The 5 Retirement Wealth Levels In 2026: Where Are You?

追加: 2026-05-31

[00:00:00]If you spent any time watching retirement content online, you've probably noticed that most of it sounds the same. You know, the 4% rule, diversify your portfolio, max out your 401k. And none of that is necessarily wrong. It's just that it's written for everyone, which means it's actually written for no one. Because what I've learned after almost two decades of working with retirees is that someone with 800,000 does not have the same issues as someone who has 4 million. You know, they're not even playing the same game. And the biggest planning mistakes that I'll see, it's not just getting the math wrong. It's spending enormous energy on the right answers to the wrong questions. If you're new here, my name is Justin. I own a financial planning firm in Lewisburg, Pennsylvania, where we help retirees all across the country make smarter financial decisions. So today I'm walking you through the five retirement wealth levels that I actually see in practice, what changes at each one, and which problems are actually worth your attention, just depending on where you stand. So let's get right into it. Here's why generic advice fails almost everyone. And this is what irritates me a little bit about financial content. Almost all retirement advice online is written for your hypothetical average retiree, but that person just does not exist. the the challenges for someone with 600,000 are way different from someone with 2 million, which are also very very different from someone with 8 million.

[00:01:24]So, if you're using a map that's designed for someone else's journey, you're just going to end up lost. That's not what we want. One thing to keep in mind as I go through the levels, a lot of what I cover will overlap across multiple levels, but the weight that each issue carries, that will change dramatically just depending on where you stand. Starting off with level one, under 1 million in retirement assets.

[00:01:46]And this is by far the most common American retirement. And many might assume that people at this level are struggling or can't retire. But that is not always the case at all. Some of the happiest retirees I've seen are at this level because they learn to live within their means decades ago. You know, they don't need a perfect or extravagant retirement. They just want a stable one.

[00:02:06]I'd say this level is also more nuanced, too. You know, a lot of the the success or failure here, it depends on the level of income that they have besides investment accounts and if they still have any debts that they're paying in retirement. But, you know, I've seen people retire very comfortably with assets well below the million-doll mark.

[00:02:25]I've seen couples, for example, who they may retire with a pension, social security, maybe they both have pensions and they're actually saving and accumulating money in retirement, which is a very nice problem to have. And I say at this level, Social Security is extremely important. It's not just a supplement, it's a foundation. And a lot of people will actually have to claim earlier because they need the income.

[00:02:49]They might they they might just need it to take the pressure off their investments. So maybe they want to delay, but they can't. So that's something I commonly see here. But most important here is getting your expenses really dialed in. And knowing the room that you have is a lot more critical here because there's usually less margin for error. Once you start adding more assets to the picture though, things change a little bit. The income question gets easier. But a whole different set of problems shows up leading me to level two, the 1 million to around 2.5 million in retirement assets. And I'd say this is the range that most people think of when they set a retirement savings goal.

[00:03:25]It's I I got to get to at least a million or I got to hit that 2 million mark before I retire. I find though that those in this range, they often feel like they're stuck in the middle. And this is where I think the biggest emotional tugof-war exists in retirement planning because people at this level, they usually, I'll say usually, have enough money to retire comfortably, but it's not enough where they can just stop worrying about whether a big mistake or market downturn can permanently damage the plan. You know, I've I've had one person say that they they said, "Justin, I feel like I'm the I feel like I'm the the weakest strong man at the circus."

