How Many People Really Save $1 Million for Retirement?

It's a number most middle-income Americans have aspired to reach for so long that inflation has measurably chipped away at its buying power in the meantime. Indeed, it's no longer an especially unusual amount of money to amass.

Nevertheless, plenty of people still contend that a $1 million retirement nest egg is more than just a milestone. It's often arbitrarily seen as the dividing line between a comfortable retirement and a worrisome one, in fact.

And this begs a question: How many people are actually saving $1 million (or more) for retirement?

Answer: Not as many as you might think.

The number

Don't misread the message. There are more millionaires currently living in the United States than there have ever been at any point in the past, even if reaching this mark doesn't mean nearly as much as it used to.

Still, most peoples' net worth isn't a seven-figure sum. And fewer still are sitting on a retirement nest egg worth $1 million or more in cash or highly liquid assets like stocks, bonds, or mutual funds.

But the number? There's more than one, although they all more or less jibe with one another.

One of these numbers comes from the Federal Reserve's most recent survey of consumer finances. Although the numbers published earlier this year were as of 2022, then, 4.6% of the United States' 131.2 million households (6 million) held retirement accounts collectively worth $1 million or more.

The survey didn't break these numbers down by individual savers. For perspective, though, the Bureau of Labor Statistics says the typical U.S. household headed by someone aged 65 or older is home to an average of 1.7 people. It's likely that many of these seven-figure retirement stashes reflect two retirees' life savings.

Image source: Getty Images.

Data from mutual fund giant and retirement plan administrator Fidelity does this fine-turning of the Federal Reserve's broad picture. Of the 24.8 million retirement plan participants it serves, as of last quarter, 654,000 of them owned 401(k) accounts worth at least $1 million.

The report doesn't indicate how much of this value was or wasn't vested. Given the length of time it would take most people to amass seven figures with or without their employer's contributions to their retirement accounts, though, most of this money is indeed likely to be 100% owned by these plans' participants.

More to the point, extrapolating these numbers to Gallup's estimate that only about 6 out of every 10 of the 305 million adults living in the U.S. has any type of retirement account suggests there are just under 5 million retirees with million-dollar retirement accounts, more or less aligning with the Federal Reserve's figure.

Focus on the process, not the size of the prize

Take the number with at least a small grain of salt. It's interesting to be sure, and perhaps even a little bit discouraging in that so few retirees are reaching what seems to be a minimum savings target. (In its most recent survey on the matter, insurer Northwestern Mutual found that -- on average -- Americans think they'll need $1.26 million in savings to retire comfortably, even though most of them seem to know they're not likely to hit that mark.)

But you don't necessarily need a seven-figure nest egg to secure a nice retirement. You can be OK with less. Most people are, in fact, particularly when adding Social Security benefits to the mix. Your first and foremost focus should arguably just be tucking away as much money as you can for as long as you can without forcing yourself into debt as a result, and then investing that money as effectively as possible.

And for many people, this will at least mean contributing enough to a 401(k) account to qualify for your employer's maximum matching contribution to your account on your behalf. Even if you don't like all of your investment options within your particular workplace retirement plan, there's no better return on your 401(k) contributions than the free money your company is willing to add to your savings.

Even if you aren't able to participate in a 401(k) plan, though, doing something on your own is better than doing nothing at all... even if it seems like you're doing so little that it doesn't even matter. Most of the few million-dollar retirement accounts in question were built from surprisingly meager starts.

In this same vein, most of these millionaires probably never actually expected to reach the seven-figure mark when they started. It just sort of happens when you're not really looking, and remain more focused on the process than the prize.

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