Is $1M the new benchmark for retirement savings?

[disneysteve]

I'm definitely abnormal and made this happen having never hit 6 figures (except the year my sick days were paid out). Granted, I also had some inheritance and lawsuit money that felt like blood money to me so I just put it away. I'm still feeling a bit cautious about pulling the plug since my spouse spends more than I, they also like to solve problems with spending more money, it's the engineering mind always looking to improve. This summer, my plan is to semi-retire and it's just the strangest thing. 91 days until my summer break which begins the part time employment. For me, it's always been slow and steady wins the race.

Good for you. I was also overly cautious about retiring which is why I took a phased approach to it. I dropped to part time work in 2021 going from 36 to 20 hours (and still picking up extra shifts fairly regularly). Then I dropped to per diem in 2022 scheduling mostly 8 hours/week to test out that budget. Finally at the end of 2024, I decided to cut back to 4 hrs/wk which I did for a month or so before finally accepting that continuing to work. was ridiculous and I gave notice in February 2024. My final day was June 8, 2024 (our contracts required 120 days notice) though my last actual day of work was May 26.

I absolutely could have fully retired a couple of years earlier and we would have been just fine but since my job offered the flexibility to basically work whenever I felt like it, I stuck with it for a while.

[Fishindude77]

If you think about it, you can retire at just about any level of savings depending upon what you want and how you are willing to live.
There are a whole lot of broke retired people that are getting by OK, primarily living off a little SS and government handouts; housing, medicaid, SNAP food cards, utility assistance, public transportation, etc. I don't recommend it, but seems like plenty are content with it.

[ua_guy]

Yeah, sadly that can be pretty common in the rural south and middle of the country where folks don't see a lot of economic opportunity and incomes are generally low. There's not a lot of opportunity to save for retirement, and I think a lot of people get caught in the doom loop. One financial emergency like a health issue begets another financial emergency, which snowballs into the next emergency, and they never recover.

[disneysteve]

If you think about it, you can retire at just about any level of savings depending upon what you want and how you are willing to live.
There are a whole lot of broke retired people that are getting by OK, primarily living off a little SS and government handouts; housing, medicaid, SNAP food cards, utility assistance, public transportation, etc. I don't recommend it, but seems like plenty are content with it.

True. My mom fits that description. Her age and income qualify her for a number of programs. She lives in a subsidized apartment where she pays under $700/month. She gets assistance for utilities. She gets reduced price “meals on wheels”. She can use Access Link which is part of NJ Transit which will take her wherever she needs to go for a couple of dollars. Through the Jewish Federation she gets a box of food staples monthly and some other stuff.

There are all kinds of programs and discounts available for seniors who qualify. It’s definitely worth exploring all of the options.

[Petunia 100]

If you think about it, you can retire at just about any level of savings depending upon what you want and how you are willing to live.
There are a whole lot of broke retired people that are getting by OK, primarily living off a little SS and government handouts; housing, medicaid, SNAP food cards, utility assistance, public transportation, etc. I don't recommend it, but seems like plenty are content with it.

Definitely. Jacob from Early Retirement Extreme initially retired on only 150k and had his living expenses down to 7k per year. Granted, it has been maybe 20 years since he did so, but that is still quite low.

[disneysteve]

Definitely. Jacob from Early Retirement Extreme initially retired on only 150k and had his living expenses down to 7k per year. Granted, it has been maybe 20 years since he did so, but that is still quite low.

There are a number of people on the early retirement forum who happily live on under 25K/year.

[srblanco7]

Of dollars and data had a post on the "$1M topic" that I found interesting. The book "The Millionaire Next Door" was first released in 1996. In order to have roughly the same purchasing power in today's dollars, you'd need $2M.

Another view of the data is that $1M net worth in 1996 would have put you in the top 5% in terms of household wealth. $1M net worth today puts you in the top 19%. To be in the top 5% today, you'd need $3.8M net worth. Summarized as over the last (almost) three decades, the rich have gotten richer.