[00:03:58]Or I had one person say, if you're a sports fan, they said, "I feel like I'm the the 12th man on an NBA roster. Just good enough to make it in the league, but I always have to feel, you know, very vigilant, you know, about keeping my spot." Um, you know, and I always think of this level as as financially successful, but psychologically uncertain. you know, internally a lot of people at this level, they feel like they're one major market downturn away, you know, from just just ruining everything. And that's why this level can quietly carry a big amount of financial anxiety. I'll also say though, this level has massive variability. So, two people with the exact same 2 million, for example, they could have completely different retirements just depending on where they live, how much they spend, you know, whether they have a pension or not. as I mentioned earlier, healthcare costs, all of those things. So, somebody living here in rural Pennsylvania with a pension is playing a very different game than somebody who might live in Southern California with no pension and maybe, you know, a $5,000 monthly mortgage payment. This is also the level where, you know, I'll see the most, you know, market panic during downturns because, again, there's enough money where, you know, losses feel very real. There's not enough to to where people feel untouchable, though. So that combination can be really dangerous emotionally. You know, people will start questioning not just their investments during bad markets, but questioning whether retiring itself was even the right decision. That's why having a good plan here and knowing, you know, what your withdrawal range is, having guard rails, that's very important here. You know, decisions made emotionally at this level that can permanently alter the entire trajectory of retirement. Health care before Medicare also catches a lot of people off guard here because someone retiring at 60 for example with two million date they'll have five years you know of health insurance cost ahead of them before Medicare kicks in and that can put a major dent in the early years of retirement if it's not planned for correctly if they have to fund the full cost. This is also where tax planning starts becoming much more meaningful.

[00:06:02]So, especially during those gap years between retirement when social security kicks on or before RMDs start coming, you know, a lot of people don't realize how unusual those lower income years can be and how valuable they are from a planning standpoint. Once we move into level three though, taxes stop being a side consideration. They start becoming one of the central planning conversations entirely. And level three is that 2.5 million to around 5 million in retirement assets. So this is where retirement planning fundamentally changes a lot. So the fear of running out of money, it usually starts going down significantly at this level. You know, if spending's reasonable and never completely though, because I, you know, I don't know that retirement anxiety ever fully disappears for people. You know, I've had people with enormous portfolios, even in the higher wealth levels that I'll get to later, they still worry about running out because that's just human nature, right? But what I see here most often is the one more year trap. So people with 3 or 4 million continuing to work even though financially they could have retired years ago. And one thing I've noticed is that the the people who are most trapped in that one more year cycle, they're often the people who were the most responsible their entire lives, you know, very disciplined savers, very hard workers, you know, the the grinders, people who always just delayed gratification. But eventually that mindset it becomes so ingrained that even when the math says you're you're financially fine even when it's obvious to someone on my end psychologically they just don't feel like they can stop and a lot of times it's not even about money at all. You know work gives them that certainty you know structure identity maybe so walking away psychologically it can feel riskier even than walking away financially. And really at this level the question starts to shift from you know can I retire to you know how how do I avoid making expensive mistakes that will blow everything up right and that's where efficiency starts really compounding tax planning becomes far more important here you know if someone has several million dollars sitting in a large pre-tax retirement account and if there's no strategy around distributions those RMDs are going to hit pretty hard later on you know this is where strategies like Roth conversions and start to become a lot more powerful. I think people oversimplify this though, you know, and look at, you know, Roth conversions is the answer to everything. You know, at this level, the the goal is not one tactic. It's coordination, right? Social security timing, when are RMDs coming, what are your tax brackets, Irma exposure, they all start interacting with one another. Another thing that starts happening here that I don't think gets talked about a lot is people become afraid to actually enjoy the money. you know they spent 30 years or more accumulating you know delaying that gratification as I mentioned before and then suddenly retirement arrives they don't know how to mentally switch gears with it you know I've I've seen people with millions here at this level continue living almost like financially deprived just because saving is such a huge part of their personality now you know they built the machine but emotionally they're still afraid to turn it on and eventually at this wealth level the conversation starts moving towards legacy gifting, family impact, how to do those things efficiently, which leads us into level four. Before we get into the next level, if any of this is hitting close to home and you want to see what a plan built around your specific level actually looks like, not just generic filler, click the link in the description below the video. It'll take you to a page where you can book some time to talk to me. If I can help, just let me know. Now, getting into level four, 5 million to 10 million in retirement assets. So at this level the odds of spending through your portfolio you during your lifetime start to become very very very low. You know for most people that that question has been answered. So the conversation starts to change again. Now it becomes you know what happens to all this money eventually and is it actually structured the way I want it to be? Am I managing it as as best as I could be? I'll bring up tax efficiency again because that becomes a massive focus here. You know a lot of people at this level they might have highly appreciated stock positions they might have concentrated business equity big real estate gains you know and or they might may have very very large pre-tax retirement balances so small inefficiencies they start turning into very large dollar amounts over time it becomes a lot more important to get the little things right. I'd say this is also where things like trust planning and estate coordination start entering the picture and becoming important because now you're you're not just planning for retirement just for yourself. You know, maybe you're planning for children for beneficiaries, maybe possible estate taxes, inheritance taxes, you know, making sure your wealth can transfer cleanly, you know, to who you want it to go to without it becoming a burden and a big painful process for your beneficiaries. One thing I'll bring up that I don't hear about a lot with people at this level is there's there's often a you could call it a loneliness around money, right? A lot of people here will realize they might have significantly more wealth than a lot of people around them and it can change relationships in subtle ways. You know, I've had some clients tell me that, you know, they realize they have, you know, a lot more wealth than their peer group and they almost feel a little bit guilty about it and they just don't know how to square that, right? And and they don't feel like they have anybody that they can talk to about it. So that that isolation can feel a little bit real.

