Are You Among the Wealthiest 5% of Retirees?

Editor’s Note: This story originally appeared on NewRetirement.

Average retirement savings is a popular topic.

But new analysis using the Survey of Consumer Finances (SCF) data reports on what it takes to be in the top 1%, 5%, 10%, and 50% of wealthiest retirees.

Read on to see how you compare.

Defining Retirement Wealth

Before taking a look at what it takes to be among the wealthiest of retirees, let’s first understand how to define wealth.

There are different measures of wealth with the most popular being income, savings, and net worth.

Of those three, net worth is considered to be the most accurate or all-encompassing measure. It is defined as the total value of all assets minus the total value of all liabilities.

Other factors that are important to consider are age or how “retirement” is being defined and whether you are measuring household or an individual’s wealth.

How is “retirement wealth” defined?

When talking about wealth in this article, we are referring to net worth by household (not individual) for people who are over 65 years of age (regardless of whether they are working or not).

What Does It Take to Be Among the Wealthiest Retirees?

To be among the wealthiest retirees, it takes millions. However, it might be less than you think.

• To be in the top 1% for retirement wealth, you need to have a net worth $16.7 million.
• The top 5% have an average of $3.2 million.
• The wealthiest 10% have $1.9 million.

Retirement wealth drops significantly from there.

• The top 50% have an average net worth of $281,000.
• And the poorest 20% have an average net worth of $10,000.

Who Are the Wealthiest Retirees?

You might think that the wealthiest retirees are trust fund heirs or high powered senior executives.

However, the reality is that most wealthy retirees are regular people who had regular jobs. They just saved diligently and invested wisely over a long period of time.

What Do Wealthy Retirees Look Like?

A large research study found that:

• The top five professions for millionaires are engineers, accountants, teachers, managers, and attorneys.
• They are college educated, but most graduated from public universities and state schools.
• Only 20% of the millionaires received an inheritance.
• A mere 15% of millionaires were in senior leadership when they were working.
• 70% earned less than $100,000 a year on average when working.

How Do Millionaires Grow Their Net Worth?

Here are five key takeaways:

• Millionaires used their company retirement 401(k) or other plan and saved as much as they could.
• They also saved and invested outside of their company plan.
• The wealthiest retirees invested broadly and did not focus on single stocks.
• They started saving and investing early in their careers. (Although, it is important to note that it is never too late. See 28 ways to grow wealth, even after 50.)
• Consistency was key.