A professional financial advisor can help you set and achieve realistic wealth goals for retirement. But if you’re one of the 73% of Americans who doesn’t use an advisor, per YouGov, figuring out how much you need might be a challenge.
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The most recent Federal Reserve data suggests retirement-aged groups — those who are in the 55-to-64 age group and 65-to-74 age group — have a median net worth of $364,270 and $409,900, respectively. However, net worth may not be the best indication of retirement readiness. Read on for more details.
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According to a 2024 MassMutual study, the average American retires at age 62, which is earlier than the full retirement age of 67 for anyone born in 1960 or later, per the Social Security Administration.
According to the Federal Reserve’s most recent Survey of Consumer Finances, for 2022, Americans ages 55 to 64 had a median net worth of $364,270. However, the median increased to $410,000 for the 65-to-74 age group. The average of the medians for the two age groups works out to about $387,000.
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Net worth is an accurate measure of wealth, but it doesn’t take into account your expenses in retirement. Nor does it tell you how much cash you have available to pay those expenses.
Say, for example, you’ve paid off your home and have $400,000 in equity, plus $200,000 in retirement savings and no debt. Your net worth would be $600,000, which is well above the median, but only $200,000 of that would be available to cover living expenses — unless you borrowed against your equity or downsized to a less expensive home.
If, on the other hand, you had $200,000 in equity, owed $200,000 on your mortgage and had $600,000 in retirement savings, your net worth would still be $600,000. But you’d have a $600,000 nest egg to carry you through retirement. Compounding returns on the unused portion of your savings might be more than enough to offset your mortgage payment.
“In retirement, net worth takes a back seat to income, but income does come from assets,” Kelly Gilbert, principal fiduciary advisor at EFG Financial, told U.S. News & World Report.
Fidelity recommends having 12 times your salary saved for retirement at age 65, 10 times your salary saved to retire at 67 or eight times your salary saved to retire at age 70.
