6 Levels of Wealth for Retirees: Where Do You Land?

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If you’re starting to think about retirement, you may be wondering where you’ll end up economically. Many people would argue that wherever you find yourself now, you’ll likely find yourself in the same spot during your retirement years. But it doesn’t have to be that way.

You can take a good, hard look at what economic levels retirees fall into and start making decisions now to ensure those golden years really are golden.

Here are the six levels of wealth for retirees and what moves you can make now to rank higher than.

1. At-Risk — $69,500 or Less

Seniors in this category are considered at the poverty level. This means you’re retiring with a net worth of $69,500 or less. And you wouldn’t be alone. Twenty-five percent of seniors leave the workforce in this economic category.

What this means: If you retire with little to no resources, you’ll be heavily dependent on public resources like your Social Security check, Medicaid, food stamps, and more. It leaves you in a position of vulnerability because one accident or emergency could find you unhoused and desolate.

What to do about it: Even if you’re just a few years away from retirement age, you still have options to pull you out of this economic situation.

• Sit with a financial planner to discuss a smart retirement strategy.
• Figure out how much you’ll need to live well during your retirement years. This may mean considering ultra-affordable locations such as Vietnam, Indonesia (i.e, Bali), Malaysia, or the Philippines.
• Start boosting your investments now by putting money in an account with decent returns.
• Consider putting retirement off for a few more years to “catch up” on your savings .

2. Working Class — $69,500 to $394,300

In this category, you’re not necessarily impoverished and vulnerable, but you’re still in a position where 50% of seniors in the U.S. are retiring with more wealth than you.

What this means: You won’t be on public services, but things will be tight, even with your Social Security check as backup. It will be tight in almost every major U.S. city, so you’ll likely have to move somewhere more rural or move to another more affordable country, such as Mexico (i.e., Cancun, Mexico City), Portugal, or Poland.

What to do about it: Wherever you are in life right now, it won’t take a ton of effort to eek your way into the next category, with far more security and less stress for your golden years.

Find ways to cut your expenses now, like not going out as much, not shopping for things you don’t need as much, lowering your car insurance, homeowner’s insurance, and utility bills. You can usually shop around and end up saving thousands of dollars each year, which can go right into an investment account.

Find ways to increase your income now. This could include asking for a raise at work, moving to a different company that will pay more, or picking up a side hustle. You could earn an extra $1,000 a month just driving an Uber or acting as someone’s virtual assistant.

The more you can build your retirement account now, the more quickly you’ll break into the solid middle class category. And you can retire in style.

3. Middle Class — $394,300 to $1.16 Million

Okay, you’re not rich here, but you’re doing mighty fine if you do say so yourself. In this category, you can count on living in retirement exactly how you live now, or better. This category places you between the 50th and 75th percentiles, and you’re in a healthy middle-class range.

What this means: It’s important to remember that these figures are based on your net worth. If your net worth is tied up in your home or other property that won’t allow you to access your cash, it’s time to consider liquidating assets and earning interest in other ways during retirement. Your net worth during your retirement only matters if you can use it.

At this point, it may be difficult to retire in large cities in the U.S., but you can retire comfortably in most of the U.S. and most countries, such as Italy, Ireland or Canada.

What to do about it: Talk to your financial advisor about ways to liquidate your investments so you can turn your interest into income. You can live off the interest while your investments continue to grow.

4. Upper Class — $1.2 Million to $2.9 Million

Now you’re sitting pretty. This level of comfort is not common, but neither is it rare. If you’ve made it to this point, you’ll likely live a long, healthy, financially well-off life.

What this means: Seniors within this class typically live longer, thanks to a lifetime economic status that keeps them in good health. This means you’ll need more money to last longer and continue to have that good life. So you don’t want to go crazy spending all your retirement funds in the first decade of your golden years. At this point, you can plan any trips you want, international or domestic, and live comfortably almost anywhere in the world.

What to do about it: Talk to your financial planner about diversifying your investments during your retirement years to grow your wealth continuously into the later years of your life. This could include investing in new types of real estate, venture capital or even rental income.

5. Wealthy — $2.9 Million to $21.7 Million 

If you’ve made it to this category, you likely already know how to grow your wealth and stay financially well-off. At this point, you’re in the top 10% of all seniors. You probably come from a profession like law, finance or C-Suite executives.

What this means: You likely have little to worry about in terms of running out of money. You know how to continue to grow your wealth, and now it’s just a matter of not slowing down too much in life. The biggest issue for a lot of retirees is boredom, which can quickly lead to a decline in health and wellness. You can live a luxurious lifestyle in your golden years and don’t have to care too much about money.

What to do about it: Consider continuing in your profession as a board member or consultant, to keep money coming in even as you grow your investments. This will keep you both active mentally and financially, so you can slow down without stopping altogether.

6. Top 1% — $21.7 Million or More

Yes. You’ve made it to the place in life that others only dream about. Ninety-nine percent of retirees have significantly less than you do, and you’ll likely never want for anything for the rest of your life. At this financial stage, you’re likely thinking less about budgeting and saving than about optimizing taxes and planning your estate and legacy.

What this means: At this point, you can live in the pinnacle of luxury — Rolls-Royces, private jet rentals, yacht rentals, vacation homes throughout the world, things you don’t need, but make life more enjoyable. You’ll likely want to make sure your wealth goes where you want it when you’re no longer here. This means making sure your family members inherit without problems, organizations you care about are well-funded and you avoid any unnecessary estate taxes.

What to do about it: You may want to work with your financial advisor to get your estate plan in place. Also, be sure you work with a life insurance company, so your inheritors get the maximum benefits from your legacy.

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