Ever wonder how you stack up against your neighbors when it comes to your retirement savings? How much does the average American in your age group have saved? Although it’s interesting to know if you are “ahead” or “behind” your peers, age is only one of many benchmarks. It’s hard to get a crystal-clear picture of how you’re doing compared to others because everyone’s situation is different. Some may have additional savings accounts, some may have other sources of income, and others may be planning to retire earlier or later.
However, one thing’s for sure: despite an increased public awareness of the importance of starting young and contributing regularly to a retirement savings plan, people are reaching retirement with significantly less than what they need.
A Look At The Data
In the 2016 Survey of Consumer Finances (SCF), (1) we get an inside look at the size of retirement savings accounts across varying age groups. Let’s take a look.
In families headed by someone under 35 years old, the average household (not individual) retirement savings is $32,500. This may sound like a respectable amount, but the average savings statistic tends to be skewed by outliers (extreme over- or under-achievers). Because of this, the median value is often a more accurate measurement. In this case, the median household savings was just $12,300. Of the families surveyed in this group, only 42% actually have a retirement account.
In families headed by someone between the ages of 35 and 44 years old, 57% have a retirement account, the average household savings is $100,100, and the median household savings is $37,000. This is an age group with higher incomes, but also higher expenses. Many find it difficult to save as much as they should, especially those with kids.
In the 45-to-54-year-old age group, incomes are still high, and we see a jump in savings. In this group, 60% have a retirement account, the average household savings is $215,000, and the median household savings is $82,600.
The next group, aged 55 to 64, are nearing retirement age. But are they ready? According to the SCF, the average household retirement savings in this group is $374,000, while the median is $120,000.
The last group, aged 65 to 74, includes many who have already entered retirement and are thus spending more than they’re saving. In this group, about 50% report having a retirement account, the average household savings is $358,400, and the median is $126,000.
How Much Should You Have Saved?
So now that we know what the average person has saved, is it enough? Let’s take a look at how these figures compare to retirement savings milestones recommended by financial experts. According to Fidelity Investments, you can gauge your progress by comparing your retirement savings to your annual salary. (2) They suggest you aim for your retirement savings to be:
- 1x the amount of your salary by age 30
- 3x the amount of your salary by age 40
- 6x the amount of your salary by age 50
- 8x the amount of your salary by age 60
- 10x the amount of your salary by age 67
So how do you stack up? As you can see, people are not preparing as well as they should be. Don’t let this happen to you. If you feel like you are falling behind, there are several steps you can take to put your savings back on track. Some of these include postponing the age at which you begin collecting Social Security (to increase monthly payouts), taking advantage of the bonus contributions you can make after age 50, increasing your income with side projects, and reducing your cost of living.
However, the best decision you can make is setting up an appointment with a financial advisor who can help you create a retirement savings plan. With their help, you will know exactly what you must do to ensure you will have enough money saved to enjoy a high standard of living all throughout your retirement years. I encourage you to reach out for a complimentary consultation. We at Einspar Family Financial would love the opportunity to become your family’s trusted advisor. To get started, contact our office by calling (630) 748-8953 or emailing [email protected].
Will Einspar is the founder ofEinspar Family Financial, an independent financial planning firm specializing in helping families navigate life change. Will has over 20 years of industry experience and is a CERTIFIED FINANCIAL PLANNER™ who has built his business on relationships. With a family of his own, Will understands the emotions that affect investment, retirement, and estate planning decisions. He lives in Naperville, IL, with his wife, Wendy, and their three children. When he’s not working, you can find him spending time with his family, golfing, or fishing. Learn more about Will by connecting with him onLinkedIn.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques and strategies discussed are suitable for all investors or will yield positive outcomes.
*Retirement savings factors are hypothetical illustrations, do not reflect actual investments, results, or actual lifetime income and are not guarantees of future results. Targets do not take into consideration the specific situation of any particular user, the composition of any particular account, or any particular investment or investment strategy. Individual users may need to save more or less than the savings target displayed depending on their inputs retirement age, life expectancy, market conditions, desired retirement lifestyle, and other factors.