The Minimum Net Worth of Middle-Class Couples Approaching Retirement
Written by
Stacy Sare Cohen
Edited by
Zuri Anderson
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If you’re a couple in your early fifties and are still working, you may have climbed the career ladder, established equity in a home and earn a six-figure income. On paper, you look solid.
However, as you both get closer to age 62, you may wonder how your net worth stacks up to everyone else. When the paychecks stop, will you and your spouse still be members of the middle class?
Here’s the minimum net worth of middle-class couples nearing retirement.
Three Tiers of the Middle Class
Net worth within an economic class is defined by percentiles, according to the Federal Reserve. There are three levels of the middle class: lower middle, solid middle and upper middle.
Lower Middle Class
The lower middle class includes households with a net worth between $69,500 and $394,300 in retirement. This puts the minimum net worth of lower-middle-class households at about $70,000 per year. This group lands at the 50th percentile. Retirees in this class typically live on tight budgets.
Solid Middle Class
The solid middle class ranges from $394,300 to $1.16 million, placing them between the 50th and 75th percentiles. The minimum net worth for couples in this class tier falls just under $400,000 annually. People in this group have invested enough time working to earn Social Security and may have contributed to retirement savings.
Upper Middle Class
Upper-middle-class couples have a household net worth between $1.2 million and $2.9 million. If you and your spouse are in this group, you can likely live a comfortable retirement. However, it’s essential not to let a life of luxury eat up your savings — especially if you hit the minimum net worth of $1.2 million. With rising healthcare costs and inflation, a million dollars doesn’t stretch as far as it used to.
Increase Your Net Worth Approaching Retirement
There are some ways to improve your finances as retirement nears.
- Pay off your mortgage: Paying down your mortgage now will reduce your debt, increase your net worth later and free up cash flow to invest.
- Invest in rental income property: Consider buying a rental property or adding an accessory dwelling unit (ADU) to your property you can rent out. This will produce steady monthly income in retirement and increase your net worth.
- Max out your 401(k) account: If you haven’t contributed the maximum, especially with an employer match, doing so can increase your retirement savings.
- Health savings account: If you pay a high insurance deductible, consider opening a health savings account (HSA). This will allow you to use untaxed savings to pay for medical expenses, such as copays and coinsurance, and lower your out-of-pocket healthcare costs with no tax penalty.
Start Living Like a Retiree Now
Middle-class couples between ages 50 and 60 can strengthen their retirement plans by “estimating their expected monthly expenses in retirement as realistically as possible,” said financial advisor Christopher Stroup of Silicon Beach Financial. He recommended “living on that projected income now while consistently redirecting the surplus into retirement savings.” This allows couples to “close any potential income gaps” and build more confidence heading into their golden years.
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