The Percentage of Americans With $5M Saved for Retirement, Revealed

When you think about how much you need to retire to be comfortable, for most Americans, $5 million probably isn’t the number that comes to mind. Having this amount or more would be welcome, but it’s unlikely to be a number at the top of most people’s minds. 

Instead, it is much more likely that most Americans are focused on having at least $1 million in retirement funds available. Of course, the more money you have, the better, which begs the question of how many Americans have at least $5 million available to retire. 

The $5 Million Magic Number

According to data from the Employee Benefit Research Institute, which bases its data on information from the Federal Reserve’s Survey of Consumer Finances, the number of Americans with at least $5 million is far smaller than most people might think. 

In fact, just 0.1% of all Americans have at least $5 million in retirement savings. What’s even more shocking is that only 3.2% of Americans have $1 million in retirement savings, both equally small and concerning numbers. 

This means that if you were standing in a room with one thousand people, only one person in that room would have at least $5 million available. This is a pretty big disparity in wealth, and it all leads directly to a question of how to get that number.

How Do You Get $5 Million? 

If you are one of the 0.1% of Americans who have managed to set aside $5 million for retirement, countless others are wondering exactly how you did it. The answer is that most people who get to this level do it with high-income careers, all while living modest lifestyles, and setting aside a good portion of their income into things like ETFs, mutual funds, and well-performing stocks. 

Why Does $5 Million Matter? 

At a $5 million retirement level, you are likely in a good enough place to live on at right around $200,000 pre-tax. Living by the popular guideline of the 4% safe withdrawal rate should give you this dollar amount per year to live on without running out of money over a 30-year period. 

While you have to account for inflation in your withdrawals, the hope is also that the principal is earning money over the same period. This likely means you might not need to contribute another dollar and still have around $16,667 per month or $200,000 to live on annually. 

Combined with Social Security and potentially other income sources, this makes the $5 million mark a truly magical number for Americans to retire comfortably and live with a little bit of luxury. As far as Social Security, you can get the maximum dollar amount at 70 years of age, which is equivalent to $5,108 per month. 

This would now give you $261,296 to live on annually once you hit 70 years of age, assuming you started your retirement anytime after 40. There is no question that you can live very comfortably at this level, which is a pretty consistent theme with the $5 million retirement goal. For the 0.1% of Americans who will achieve this number, there is plenty of travel, dining out, hobbies, and even a sizable home in their future. 

According to Fuchs Financial, the $5 million is a massive jump in lifestyle compared to the average retirement savings of around $210,724 for someone in their 60s. This number reveals just how large a gap there is between high earners and a more middle-class savings level. 

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