You’re scrolling through social media and another friend is showing off their latest Mediterranean cruise. It’s hard not to wonder – are they living the dream or ignoring the whole “retirement savings” thing?
If they’re part of the upper class, there’s a good chance they have the money to fund both their vacations and their future. But how much have they saved for retirement? And where do you stand?
What’s Considered “Upper Class?”
Before examining the numbers, it’s important to understand what “upper class” actually means.
According to Pew Research, the median income for a three-person upper-class household was $256,920 in 2022. However, income is only part of the equation. Wealth – defined as net worth – is a major factor, especially regarding retirement savings.
A New York Times analysis suggests that the top 20% of families have a wealth-to-income ratio of about 3 to 1. A household earning $256,920 has a net worth of around $770,760.
Now, let’s compare that to data from the Federal Reserve. According to their latest Survey of Consumer Finances:
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The top 10% of households have a median net worth of $2.7 million.
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The next bracket (11th – 25th percentile) holds a median net worth of just over $790,000.
So, whether you’re using income or wealth as your metric, the upper class is miles ahead of the national average.
The Average Retirement Savings for the Upper Class
When it comes to retirement savings, the upper class doesn’t disappoint. According to data from The Motley Fool:
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The top 10% of earners have a median retirement savings balance of $900,000.
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Those in the next tier (75th – 89.9th percentile) have a median balance of $269,000.
Since the upper class typically includes the top 20%, a reasonable estimate for their median retirement savings is between $400,000 and $500,000. While exact numbers aren’t available for the full group, their savings are far above the national medians:
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Median retirement savings for all U.S. households: $87,000.
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Households under 35: Just $18,800.
If your retirement savings are in the six-figure range, you’re closer to the upper-class average than most people. If not, there’s still time to step up your game.
What Sets the Upper Class Apart?
How do the wealthiest 20% accumulate so much more for retirement? It’s not just about higher paychecks. Here’s what sets them apart:
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Higher Incomes = Bigger Savings: Yes, they make more, but they also save more.
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Investing Like Pros: The wealthiest 10% control nearly 93% of the stock market, leveraging long-term growth to their advantage.
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Consistent Saving Habits: It’s not sporadic. For them, saving is a disciplined, ongoing process.
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Maximizing Tax-Advantaged Accounts: From 401(k)s to IRAs, they know how to use the system to their benefit.
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Access to Financial Advice: With professional guidance, they make smarter, more strategic financial decisions.
How Can You Close the Gap?
If your retirement account isn’t where you’d like it to be, don’t panic. Here are some practical steps to build your savings:
Start Saving Today: Even small contributions can grow thanks to compounding.
Max Out Employer Matches: It’s essentially free money – don’t leave it on the table.
Open an IRA: Traditional or Roth, these accounts add flexibility to your savings plan.
Diversify Your Investments: Stocks, bonds, mutual funds – spread your risk.
Increase Your Savings Rate: When you get a raise, increase your contributions.
Catch-Up Contributions: If you’re over 50, take advantage of higher contribution limits.
Comparing your retirement savings to the upper class might feel intimidating, but don’t let it overwhelm you. The key isn’t hitting a magic number – it’s about making steady progress. Start where you are, make smart decisions and focus on building a retirement fund that supports your goals.
After all, the real dream isn’t just affording a Mediterranean cruise – knowing you’ll still be comfortable long after the vacation photos are posted.
