How Many US Retirees ACTUALLY Have $250K or More?

[00:00:00]Finding out how many US retirees actually have $250,000 or more will shock you because the number is way smaller than what financial media wants you to believe. And that has consequences. By the end of this video, you'll know what percent have that number in retirement accounts, three crucial caveats you must understand with that number, and most importantly, what exactly this means for your retirement.

[00:00:24]I work specifically with families within 5 to 10 years of retirement with less than $2 million.

[00:00:30]And the number one thing I've noticed, almost everyone feels behind. And the main problem with that is that a lot of the time, they're not. Now, maybe you're thinking, "Look, I've used my 401k calculator. I still got a mortgage.

[00:00:43]There's no way I'm not behind." But that way of thinking may be exactly the problem. And once you understand the three critical caveats that come with how many retirees are retired with so little, that picture completely flips.

[00:00:58]The problem here is that you've been wired to think that solely your retirement account balance determines how ready you are to retire. But that's like how much gas you have in your tank directly equaling whether or not you can make it to your destination. It seems sound, but it doesn't factor in that you could fill up your tank a little bit, ride with a friend, take public transportation, and more. The difference between families who retire confidently and those who keep working unnecessarily often comes down to whether or not they understand and what we're about to walk through. I know what you might be thinking.

[00:01:34]"Daniel, I get it. The number's going to be low. I'm probably going to find out I have more than most retirees, but my situation isn't theirs. I still will need more than that." And frankly, that is probably true for you. But hang with me for a few more minutes because the number isn't the point. What the three caveats reveal after the number is the point. And it's going to change how you think about your own target. According to Federal Reserve data, specifically the Survey of Consumer Finances in 2022, we'll get to today's numbers in a second, only 19.2% of US households age 65 and up have $250,000 or more in retirement accounts, less than one in five. And here's how that breaks down. 6.7% between a quarter million and half a million dollars, 6% between half a million dollars and 1 million dollars, 6.5% a million or more. Now, that data is from 4 years ago. So, if we adjust for market growth and inflation since then, the real 2026 number is going to be somewhere between that 19.2% number and 29.1%.

[00:02:45]Why? Well, in 2022, there was another 9.9% of households age 65 and up that had between 100 and 250,000.

[00:02:55]If you assume every single one of those households moved up into the 250,000-plus bracket, which is overdoing it, but it's the ceiling, you'd land at 29.1%.

[00:03:06]So, realistically, somewhere around one in four to one in five US retirees have $250,000 or more in retirement accounts today. But, that is not telling the whole picture. You might have noticed that's just retirement accounts. In fact, that same Federal Reserve study showed, caveat number one, about 45% of households age 65 and up have income from a defined benefit pension, either from a current or a former employee. The Congressional Research Service explicitly states this is one of the main reasons older households have lower retirement account balances.

[00:03:42]They didn't need to build up big 401k balances because they had pensions. And even if that's just $2,000 a month, well, using the 4% rule, which is how much retirees can typically safely withdraw from their portfolio, you'd need about $600,000 to get that same result in savings.

[00:04:00]Think about that. A retiree with $0 in a 401k, but a $2,000 a month pension is far better than someone with $250,000 in a 401k and no pension. And that pension keeps paying for life and often the spouse's life, too. If you're finding this useful, subscribe to the channel.

[00:04:17]You have my word, you won't regret it.

[00:04:18]Caveats number two, though, that 19.2% number is not measuring net worth. So, not only is it forgetting pensions, it's also not including your home equity, your taxable brokerage accounts, your savings accounts, and more. If we zoom out to total net worth, that's everything you own minus everything you owe, same Federal Reserve 2022 data tells a completely different story.

[00:04:42]Households ages 65 to 74, median net worth was around $410,000.

[00:04:48]Households age 75 and up, median net worth was around 334,000.

[00:04:54]So, well, only about one in five retirees have about $250,000 in retirement accounts specifically, the median retiree has over 400,000 in total net worth in today's dollars. So, what does this mean? Well, if you have 350,000 in an IRA and you're renting with no additional assets or pensions, you're behind the median. If you've just got a 100,000 in an IRA, but you have a $500,000 home, you're ahead of the median. What really matters though isn't how you compare.

[00:05:26]It's can you accomplish your goals in retirement or not? We'll cover exactly how to calculate in a second, but the third and final caveat here is this study was done for ages 65 plus, not necessarily retirees age 65 plus. In the 65 to 74 band, about 73% are actually retired. In the 75-plus band, that jumps to about 92%. Close enough that we can fairly call this retiree data, but worth knowing that distinction. Now, here's the thing. If you're thinking, "This is great, but I have a hard time knowing just how much I need. And even when I do get a ballpark number, I just always feel like I'm forgetting something."

[00:06:07]Good. This is for you. Here's how you solve that. First, we need that ballpark number so we have something to stress test. Realize retirement is about your income covering your expenses, not how much you have saved. You'll need to roughly determine your expenses first, then determine how much income you'll actually have already from Social Security and pensions, rental income.

[00:06:30]Third, you're going to take that gap between those numbers, if there even is one, and multiply it by 25 to account for the 4% rule. If you want to do this exercise in much more detail, there's a free resource below.

[00:06:42]Now, the second step, and this is where we really solve your concern, is to use retirement software. If you are proficient in this, great. You can do this yourself. If not, you may consider help. I had a client, we'll call him John, and he was looking at needing around $5,000 a month to spend in retirement. Well, John had already anticipated about $3,500 a month coming in from Social Security, as well as an income annuity he purchased with a portion of his 401k that would pay him a little more than that remaining $1,500 he needed. Now, that actually won't adjust for inflation, so it's a good thing it's a little above that number, but now all he really needs to retire is enough to account for the portion of his income that doesn't adjust for inflation, which if you couldn't guess, isn't much. Part of John's problem, though, was that he wanted to know exactly how much. The reason that that was so difficult before software that we used to solve this was that he hadn't tested claiming Social security at different ages yet. He didn't know how to project what his tax picture would look like by the time RMDs kicked in and if he could do something to mitigate that. He wasn't sure how health care would impact things in more. And look, I understand if this challenges everything you've been told. You've heard for decades that you need a million dollars.

[00:08:02]Northwestern Mutual says Americans say it's almost 1.46 million to retire. And here I am showing you that close to 75% of retirees have less than $250,000 in retirement accounts. Here I am saying just a ballpark number, run it through software, and you might be shocked.

[00:08:19]It feels wrong. But here's what I want you to consider. What if the retirement industry benefits from you feeling behind? What if bigger targets mean more assets under management or higher fees?

[00:08:32]The Federal Reserve data doesn't lie.

[00:08:33]The retirees are out there. They're living. Many are doing fine.

[00:08:38]The real question is, are you willing to plan based on what your unique number is or keep chasing a number designed to make you feel stressed? And listen, you can keep chasing Fidelity's 10 times your salary benchmark or gunning to hit a million dollars. You will end up with a lot of money.

[00:08:54]Or you can run your own unique numbers.

[00:08:57]If you want to do the second one, I put together a simple one-page checklist, the three inputs you need to model your own retirement scenario and see if you're on track for your personal spending in retirement. Link is the first one in the description. It's free.

[00:09:11]Check it out below. Now that you've seen how many retirees actually have $250,000 or more and what it means for you, here's the part most people miss.

[00:09:21]Families with just half a million dollars are consistently out-retiring families with seven figures in real time. Same lifestyle, more peace of mind. In the video on screen now, I show you exactly what those families do differently and why bigger portfolios actually make retirement harder, not easier. When you watch it, you'll see why the number in your account matters way less than what you do with it. See you there.