When it comes to retirement savings, reaching the $5 million mark is like joining an ultra-exclusive 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 small portion of Americans have built up retirement savings that most people can only dream of. Even reaching the $1 million milestone is unusual, with only 3.2% of retirees meeting that goal.
Don't miss:
So, who are these rare individuals sitting on $5 million nest eggs? Surprisingly, many did not start with this goal in mind. What sets them apart is their consistent savings habits, modest lifestyle and willingness to continue working well into their retirement years, even if only part-time. A mix of discipline and smart choices adds up over time.
For context, let's talk about averages. Vanguard's 2022 data shows that the typical retirement account balance for those age 65 or older was just $232,710. That means someone with $5 million has more than 21 times as much savings as the average retiree. Meanwhile, the average retirement savings for all U.S. households is just $87,000, according to the Federal Reserve. Half of American families do not have a retirement account and another 22% have less than $50,000 saved.
See also: The number of '401(k)' millionaires is up 43% from last year — Here are three ways to join the club.
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 also critical: While the average 401(k) employee contributes 7.4% of their salary, often supplemented by 4.6% from their employer, wealthy 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 are also knowledgeable about taxes and use strategies to make more of their money work for them.
Trending: Deloitte's Fastest Growing Software Company Partners with Amazon, Walmart & Target – Last chance to get 4,000 pre-IPO shares for just $0.26/share!
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 your reach if you plan wisely and stay disciplined. This is where a financial advisor can make a big difference. They can help you create a personalized plan that meets your income, savings and lifestyle goals, maximizing your chances of financial security in retirement.