[00:11:22]This level is also where I start seeing people make some of the biggest mistakes with investing and over complicating it for no reason. You know someone will build substantial wealth or they might come into it very quickly and then suddenly they feel like you know they need to invest like the quote rich people do. They'll think oh I I have all this money so I need to start doing all these fancy things right? they'll start putting money into these private deals or, you know, hedge funds or or these alternative investments that they barely understand. You know, most of the time what actually happens is they'll end up with portfolios that are just very expensive, illquid, a tax nightmare, and just unnecessarily complex. Listen, I can't tell you how many times someone has handed me a statement, you know, from a large firm in this scenario and it's just chaos, you know, and unwinding those mistakes without creating a giant tax problem. That becomes its own planning challenge and and that's a lot of the work that we do here. And now I'm I'm not saying that complexity is always bad, though. You know, I I think complexity it it can have its place when it's solving a specific problem. For example, those at this level might have highly appreciated stock and need to try to diversify out of it without triggering capital gains. Same with business sales. Maybe you have a very large capital gain for the year that you need to reduce. That's where strategies like maybe exchange funds where you're taking concentrated stock and diversifying it without triggering a capital gain or a 351 exchange where maybe you have a lot of different positions embedded capital gains and you need to try to mitigate that. These are things that can and do make sense for people at this level. You just have to know what the goal is and what specific problem it's solving. I'd add too that investment risk itself starts becoming almost philosophical at this level, you know? So, someone might look at, you know, 7 million and think, well, I I've already won the game, right? Why do I need to keep taking much more risk? I don't even need to play anymore, right?

[00:13:20]Others others might want the portfolio to keep growing aggressively, you know, and feel, hey, I'm not going to touch it. So neither answer is necessarily wrong. Now we're getting more into values and psychology. And when you move into level five, that becomes even more of a focus. Getting into level five, 10 million or more in retirement assets.

[00:13:39]And I realize this is pretty broad. This could be 12 million or 100 million, right? But at this level, you know, retirement income is a non-issue. you can live indefinitely on returns without ever touching your principal. That question is already answered. And like I mentioned at the end of level four, you've won the game at this level. So investment risk becomes almost entirely personal. There's really no right or wrong answer until we actually understand what really matters to you.

