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By the time you turn 68, you’ve probably moved on or are already retired. Your income still matters, but if you’re already withdrawing money from your retirement accounts, your net worth technically matters more.
This is because the money you accumulate will help support your lifestyle, such as funding higher levels of spending, preparing for the unexpected and maintaining financial flexibility in your later years.
Using benchmarks from sources like Fidelity, the U.S. Census and the Pew Research Center, the numbers look like this.
What income in retirement indicates ‘upper class’?
The income criteria are still useful, even if some 68-year-olds are not earning a traditional salary from a job. Also, it would be helpful to look at net worth benchmarks, as many benchmarks are based on how much someone should save based on their earnings.
There is actually no official definition of someone who is considered “upper class”, but Pew Research Center There is one that may be close enough. It defines “high-income” households as earning more than three times the U.S. national median income.
according to US Census BureauThe most current median household income is $83,730, so this means that someone in the “upper class” income is likely to have an annual income of at least $251,190.
At this age, income can mean a combined source from a job and withdrawals from pensions, Social Security, and investment accounts.
Using Income to Measure Net Worth Benchmarks
At age 68, the question is how many assets have you already accumulated to generate income that will support you at this stage of life. To help, you can use benchmarks like this Loyalty Offer.
According to the financial institution, you should save about 10 times your income, or about $2.5 million, to have a comfortable retirement.
While this is not an exact science, it can at least help us see what is the minimum amount of assets a person must have to reach the upper class.
Is that in line with actual net worth data?
To see if this is consistent with what Americans of this age actually have Federal Reserve’s Survey of Consumer Finances Can be a useful tool. The data shows that households with people aged 65 to 74 have an average net worth of approximately $1.79 million or an average net worth of $409,900.
The average net worth may not be as accurate as larger net worth amounts can distort this number. For the “average” American, the average number is probably more accurate, as it reflects a more typical level of wealth.
If your net worth is less than this benchmark
There is nothing wrong with having less than several million dollars in the bank, as it may not be the amount you need to live well. One strategy is to start by looking at what you can get in Social Security benefits. If possible, you may want to consider delaying receiving your benefits until age 70, when you can maximize the amount you will receive.
You can also take a careful look at your expenses now and see how you can make adjustments. Perhaps downsizing, relocating, or finding ways to create additional income sources could work. Who knows, maybe after looking at your expenses and other financial needs you don’t need as much as you think.