[ua_guy]

Of dollars and data had a post on the "$1M topic" that I found interesting. The book "The Millionaire Next Door" was first released in 1996. In order to have roughly the same purchasing power in today's dollars, you'd need $2M.

Another view of the data is that $1M net worth in 1996 would have put you in the top 5% in terms of household wealth. $1M net worth today puts you in the top 19%. To be in the top 5% today, you'd need $3.8M net worth. Summarized as over the last (almost) three decades, the rich have gotten richer.

It's pretty shocking, really. The bar has been moved considerably.

I had lunch with a colleague on Friday and I learned someone we knew back when I first started my career just took a new role. He was a project manager back 15 years ago and was probably making $120k, which was good at the time. His new role? My buddy shared with me this guy's total comp is just over $1.1 Million per year.

To me that's not just good money, that's seriously good money, and it definitely is when you consider the published median household income and other data about us plebs. Or, is $1M/year the new "doing well" -but not filthy rich? We live in the land of $1M median home prices and $15k/year property taxes and 10% sales tax and $100k college tuition, and $50k average new vehicle cost, and I suppose for him: a 37% federal tax bracket. No doubt his compensation is some percentage equity and some percentage cash so what does living on $500k/year look like in an area where cost of living is extremely high? I doubt it looks "filthy rich" but I'd still say it's probably a lot better than average.

How far $1 Million doesn't go these days...

[Fishindude77]

In some areas (such as the area in Cal that just burned), that $1mil annual income is just about needed to maintain a basic standard of living.

[disneysteve]

It's pretty shocking, really. The bar has been moved considerably.

I had lunch with a colleague on Friday and I learned someone we knew back when I first started my career just took a new role. He was a project manager back 15 years ago and was probably making $120k, which was good at the time. His new role? My buddy shared with me this guy's total comp is just over $1.1 Million per year.

To me that's not just good money, that's seriously good money, and it definitely is when you consider the published median household income and other data about us plebs. Or, is $1M/year the new "doing well" -but not filthy rich? We live in the land of $1M median home prices and $15k/year property taxes and 10% sales tax and $100k college tuition, and $50k average new vehicle cost, and I suppose for him: a 37% federal tax bracket. No doubt his compensation is some percentage equity and some percentage cash so what does living on $500k/year look like in an area where cost of living is extremely high? I doubt it looks "filthy rich" but I'd still say it's probably a lot better than average.

How far $1 Million doesn't go these days...

Our net worth puts us in the top 3% nationwide. 97% of Americans have less money than us. You would think that would make us "rich" whatever that means but it doesn't at all. We still have many of the same day to day money issues as everyone else, though certainly to a lesser degree than many. I fully recognize that we have options and flexibility that others don't, but it's not like we can go out and spend wildly either. Being in the top 3% doesn't mean private jets or even first class commercial flights. It doesn't mean luxury cars. It doesn't mean a maid or house cleaner. It doesn't mean designer clothing or luxurious vacations or the latest tech.

We live in the same house we've been in since 1994, a pretty modest 60-year-old colonial in a working class neighborhood. We drive a Toyota Camry and a Subaru Forester, both bought used from Carmax. We mostly stay at Fairfield Inn or similar when we travel. We drive most places rather than fly whenever feasible. We use our credit cards to get the 5% quarterly cashback bonuses. We use Rakuten to get cash back on online shopping. We clip coupons and shop sales. We watch our spending just like everyone else. Again, I realize we've got a bigger slush fund than others, but we still have to pay attention to the boundaries, even with $4 million in the bank.

[LivingAlmostLarge]

It's pretty shocking, really. The bar has been moved considerably.

I had lunch with a colleague on Friday and I learned someone we knew back when I first started my career just took a new role. He was a project manager back 15 years ago and was probably making $120k, which was good at the time. His new role? My buddy shared with me this guy's total comp is just over $1.1 Million per year.

