Percentage of U.S. Retirees Who Are Millionaires

How you can join this elite group, too.

A man stands at the wheel of a large and luxurious sailing yacht with the sun setting behind him.
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Remember when being a millionaire was a big deal? With the median household income of the average retiree sitting at about $48,000 per year, being a millionaire retiree is an impressive accomplishment. 

But how many retirees can wear that badge of honor? Fewer than you might think given the raging bull market Wall Street has been in over the past decade.

One in Six Retirees Are Millionaires, on Average

According to a report published by United Income, an online investing firm, one out of every six retirees is a millionaire, but there are some caveats with this number.

First, the average wealth among all retirees is $752,000. Second, this lofty sum is the average wealth of all retirees. The median wealth of all retirees is $200,000.

Why such a difference between the average and the median? Because relative high net worth millionaires and billionaires skew the average higher. The median, which is the figure exactly in the middle of the range, isn’t affected by the outliers as much, meaning that a larger number of people are at the lower end of the income spectrum than the higher.

While the data show one in six are millionaires, they also show that a much larger number—five in six—are not.

The Wealth and Health News Is Still Good for Retirees

But let’s move past the depressing news. The same report found that net worth among retirees has doubled since 1989 and the rate of retired millionaires has doubled in the past 30 years. Further, fewer people are retiring in poverty and since 1900, the average life expectancy of a 60-year-old has increased by almost nine years.

Even better? Retirees now living longer are also living healthier. Those without mental or physical limitations has increased from 49% in 1960 to 62% in 2016. And what are retirees doing with all the extra time? Mostly watching more television—about 4.5 hours per day in 2012, up from 3.0 hours per day in 1975.    

How Can You Become a Millionaire Retiree?

You may have heard of the “retirement number” or the “magic number”—the amount of savings you must have put away to support you in retirement. Over at Dave Ramsey’s blog, financial expert Chris Hogan calculated a typical retirement number based on government data. According to the Bureau of Labor Statistics (BLS), American households close to retirement spent about $61,000 per year in 2016, the most recent year for which the BLS has data.

If you want to hold on to that same lifestyle, you will spend approximately $5,100 per month. That means, according to Hogan’s calculation, that you will need about $1.3 million socked away to generate the required income, assuming moderate returns from investments and a typical withdrawal rate.

Of course, your magic number will be different depending on market conditions, your specific financial situation, and whose calculator you use, but regardless, the point is still the same. If you’re a few decades from retirement, you can’t see $1 million in retirement savings as your ticket to living the lavish life. Instead, it might be a necessity for living a comfortably average life.

So how can you reach the millionaire club?

Pay Off Your Mortgage

Over half of people ages 55-64 still have a mortgage, according to the BLS. Remember that $61,000 per year in expenses for the nearly retired? Around $12,000 of that annual figure consists of mortgage payments, on average. Removing your mortgage payment is a game changer for your financial quality of life.

Keep Working

The United Income report pointed out that the richer a retiree is, the more TV they watch. This is a growing trend that the authors point out could lead to cognitive and physical issues due to the sedentary lifestyle it creates.

Not only does continuing to work, even part-time, help with the financial burden of retirement, it may also address the body’s need to remain mentally and physically active.

Remain Aggressive

Never act on general financial advice without talking to a professional that can evaluate your personal finances, but the traditional advice to invest conservatively once you reach retirement might not be the best advice. Retirees can often take on more risk than they may think. However, don’t go the other way and take on outsized risk to try and catch up your contributions heading into retirement.

Downsize

Do you have an emotional connection to your large house that once was home to your multiple children? Are you holding out hope that the grandchildren will want a place to stay during their frequent visits? The sentiment is understandable but the older you get, the more you’ll camp out in only a few rooms of your home. The rest of the home becomes a burden to maintain. 

Sell your home that’s already paid off, or sell it to get rid of the payment, purchase a smaller home for less money, invest your gains in your retirement account and now you have less house to maintain, and more financial cushion to live on.