Good news for nearly half of all American adults over the age of 45: you’re richer than you think.
The median net worth for someone aged 45 to 54 was about $247,200 in the Federal Reserve’s 2022 Survey of Consumer Finances, according to reporting by CNBC (1). Median net worth rises further for older age groups, before declining at the oldest ages.
Simply put, more than half of all adults over the age of 45 have (or had, as of that survey year) a net worth around or above $250,000.
Technically, that’s one-quarter of the way to a million. However, when thinking in terms of percentage gains rather than dollar amounts, this milestone can be viewed as halfway to the seven-figure club. Here’s why.
If you’ve managed to accumulate $250,000 in wealth, you might assume it will take three times as much time and effort to reach $1 million. After all, going from $0 to six figures in net worth is a difficult and time-consuming process for most people.
However, because of the power of compounding, this milestone can represent roughly the halfway point in time, under consistent return assumptions.
Let’s say you start with $0 and contribute $1,000 a month to an index fund that delivers an annual average return of 8%. It would take you just under 13 years to get to $250,000 in savings.
From this point forward, your savings are also generating a return alongside your ongoing contributions. You’re earning 8% on your $1,000 monthly contribution and on your $250,000 balance. Simply put, your progress is accelerated by the money you have already accumulated.
Much like rolling a snowball down a hill, there’s much more momentum once you hit critical mass.
If you continue to invest $1,000 a month and earn the same 8% return, it takes just another 14 years to get to the crucial $1 million milestone — meaning the second $750,000 can take roughly as long as the first $250,000 under these assumptions.
This milestone is crucial because it’s so close to what most people would consider financial freedom. The average U.S. adult believes they need about $1.26 million to retire comfortably, according to Northwestern Mutual’s 2025 Planning & Progress Study (2).
Reaching seven figures doesn’t guarantee retirement security, but it places many savers within range of their stated goal.
Read More: 5 essential money moves to make once you’ve saved $50,000
Whether you’re seeking financial security or a comfortable retirement, the compounding effect is good news.
Psychology plays a critical role in your wealth-building journey. If progress accelerates as balances grow, that momentum can reduce the psychological burden of saving.
Even modest levels of savings can be immensely beneficial for your mental health. According to a 2025 survey by Vanguard, having at least $2,000 in an emergency fund is associated with a 21% higher level of reported financial well-being compared to having no emergency savings (3).
In other words, once you cross the five-figure mark, unexpected expenses may be easier to manage — but they don’t disappear. Once you cross the six-figure mark, you’re potentially on a steadier glidepath to financial security if you continue saving and investing consistently
Beyond a certain point, your money can generate investment returns comparable to your annual income — depending on market performance. For example, if you earn $50,000 but manage to accumulate $500,000 in savings that earns a 10% return, that portfolio could generate $50,000 in gains in a strong year — though returns are never guaranteed and can vary widely.
If you’re planning for retirement, the good news is the “magic number” may be more achievable than it sounds. Becoming a millionaire is ambitious, but if you have $250,000 or more already saved up and at least 15 years to let your money grow at a reasonable pace, you could potentially get there under favorable return assumptions.
For those with little to no savings, there’s good news too. It doesn’t take much to gain meaningful momentum. Small changes to your lifestyle, spending habits, and savings rate can make a big difference over the long-term. Start as soon as you can, because over a decade or more, you can meaningfully change the trajectory of your personal finances.
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CNBC (1); Northwestern Mutual (2); Vanguard (3)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
