Many Americans fantasize about retiring affluent, but few actually achieve it. According to Federal Reserve data given by Synchrony Bank, adults aged 55 to 64 have a median retirement savings of $134,000. The median for people aged 65 to 74 is $164,000. Both values are significantly lower than the minimum recommended by many financial consultants, which is $700,000 to $800,000.
Even $800,000 in retirement savings does not necessarily imply that you are wealthy; it simply indicates that you will be able to retire comfortably for 25-30 years. According to some assessments, being wealthy requires a net worth of at least $2 million.
So, how can you know whether you’re going to retire wealthy? Here are a few signs:
You make your savings work for you: The path to retirement wealth begins well before retirement. People who retire with some wealth have some behaviors. Almost all of them have one thing in common: they want to get the highest return on their investment. This involves looking for savings accounts with the best rates. Digital banks, such as Jenius Bank, often offer the best rates. The Jenius Savings Account offers a 5.25% APY¹, 11 times the national average². There is no minimum balance requirement and all deposits are guaranteed by the FDIC up to $250,000³. Better better, Jenius does not impose fees for its savings accounts.
You Are Already Wealthy: This may seem simple, but being wealthy as you approach retirement is about the most reliable indicator that you will retire rich. A lot depends on your income and where you reside. If you earn roughly $300,000 per year in low-cost areas like Mississippi and West Virginia, you can be in the top 5% of earners. However, more expensive jurisdictions such as California, Maryland, Massachusetts, and New Jersey require an annual income of $500,000 or more. Although being wealthy before retirement is a good indicator of future wealth, it is not a guarantee. Rich people, like everyone else, make financial blunders, and the wrong investment can quickly empty your savings. Once you have accumulated wealth, the ideal plan is to limit risks that could threaten it.
You have no debt: Wealth is more than just possessing a huge bank account and a lot of valuable assets; you should also maintain your debt to a minimum. Having $10 million in cash and assets won’t help you if you owe $12 million. One clear sign that you will retire affluent is that you have paid off your mortgage, vehicle loans, student loans, and other debts.
Surround yourself with the right people: The great majority of Americans lack skills in the several financial sectors that can lead to wealth. You engage with personal financial counselors, tax specialists, stock experts, investment managers, and other money experts on a regular basis, which is one indication that you will retire affluent. Financially knowledgeable individuals frequently seek advice and ideas from successful experts.
You built retirement savings based on your expected lifestyle: Retirement money means different things to different people, but for the most part, it means enjoying some of life’s luxuries. Another clue that you’ll retire affluent is that you’ve saved enough money to fund your desired post-retirement hobbies, such as extended travel, living overseas, purchasing a vacation home, joining a country club, or donating to preferred organizations.
You have a diversified portfolio: The adage “don’t put all your eggs in one basket” has been around for a long time, but it remains as accurate now as it was when it was originally stated. A balanced portfolio ensures that your investments are distributed across multiple asset classes, lowering risk and increasing the potential for significant returns. A well-balanced portfolio of savings accounts, equities, bonds, mutual funds, and other investments indicates that you will retire affluent.
You no longer need to support your adult children: Suze Orman and other financial gurus recommend that you quit financially supporting your adult children if you want to have a comfortable retirement. The idea here is to put more of your income into retirement accounts so you may accumulate a big nest egg. If you are free of unnecessary family financial responsibilities, your wealth will remain in your own accounts when it is time to retire.
You won’t have to rely on Social Security: Even while millionaires and billionaires are eligible for Social Security retirement benefits if they work long enough and contribute to the system, they do not rely on them. A clear clue that you’ll retire affluent is that you’ve already decided you won’t need Social Security to support your lifestyle.
NOTE: SMBC MANUBANK owns Jenius Bank. FDIC member.
- APY is variable as of 2/13/2024 and may change at any time.
- The nationwide average rate accurately reflects the FDIC nationwide Rates and Rate Caps for Savings deposit products as of 1/16/2024.
- Maximum FDIC insurance authorized by law. For FDIC insurance limits, Jenius Bank and SMBC MANUBANK deposits are merged.