To me that's not just good money, that's seriously good money, and it definitely is when you consider the published median household income and other data about us plebs. Or, is $1M/year the new "doing well" -but not filthy rich? We live in the land of $1M median home prices and $15k/year property taxes and 10% sales tax and $100k college tuition, and $50k average new vehicle cost, and I suppose for him: a 37% federal tax bracket. No doubt his compensation is some percentage equity and some percentage cash so what does living on $500k/year look like in an area where cost of living is extremely high? I doubt it looks "filthy rich" but I'd still say it's probably a lot better than average.

How far $1 Million doesn't go these days...

It's more than $1m is feasible if a dual working couple both make $500k. Which doesn't seem that outrageous for mid career professional couple. A lot are making $200-300k each so HHI is $500-600k. Go up a notch and there you are. That being said $1m is a definite benchmark for a single earner.

And yep the rich is getting richer. I too am shocked top 5% is $3.8M. it certainly has not grown proportionately.

Also like Fishingdude said it depends on how you want to retire. My grandma retired on SS alone making about $1100/month. And $1500 as a couple. And her mom only made $600/month in SS and lived well. They both had no medical bills because at that level you have medicare and medicaid. Then food stamps, rent help etc.

In the US it's better to be really rich or really poor. It sucks a lot to be in the middle. say you make $60k like fishindude's example I think that's worse case. You don't make enough to comfortably afford everything, but too much to get assistance. It's a much tighter existance than someone making $12k/year or $120k/year.

[srblanco7]

Our net worth puts us in the top 3% nationwide. 97% of Americans have less money than us. You would think that would make us "rich" whatever that means but it doesn't at all. We still have many of the same day to day money issues as everyone else, though certainly to a lesser degree than many. I fully recognize that we have options and flexibility that others don't, but it's not like we can go out and spend wildly either. Being in the top 3% doesn't mean private jets or even first class commercial flights. It doesn't mean luxury cars. It doesn't mean a maid or house cleaner. It doesn't mean designer clothing or luxurious vacations or the latest tech.

We live in the same house we've been in since 1994, a pretty modest 60-year-old colonial in a working class neighborhood. We drive a Toyota Camry and a Subaru Forester, both bought used from Carmax. We mostly stay at Fairfield Inn or similar when we travel. We drive most places rather than fly whenever feasible. We use our credit cards to get the 5% quarterly cashback bonuses. We use Rakuten to get cash back on online shopping. We clip coupons and shop sales. We watch our spending just like everyone else. Again, I realize we've got a bigger slush fund than others, but we still have to pay attention to the boundaries, even with $4 million in the bank.

I read this and thought to myself we live similarly (modest house, used cars, etc). I'd suggest that your modest/reasonable life choices are part of what's enabled you have a top 3% net worth.

[disneysteve]

I read this and thought to myself we live similarly (modest house, used cars, etc). I'd suggest that your modest/reasonable life choices are part of what's enabled you have a top 3% net worth.

Absolutely, but being in that top 3% doesn’t make everything magical. $4 million is a ton of money but it’s not nearly enough to “live large” today.

[james.hendrickson]

Absolutely, but being in that top 3% doesn’t make everything magical. $4 million is a ton of money but it’s not nearly enough to “live large” today.

Sooo...lets talk about that. What do we mean by living large? Aren't most millionaires the "millionaire next door" type, where they drive modest domestic cars, live in normal sized houses and don't spend conspicuously?

[ua_guy]

Sooo...lets talk about that. What do we mean by living large? Aren't most millionaires the "millionaire next door" type, where they drive modest domestic cars, live in normal sized houses and don't spend conspicuously?

Interesting detail you chose to throw in. Why domestic? I think exactly the opposite, something like a Toyota Rav4 or a Honda Pilot. Something that adorns the top of Consumer Reports best of bland -list.

I think this is the reality for more and more millionaires. Mostly because a normal sized house costs 1-2 Million around the high paying job centers, and retirement is a much bigger bill. It's longer, it's typically funded mostly by career employees, out of their own pay, healthcare is extremely expensive and Medicare doesn't cover everything, and they're on the hook for increasingly high long term care costs, and often the long term care costs of their parents. And-- mostly because their "millionaire" status is wrapped up in home equity and retirement savings.