What is considered wealthy in retirement?

1 min read by Unbiased team Last updated June 28, 2024

Discover how net worth, income streams, and regional cost of living influence the perception and reality of a wealthy retirement.


  • Reliable income streams such as retirement savings accounts, pensions, and dividends from investments are crucial for a wealthy retirement. 

  • The cost of living and healthcare expenses significantly influence how much money is needed to retire wealthy. 

  • Lifestyle choices and financial capabilities are key indicators of economic status in retirement. 

  • A financial advisor can help you develop a personalized retirement plan to ensure you have enough money to meet your goals.  

How is wealth defined in retirement? 

In retirement planning, wealth is often defined by a combination of net worth and income streams.  

Net worth refers to the total value of assets minus liabilities.  

Financial experts typically consider someone wealthy if they have a retirement net worth of at least $1 million, excluding the value of their primary residence. This figure encompasses assets such as investments, savings, and properties minus any liabilities like debts or mortgages. 

Income streams are equally significant.  

A retiree might be deemed wealthy if they have multiple reliable sources of income.  

These can include pensions, Social Security benefits, dividends from investments, and rental income. The goal is to have enough passive income — revenue streams that require little to no effort to maintain — to cover living expenses comfortably without depleting savings, thereby allowing retirees to enjoy living richly in retirement. 

What are the factors that influence wealth perception in retirement? 

Various factors impact how retirees perceive wealth, with the cost of living taking center stage.  

Retirees residing in states with a lower cost of living, such as Mississippi or Arkansas, may find satisfaction with less money compared to those in pricier states like California or New York.  

Healthcare expenses also impact the cost of retirement, with medical costs steadily climbing. Inflation poses an additional challenge.  

As the price of goods and services rises over time, retirees must ensure their income keeps pace to maintain their standard of living. Failure to account for inflation can erode purchasing power, leaving retirees feeling financially strained. 

Regional disparities in the cost of living significantly influence wealth perception.  

For example, $1 million in savings will stretch much further in a state like Alabama than in a high-cost area like Massachusetts.  

What are the economic classes for retirees? 

Retirees generally fall into one of four economic classes:  

  • Poor: Retirees in this class rely heavily on Social Security benefits, often struggling to cover basic expenses. Their net worth is typically under $50,000. 

  • Middle-Class: These retirees have a modest net worth ranging from $50,000 to $500,000. They live comfortably but must budget carefully and may need part-time work or small side incomes to maintain their lifestyle. 

  • Upper-Class: With an upper middle class net worth between $500,000 and $1 million, upper-class retirees enjoy a comfortable lifestyle. They have sufficient savings and investments to cover their needs without financial strain. 

  • Rich: Those who retire wealthy have a net worth exceeding $1 million. They can afford luxury and leisure, often engaging in travel, hobbies, and philanthropic activities without financial worry. 

How do lifestyle choices and financial capabilities indicate economic status in retirement? 

Lifestyle choices and financial capabilities serve as key indicators of economic status in retirement, often reflecting how well individuals have planned for the cost of retirement.  

For example, frequent travel, dining out, and engaging in leisure activities like golfing or sailing often signal a higher economic class.  

Conversely, retirees who need to monitor their expenses and forgo luxuries closely likely belong to a lower economic class. 

Financial capabilities further underscore economic status. The ability to handle unexpected expenses, invest in long-term care, or financially support family members indicates a retiree's economic standing.  

How can I build wealth for retirement? 

Building wealth for retirement requires strategic planning and disciplined execution to manage the cost of retirement effectively.  

Here are some key strategies t implement: 

  • Savings rates: Aim to save at least 15-20% of your income throughout your working years. The earlier you start, the more time your money has to grow through compound interest. 

  • Investment strategies: Diversify your investments to balance risk and reward. Consider a mix of stocks, bonds, real estate, and mutual funds. Adjust your portfolio as you age, shifting towards more conservative investments. 

  • Timing: Take advantage of tax-advantaged retirement accounts like 401(k)s and IRAs. Start contributing as early as possible and maximize employer matching contributions. 

Financial planning and professional advice play pivotal roles in achieving a wealthy retirement.  

A certified financial advisor can help you create a tailored plan, optimize your investments, and navigate complex financial decisions. 

What are the challenges in maintaining wealth in retirement? 

Maintaining wealth and living richly in retirement comes with challenges.  

Market volatility can impact investment portfolios, potentially reducing income streams.  

Diversifying investments and maintaining a portion of assets in more stable, lower-risk options can help mitigate this risk. 

Unexpected health issues and long-term care costs are significant concerns. If not adequately planned for, these can quickly deplete savings. Investing in comprehensive health insurance and considering long-term care insurance are prudent steps. 

It's crucial to have a risk management plan to safeguard assets.  

Regularly review and adjust your financial plan to accommodate changes in the market, personal health, and lifestyle needs. This proactive approach helps ensure your wealth endures throughout your retirement years. 

Get expert financial advice 

Understanding how to retire wealthy involves considering multiple factors, from net worth and income streams to cost of living and lifestyle choices. Building and maintaining wealth requires strategic planning, disciplined saving, and wise investment decisions. With careful preparation and informed choices, you can enjoy a comfortable, financially secure retirement. 

Unbiased will connect you with a financial advisor for expert financial advice, ensuring you have the guidance needed to achieve a wealthy retirement. 


Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.