Motley Fool report, the median retirement account balance among this group is $900,000 and the average balance is close to $1.3 million. So, if you're aiming to join the "wealthy retiree" club, a seven-figure nest egg is a realistic goal.

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Factors That Will Shape How Much You Need for Retirement

Retirement looks different for everyone and your circumstances and goals shape the amount you'll need. Here are some key areas to keep in mind as you estimate your retirement savings needs:

Lifestyle Expectations: Think about the kind of retirement you envision. Maybe you're planning a more local, low-key lifestyle or hoping to travel regularly or pick up new hobbies. The more you want to do, the larger nest egg you'll need to fund those experiences comfortably.

Health care Costs: Unfortunately, health care often becomes a bigger expense with age and those costs can add up fast. Medicare can help, but it doesn't cover everything, so it's wise to set aside additional funds for medical expenses that might come up.

Life Expectancy: It's hard to predict, but if your family tends to live well into their 90s or you're in great health, you may want to plan for a longer retirement.

Inflation: As prices rise over time, your purchasing power can decrease. For instance, with an average annual inflation rate of 3%, the cost of living could double in about 24 years.

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Tips to Build a Wealthy Nest Egg

No matter where you're starting, these tips can help you build a stronger retirement fund:

Start Early: The sooner you save, the more time your money has to grow. Compound interest is your best friend in retirement planning.

Max Out Contributions: Maximize your retirement accounts, such as 401(k)s and IRAs. Starting in 2025, those aged 60 to 63 can make a "super catch-up" contribution, allowing $34,750 in their 401(k)s.

Diversify Investments: Spread your investments to help manage risk and get more consistent returns.

Live Within Your Means: Managing your spending now leaves more room for retirement savings.

Saving for retirement is less about hitting a magic number and more about creating a lifestyle you'll be happy with when you stop working. If you're unsure what that looks like or how much you'll need, talking with a financial advisor can help you set realistic goals and build a plan that feels right.

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This article Are You On Track To Retire Rich? Here's The Nest Egg You Need To Be Considered a Wealthy Retiree originally appeared on Benzinga.com