[00:14:04]So the real conversations at this level start to become much more personal. And something else happens here that I don't think people fully realize or appreciate unless they've actually worked with retirees at this level for a while. So, you know, a lot of people at this level, they became very wealthy through specialization, meaning they built a very successful business or maybe they owned a lot of real estate. Maybe they spent 35 years becoming very elite in one specific field. But I found that, you know, being successful in one area, it doesn't automatically translate into managing money well or managing liquidity after the fact. So, I've seen business owners sell a company for tens of millions of dollars, suddenly realize, I don't really know what to do with a lot of this money now, right? And and that uncertainty can create a a lot of paralysis. I've seen millions of dollars sitting just in checking accounts for a long time because people are terrified of making a mistake, you know, after spending decades building the wealth in the first place and they don't have a lot of confidence in what to do after because their special specialization was in another area. You know, earning wealth and managing wealth are two completely different skills. You know, building wealth often rewards concentration and aggression. Managing wealth well requires patient structure, coordination, you know, some emotional discipline. So that transition can be very comfortable or or uncomfortable, excuse me, for a lot of people. So what they need at that point isn't just better investment strategies. They need clarity all around around purpose and confidence around the decision-m. And again, there is a case for complexity as I mentioned before when it's solving specific problems. you know, the highly appreciated stock or huge capital gains I mentioned at level four are even more of an issue at this level. That's where some of those strategies I mentioned can be even more powerful. That's a lot of the work we do with people at this level. And estate planning also becomes much more of a focus here because now you're getting into potential estate tax territory. You know, you have that federal exemption. As of 2026, it's 15 million for a single individual, 30 million for a couple. If you have wealth over and beyond that, you're potentially subject to 40% estate taxes beyond that number. Then some states have their own estate taxes. Then some states like Pennsylvania have inheritance tax. So trying to figure all that out, protecting against that, that becomes a very big piece at this level too. You know, family wealth transfer matters, family governance matters, coordination between the financial plan and the estate structure that stops being optional. it starts becoming one of the biggest pieces that we work on. And this is the level two where I'll see ironically I'll see people dramatically underspending still relative to what they could safely afford. You know the question isn't you know can you afford this? It's are you using using your money intentionally in a way that adds value to your life. Some of the most meaningful conversations I have at this level involve gifting. You know, many here want to, you know, give to causes that are really important to them, you know, but they just don't know how to go about it correctly. Maybe they want to leave a legacy for their children. They want maybe they want to fund trusts for grandchildren, but the the gifting rules confuse them or they're just not sure of how it all works. So, making sure that we get this all coordinated very well.

[00:17:23]That's a big focus at this level. And, you know, many times they want to give while they're living so they can see the impact firsthand, not just after they're gone. and mapping that out efficiently is another focus. But I've watched people change completely, you know, emotionally once their money becomes connected to people and experiences instead of just a number on their statement. And that's what it's all about. And that ultimately that's what leads me to the final level, the sixth level, the one that matters the most.

[00:17:50]There's a sixth level of wealth that I didn't put on the numbered list, but ironically, it's the one that everyone at every dollar level values the most, and that is the value of your time. You know, and what I found in working with people at all these wealth levels, the wealthier that people get, the more they value time above all else, especially at the the higher 10 million and above, because they solved the money problem maybe a long time ago, and they realize that the things that they can't buy is time and their health, you know. So valuing experiences over things. Being present for the little stuff, the small stuff, the Sunday dinners, the time with your children and your grandchildren, you know, the trip that you've been putting off. You know, it's all those little things. You know, there's nothing bigger, is there? Right. So, the the the $8 million couple and the $800,000 couple, they're after the exact same thing. They want to stop trading, you know, hours for income and start spending time on what actually matters.

[00:18:50]you know, being able to take that long weekend without checking your work email or doing the things with your family that you like to do or things that are important to you. You know, that's what it's all about. That's what the money buys you in the first place. That's what retirement planning and wealth planning is really for. It's not just to optimize tax brackets or investment returns. I mean, that those things are important, but they're secondary, right? You know, wherever you fall on these five levels, that's the real question underneath it all. What do you want to do with your time? Because if the plan is not built around that answer, then it's just built around the wrong thing. And so if you want help building out a plan that's specific to you, that's structured to you, your values, and what's really going on in your life, that's the work that I really enjoy doing. Feel free to click the link in the description below the video. It'll take you to a page where you can walk through my entire retirement process, and there's some a link there to book some time with me. If I can help, just let me know. Glad to do it. Thanks for watching. See you in the next one.