Millionaire Status in FIRE – How Does Your Savings Stack Up?

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The Economic Policy Institute recently published some charts focusing on the state of retirement savings among working families in the United States today.  I’m not sure what they determine exactly constitutes a ‘working family’ – since most Americans live in 1 or 2 member households – but assuming the definition is reasonably broad, the data was interesting.   It showed the amount of retirement savings that had been amassed in American households in 2016:

  • Top 1% of Savers: $1.08M in retirement accounts
  • Top 10%: $274K
  • Top 20%: $116K
  • Top 30%: $50K
  • Top 40%: $20K
  • Median (50%): $5K
  • Few families below the median had any retirement savings

While many may read this as a story of the “haves” and “have nots” – but it can also be read as the path many take to FIRE.  We’ve been in all of these groups at different times of our married life & careers.

Fresh out of college, we had zero net worth and practically no retirement savings for the first couple years we were married.  While we each did start a 401k account when we started working at our first MegaCorps, we undoubtedly had a negative net worth due to significant student loans and some credit card debt.

After being married about three years, we were out of debt and bought our first house.  With the help of my parents, we had a 20% down payment to get a mortgage and had paid off all of our other debt.  Certainly by that point we had reached the “working family median” retirement savings of $5K, and our nest egg grew steadily after that. 

Our retirement savings reached $100K when we were in our early thirties – it was all in our 401k accounts.  I remember a good friend of mine from high school mentioning that his 401k had also reached $100K and we were amazed at how quickly the accounts had grown.  I would have been surprised to see that having a little more than that ($116K) puts a household in the top 20% of American’s today.

Our retirement savings (and overall net worth) grew pretty quickly after that point.  It is quite a ‘hockey stick’ of exponential growth that builds your retirement savings – if you focus on banking your raises and investing your bonuses to increase your savings rate each year.

Reaching millionaire status is certainly a big deal, but I was a bit surprised to see that having a little more than $1 million in retirement savings puts you in the top 1% of retirement savers.  Yes, $1 million dollars is an awesome amount of money, but still it just buys $40K a year in spending at a 4% withdrawal rate over a 30 year retirement.  A nice chunk of money (that could reach $65K with an average couple’s Social Security checks), but not the windfall I might have expected for someone in the ‘Top 1%’.

How does your experience line up with these benchmarks?

Image Credit: Pixabay

12 thoughts on “Millionaire Status in FIRE – How Does Your Savings Stack Up?

  1. Definitely not there yet, as in enough wealth to be in the “top 1%”, but hoping to make it some day. Then again, we are well into the 10%, which is not bad either 😉

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    • I don’t think they include everything that someone might be using to save. The foot note says IRAs, 401k, Keoghs, and other retirement accounts.

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    • Time and patience, combined with a simple investment plan adds up very quickly. It’s good to be in the top 10% of a very wealthy country.

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  2. I would note that it’s 1M in their retirement accounts alone – not net worth. Most don’t put their homes, rental properties, early retirement accessible monies, businesses, etc. in their retirement accounts – making that amount look lower. In today’s standard retirement contribution amounts: ($18k for 401k + $5500 for IRA)*2 for a spouse = $47,000/year…it’d take a few years of working/maxing contributions to get that 1M in the retirement account only. *Totally not arguing that as a whole most Americans are NOT saving enough*

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  3. I have seen these sorts of estimates before and have always been a bit skeptical. My cynical view is that these are efforts by the financial services industry to try to encourage more purchase of their products. One issue could be that they are only looking at balances in workplace plans for individual employers. To illustrate, my 401k balance at my current employer of 11 years represents less than 1/3 of our total retirement savings amassed over 30+ years.

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    • They also count IRAs (non-employer based) in their estimates, but I do think it’s good to be skeptical. Like you say, if anything they are underestimating what people have.

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  4. I think the top 1% have most of their net worth in non-retirement accounts, real estate, and other assets. My retirement accounts add up to 2% of my net worth (I’m retired, so not contributing to them anymore). This data is only telling a small part of a story, at least with respect to top savers.

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