In retirement, the net reflects the results of lifetime savings, loans and investments. This measure is usually more prudent than money, as it shows your financial stability and whether you are poor, middle class or rich.
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Here’s how retirees can assess their financial situation from “poor” to “rich.”
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In retirement, your economic class can be divided into four different groups, each defined by their value and financial ability, from retirees with limited resources to the wealthy. According to Moneywise, here are the net worth groups of the poor, the middle (and upper-middle class) and the rich:
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The retired poor: The poor retirees are less than 20 percent, and may have net worths of up to $10,000. This is often without property ownership, forcing many to rely heavily on Social Security or a small pension.
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Middle-class retirees: To make up the 50th percentile, with a median net worth of $281,000, this group typically includes home equity, retirement savings and a 401(k) plan.
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Upper-middle-class retirees: These retirees have a net worth between $280,000 and $698,000. They are versatile and enjoy an exceptional retirement cushion.
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Rich retirees: In the 90s, with a net worth starting at $1.9 million, this group has more financial freedom and can buy luxury items and plan their inheritance.
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According to recent data from the Federal Reserve, the average net worth for 65- to 74-year-olds was $1,794,600, which is more than four times the median net worth of $409,900. This important difference is that the super-rich skew average is much higher.
While $409,900 sounds like a nice nest egg, it will not provide enough retirement income for most Americans. For example, if you invest that money at 5% interest, it will only generate $20,495 in income each year, as previously reported by GOBankingRates.
Where you live and your lifestyle also play a big role in how far your money will go. Up to $20,500 a year may not be enough in high-cost places like California or New York. Social Security can help, but it may not be enough.