What Percentage of Retirees Have $2.5 Million?

If you have $2.5 million saved for retirement, you’re among a select group of Americans. Only 1.8% of households have $2 million in retirement accounts and just 0.8% have reached $3 million, according to an Employee Benefit Research Institute analysis of Federal Reserve data. Retirees who begin saving early, use tax-efficient retirement accounts and harness the power of compound interest are more likely to build this level of wealth.

Working with a financial advisor can help you optimize your savings strategy for retirement.

How Long Will $2.5 Million Last in Retirement?

Retiring with $2.5 million gives you a solid financial base, with room for discretionary spending and travel. With the 4% rule, a retiree could withdraw $100,000 annually from a balanced portfolio. Adjusting for inflation, that approach may extend their savings for 30 years. The 4% rule is a common benchmark, but there are other strategies to consider:

• 3% withdrawal strategy: Provides greater longevity, ensuring savings last 40 or more years. However, it would require lower annual spending (about $75,000 per year).
• 5% withdrawal strategy: Increases annual income ($125,000 per year), but raises the risk of depleting savings within 25–30 years.
• Dynamic withdrawal strategies: This is where you would adjust withdrawals based on market performance, reducing spending during downturns to extend savings.

Spending habits, health status, and investment returns all influence how far $2.5 million can stretch. Here’s how retiring with $2.5 million might look in different scenarios:

• Low-cost areas (rural locations or overseas retirement destinations): In some states or international destinations (such as Mexico, Belize or Thailand), $100,000 per year could provide an upper-class lifestyle, with ample room for luxury spending and extra savings.

• High-cost areas (New York, California, or major metro areas): A retiree may need to allocate a significant portion of their budget to housing, property taxes and healthcare, meaning $100,000 per year may feel tight. Downsizing or moving to a lower-cost-of-living area could help stretch savings further.

• Moderate-cost areas (suburban locations or mid-sized cities): A retiree could maintain a comfortable lifestyle, enjoying regular travel, dining and entertainment while covering medical expenses and homeownership costs.

Average Retirement Savings

When evaluating how rare a $2.5 million nest egg is, it helps to understand broader retirement savings trends. For many Americans, retirement balances fall well below seven figures. Median retirement savings for households nearing retirement age are often in the low six figures, meaning half of savers have less than that amount.

The average retirement savings for all families is $333,940, with balances varying by age. Specifically, individuals aged 65–74 have an average retirement savings of $609,230, according to the Federal Reserve‘s most recent Survey of Consumer Finances ¹ .

However, median savings tell a different story. Since a small percentage of high-net-worth retirees push up the average, the median retirement savings for households led by someone between 65 and 74 years is $200,000. For the 75+ age group, the median retirement savings is $130,000.

How to Save $2.5 Million for Retirement

Saving early leverages the power of compound interest as investments grow exponentially over time. Saving $1,000 per month from age 25 could grow to over $2.5 million by retirement, assuming a 7% average annual return. If the same savings strategy started at age 35, the total accumulated would only be $1.1 million, requiring higher monthly savings to catch up.

Maximizing Retirement Accounts

Utilizing tax-advantaged retirement accounts, such as 401(k)s and IRAs, is crucial. Contributing the maximum allowable amounts and taking advantage of employer matching programs can significantly boost retirement savings.

For 2026, the 401(k) contribution limit is $24,500 if you’re under 50. However, those 50 and older can contribute a total of $32,500, and anyone 60–63 has a total limit of $35,750 in annual 401(k) contributions. The IRA contribution limit for 2026 is $7,500, with an additional $1,100 in catch-up contributions allowed for those over 50.

Earning Potential

Higher earnings over your career can help grow your retirement savings. Advancing education, gaining specialized skills or pursuing career growth opportunities can lead to higher salaries, allowing you to make greater contributions to your retirement funds.

You can also generate extra income through side businesses, freelance work or rental properties. For instance, an individual earning $100,000 annually who consistently saves 20% of their income and achieves an average 7% return on investments could reach $2.5 million in approximately 30 years.

Tips for Increasing Retirement Savings

Building retirement savings to reach higher milestones takes discipline, planning and time. While $2.5 million may be out of reach for many households, strategic steps can significantly improve your long-term outlook. The following actions can help increase your retirement savings potential over time.

• Increase Your Contribution Rate: Gradually raising the percentage of income you contribute to retirement accounts can make a major difference over decades. Even a 1% annual increase can substantially boost long-term balances due to compounding. Automating contributions helps ensure consistency and removes the temptation to spend extra income.
• Take Full Advantage of Employer Matches: If your employer offers a matching contribution, make it a priority to capture the full amount. Employer matches provide an immediate return on your contributions, effectively boosting your savings rate. Failing to take advantage of a match means leaving part of your compensation behind.
• Utilize Catch-Up Contributions: Workers age 50 and older can contribute additional amounts to certain retirement accounts. These catch-up provisions allow you to accelerate savings during peak earning years. Taking advantage of them can meaningfully narrow retirement savings gaps.
• Invest for Long-Term Growth: Maintaining an appropriate level of exposure to growth-oriented investments can help your portfolio outpace inflation. While markets fluctuate in the short term, long-term participation can drive substantial gains. A diversified strategy can help manage volatility while still pursuing growth.
• Review and Adjust Your Plan Regularly: Life changes, income shifts and market performance can all affect your retirement trajectory. Periodically reviewing your savings rate and investment allocation helps keep you aligned with your goals. Small adjustments over time can compound into significant improvements.

Ultimately, increasing retirement savings requires a combination of higher contributions, smart investing and ongoing review. While not everyone will reach multi-million-dollar balances, steady and strategic action can dramatically improve financial security in retirement.

Bottom Line

Only a small percentage of retirees accumulate $2.5 million in savings, placing that level of wealth well above national averages. Most households retire with significantly less, making disciplined saving and long-term investing critical for those aiming higher. Increasing contributions, taking advantage of employer benefits and maintaining a thoughtful investment strategy can meaningfully improve retirement outcomes.

Retirement Planning Tips

• Treat retirement contributions like a recurring bill by setting up automatic transfers to a 401(k), IRA or other savings account. This consistent approach builds discipline, smooths out market timing risk, and helps your savings grow steadily over time without needing frequent decisions or adjustments.
• A financial advisor can help you set retirements savings targets and then make a plan for meeting them. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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