Retiring with $1 million is a big goal for many people. Despite the rising cost of living in recent years, $1 million is still a lot of money, and it can support a comfortable retirement for many when you add in Social Security.
While reaching millionaire status is becoming more common, it's still a feat only a minority of people achieve before reaching retirement age. But if you plan accordingly, remain consistent, and perhaps get a little lucky, you can set yourself up to join the two-comma club.
Here's how many people actually reach retirement age with $1 million.
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Retiring a millionaire is common, but not that common
The best data we have to determine how many Americans have a net worth of $1 million or more comes from the Federal Reserve. Every three years the Fed conducts a Survey of Consumer Finances, asking Americans important demographic details and diving into their financials. The most recent survey collected data from 2022. It'll be about a year and a half until we get the 2025 survey results, so it's the best we have right now.
Roughly 18% of all households in the United States had a net worth of $1 million or more as of 2022, according to the data. But that includes households of all ages ranging from 18 to 95 years old.
If you look at families where the head of the household is approaching retirement age, someone between the ages of 50 and 64, more than one out of four are millionaires. That's roughly 16.3 million Americans.
Of course, there are people that become millionaires well before those years leading up to retirement. But the percentage of people reaching that level of wealth before 50 is significantly lower.
It's worth noting that the population of millionaires remains remarkably stable for the demographic groups beyond retirement age. That may point to several advantages of older generations in accumulating wealth, such as lower education and housing expenses. But it also speaks to the power of accumulating and holding assets that appreciate in value over time, like stocks.
In fact, that's the easiest way for you to join the group of millionaire retirees.
The simple path to retire a millionaire
With roughly a quarter of American households reaching a net worth of $1 million by the time they retire, it should give you confidence that you can reach that milestone too. It's not some outlier that strikes it lucky who becomes a millionaire, although luck can certainly help. It's the person that consistently saves and invests who establishes the financial security they need to retire comfortably.
There's a lot of low-hanging fruit that can help you retire a millionaire.
First, if you have any high interest debt such as credit cards or personal loans, you should prioritize paying them off above all else. There are few investments that offer a better return than paying off a credit card charging 30% per year in interest.
If your employer offers a matching 401(k) contribution, that should be the first place you start saving for retirement. Even if the investment options in your workplace retirement plan aren't great and the fees are high, it's probably worth securing the match.
If your employer doesn't offer a retirement plan with a match, consider any tax-advantaged retirement accounts at your disposal. An IRA or Roth IRA is a great place to save for retirement because you won't pay any taxes on capital gains or dividends in the account. That can result in a much bigger nest egg when you reach retirement age.
When it comes to choosing what to invest in, you have a lot of options. You could buy individual stocks, taking advantage of opportunities you see in the market. But if you don't have time to research individual companies and value stocks, your best bet is a low-cost broad-based index fund such as the Vanguard S&P 500 ETF (VOO 0.07%). The fund tracks the S&P 500 index, which is often used as a benchmark for large-cap U.S. stocks. It charges just 0.03% of assets to provide a diversified portfolio that will match the index's returns.
For all the advantages older generations may have had when it came to affording things like higher education or housing, younger people have a massive advantage when it comes to investing: time. Time is one of the most powerful forces in investing. The longer you let your investments compound, the bigger they grow. Consistently saving and investing over time can make you a millionaire.
Even if you're already in your 40s or 50s, it's not impossible to retire a millionaire. You'll just have to be more aggressive in your savings and consistent with your plan to get there. Retiring a millionaire doesn't have to be a pipe dream. Millions of Americans can attest to that.
