What Percentage of Retirees Have $2 Million?

Financial security in retirement is a significant concern, leading to widespread interest in understanding wealth distribution among retirees. Examining the percentage of retirees who have accumulated substantial wealth, such as $2 million, provides valuable context for personal financial planning and offers insights into the economic realities of retirement.

The Current Percentage of Retirees with $2 Million

Achieving a $2 million nest egg for retirement is not common for most Americans. Based on 2022 Survey of Consumer Finances data, the Employee Benefit Research Institute (EBRI) calculated that approximately 1.8% of households had accumulated $2 million or more within their retirement accounts. This places these households among the wealthiest retirees.

While the percentage of retirees holding multimillion-dollar portfolios remains low, it is higher for those with at least $1 million in retirement savings. EBRI research indicated that 4.7% of households reached this $1 million threshold in 2022. These statistics primarily reflect funds held in tax-advantaged retirement vehicles rather than total net worth.

Understanding What Counts as Retirement Wealth

When discussing “retirement wealth” or “net worth,” specific types of assets are included. Net worth is broadly defined as the total value of all assets a household owns minus its total liabilities.

Common assets include investable assets like stocks, bonds, mutual funds, and cash accounts. Real estate equity, comprising a primary residence and investment properties, is another significant component. Retirement-specific accounts such as IRAs and 401(k) plans are also counted, alongside the cash value of life insurance policies and business equity. Defined benefit pension plans and Social Security benefits represent annuitized income streams.

Factors Shaping Retiree Financial Outcomes

Various economic and individual factors significantly influence the wealth accumulated by retirees. A consistent savings habit throughout one’s working life plays a considerable role, as does the ability to invest those savings effectively over time. The growth of these investments can substantially increase a retirement fund’s value.

Lifetime earnings are a major determinant, with higher-income individuals generally having a greater capacity to save. Economic conditions, such as periods of strong market performance and controlled inflation, can positively impact investment returns and preserve the purchasing power of savings. Conversely, unexpected healthcare costs or other major life events can deplete accumulated wealth.

How Data on Retiree Wealth is Collected

Data on household wealth, including that of retirees, is primarily gathered through large-scale surveys conducted by government agencies. The Federal Reserve’s Survey of Consumer Finances (SCF) is a key source, providing detailed information on family incomes, net worth, and retirement savings every three years. This survey employs a dual sample frame, including a standard representative sample and a supplemental sample of high-income taxpayers, to ensure accurate representation.

Another source for wealth statistics is the Survey of Income and Program Participation (SIPP), conducted by the U.S. Census Bureau. Reports from these surveys may show slight variations due to differences in methodology, scope, and the timing of data collection. Researchers and policymakers use this data to understand wealth distribution and inform economic analysis.