I’m an average middle-class retiree: Here’s how much I have in savings

Although your pre-retirement income alone is not enough to determine whether you will retire comfortably, it certainly plays a role. For example, if you’re earning a middle-class salary, the amount you can set aside for your nest egg will be much lower than someone making millions a year.

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In 2024, middle class incomes would be between $50,000 and $150,000. If you’re in this group, you might be curious how your savings stack up against the rest of the pack. So we interviewed a 62-year-old retiree who considers himself middle-class to see how much he’s saved for his golden years. Since he prefers to remain anonymous, we’ll refer to him as Lopez. Here’s what his retirement savings look like.

Total savings as an average middle class retiree

“Before I retired, I earned an average middle-class income of about $72,000 a year. It wasn’t an extremely high salary by any means, but it was enough to cover my expenses and put a little bit aside for savings every month,” Lopez said.

He indicated that his income came mostly from a combination of his full-time job as a sales representative and some side efforts like selling used items on eBay.

Learn more: How much monthly income can you get from a $200,000 annuity?

Savings, Investment Choices and Asset Allocation

Lopez’s savings are a mix of different accounts.

“I have an emergency fund that I’ve built up over the years, which is currently about $9,500, and I have most of it stashed away in my high-yielding Allied savings account,” he said.

In addition to making sure he has enough saved up for rainy days, Lopez also diligently contributed to his 401(k) during his working years, and it’s now grown to about $250,000.

However, a 401(k) is not my only retirement account. I also have some in Roth IRAs, totaling about $100,000,” he added.

In addition to these retirement accounts, Lopez also has about $110,000 invested in taxable investment accounts, with Vanguard ETFs making up the majority of his investments.

“All in all, my retirement savings, including these accounts and a few smaller ones, add up to roughly half a million, which I’m very happy about since I live a frugal lifestyle and don’t spend that much each month, he said.

Strategies for building a nest egg

“Building a nest egg of half a million wasn’t easy, but it was definitely worth it,” Lopez said.

One of the strategies he used to help him stay consistent with saving and investing was to take advantage of his employer matching contributions.

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“Plus, I’ve automated my savings as much as possible by setting up automatic transfers from my checking account to my emergency fund and investment accounts. That way, I’m not tempted to overspend every time I get my paycheck, as most of it has already been – or will be – allocated to my retirement savings.

“I also tried to live below my means, which wasn’t that hard for me, to be honest, since I’m naturally a frugal person and I hardly care about materialistic things,” Lopez said.

He believes his frugality is one of the main reasons he was able to save aggressively to retire on a middle-class income.

Lessons learned from past financial decisions

Looking back, Lopez wishes he had done a few things differently to better prepare for retirement. Here are some of them:

• Started saving earlier: “I didn’t start saving aggressively until I was in my mid-30s. I think that if I had started even earlier, I would have benefited from the increase in interest and would have built an even bigger nest egg,” he said.

• Worked with a financial advisor: Another thing Lopez regrets now that he’s in his prime is that he wasn’t more proactive about seeking professional financial advice in his 20s and 30s. “While I did my best to educate myself about personal finance, I think working with a financial advisor earlier could have helped me optimize my savings and investment strategies,” he said.

• Create sufficient streams of passive income: Lopez also regrets not putting enough time and energy into building passive income streams that could help him make money on autopilot in retirement. While he can still build a business that generates passive income now, it will take some time before the results are seen.

Overall, though, Lopez said he’s still grateful for the savings he’s been able to accumulate and feels confident he’ll be able to enjoy a comfortable retirement lifestyle with half a million dollars in the bank.

How much should you save for retirement?

While Lopez believes he is capable of making $500,000 during his golden years, that may not be possible for most Americans — especially if they live in a more expensive city like Los Angeles or New York. According to Fidelity’s guidelines, you should aim to save 10 times your income by 67. So, assuming you make $100,000 before retirement, you’ll need at least $1 million saved by the time you retire in retirement.

Another popular rule of thumb for determining how big your nest egg should be is the rule of 25. First, decide how much you’ll need each year for your preferred style of retirement. Then, multiply that number by 25. So if you want to live on $50,000 a year in retirement, you’ll need at least $1.25 million saved to reach that goal.

While retiring a millionaire with a middle-class income may sound like a pipe dream, it is very doable. The key is to start investing and saving early to let compound interest work its magic. Use a retirement savings calculator to figure out how much you need to put away each month to retire with seven figures in the bank.

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