There is no shortage of financial advice to tell you how much you need to save for retirement. But what does retirement really look like when you are in the upper class? When you have built a real wealth and stopped working – what actually adds this monthly income?
For most wealthy retirees, the answer lands somewhere between $ 7,000 and $ 20,000 a month. This is not just a guess – this is based on how much more wealthy households are withdrawn from investment, plus any additional income they can bring from rent or pensions.
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Pew Research determines the above income as earning at least twice the national household income. For working households, this bar is about $ 149,000 a year or approximately $ 12,400 a month.
But pensioners do not work from 9 to 5 – their income often comes from a combination of withdrawals, rental income and other passive streams. So the more realistic indicator is especially based on the households of retirees.
According to the US census, the average income for households aged 65 and over is about $ 50,290 a year, or $ 4190 a month. Using the same logic by Pew, this would put the threshold of a higher-end pensioner around $ 100,580 a year or $ 8,380 a month.
By 2025, the maximum monthly social security benefit for someone waiting until the age of 70 was $ 5.108, according to the Social Security Administration. While few retirees receive the absolute max, the winners of the above income, which delay the claim, often see checks in the range of $ 3,500 to $ 4,200 a month. This is a meaningful stream of income for a higher-end pensioners is usually just one piece of a larger financial plan.
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If the pensioner has a $ 1 million nest egg and follows the classic rule of 4%, they withdraw about $ 40,000 a year – or $ 3,333 a month. But many higher-end pensioners have more than that. With $ 2 million saved, the withdrawal rises to about $ 6,667 a month.
Of course, the 4% rule does not take into account tax, inflation or personal costs. Many large portfolio pensioners correct their strategy to withdraw a little more or less, depending on the market results and life expectancy.