A recent study found that Americans had an average retirement savings of $141,542. The typical 401(k) balance is just $35,345, showing that most individuals probably have considerably less.
Accordingly, 50% of account balances are lower than this sum, and 50% are greater. The median account balance is more indicative of what most individuals have saved in their 401(k) accounts since a few outliers might influence averages.
Are you attempting to determine how much money to set up for retirement? The average retirement savings by age might provide a decent benchmark for how you stack up against the general populace.
However, age isn’t always the only thing to consider when figuring out how much money to save aside for retirement. In addition to age, lifestyle and income are other important considerations in deciding how much money you should save away for your elder years.
Most Common Average Retirement Savings by Age
You probably only have a hazy sense of how much cash you should have saved for future costs and pension unless you’re an accountant. Economists have developed a complicated formula to determine how much money you should save annually. So, there is no correct response. You may still assess your progress by understanding the average retirement savings by age.
Using information from the Federal Reserve Board’s Survey of Consumer Finances, the Economic Policy Institute (EPI) authored a report titled “The State of American Retirement Savings.” The research examines households with a head of household between the ages of 32 and 61, or the 30 years before the early Social Security eligibility age of 62 when most families need to start their retirement savings.
According to EPI researchers, generational differences in retirement money and income by race, nationality, education level, and marital status are significant. Retirement wealth has not increased quickly enough to keep up with other developments and an expanding American population. Additionally, retirement gaps have grown due to the switch from conventional pensions to individual savings.
For all households, the average retirement wealth was $120,809. It was broken down by age range in the EPI research. You can calculate the mean by summing up all the assets and dividing them by the total number of participants. Therefore, it is slightly biased by those who have enormous wealth holdings. For all families with retirement savings, the median amount saved for retirement, or the amount at which 50 % of participants have more and half have less, is just $60,000. Let’s break it down further by age.
Average Retirement Savings by Age 30
Everybody is in a different scenario. But a lot of folks in their 30s are struggling financially due to high bills and other milestone expenses. These include getting married, paying off school loan debts, purchasing a house, and beginning a family. However, they have also developed their professional skills and probably earn more now than they did in their twenties. According to research, you should have at least $14,115 to $28,230 in savings and $61,937 set up for retirement by the time you are 30 years old.
The first thing you should do is enroll in any retirement plan offered by your company. If you have already joined up, check if you can make a little additional contribution; even a few more dollars from each paycheck add up.
You should aim to put aside 15% of your income for retirement. If you can’t do that, think about beginning with a lesser proportion and increasing it by 1% until you reach 15%. If your employer does not provide a helpful retirement plan, consider other options, such as annuities or individual retirement account (IRA) plans.
Average Retirement Savings by Age 40
People in their 40s have presumably already paid off their educational loans. However, they still struggle to pay off their mortgages and other family-related costs, such as childcare and college tuition. The good news is that they have climbed the corporate ladder during the last two decades and are also at the top of their respective careers.
According to statistics on typical savings by age 40, you should have between $17,799 and $35,599 in savings and $185,811 (or three times your salary) set up for retirement.
Don’t panic if you are falling behind on your money. You have time to catch up and accomplish your retirement objectives. A good start is paying off your debt and contributing the maximum to your 401(k). If your company doesn’t provide a 401(k), or if you want to add it to your 401(k), think about optimizing your savings via the tax benefits that come with an IRA.
Average Retirement Savings by Age 50
For those in their fifties, increased medical costs and child-college tuition expenditures are often their greatest outlays. But they also have a goal in mind. Therefore, more aggressive saving is necessary. According to research on average savings by age 50, you should have between $18,846 and $37,693 in savings and $309,685 (or five times your salary) set up for retirement.
It might not be very comforting to realize that you haven’t saved enough for retirement in your fifties. In addition to any “catch-up” payments you may make, you should contribute the maximum amount to your 401(k). You can use this wake-up call to catch up with your goals.
Make that money work for you as well! Tax-deferred growth is possible up to the withdrawal. Consequently, think about investing in equities, bonds, and cash.
If you’re uncertain, consulting an impartial financial expert may help you decide what degree of risk is suitable. If you don’t already have one, you could think about opening an IRA or putting money in a conventional brokerage account.
Average Retirement Savings by Age 60
People in their 60s are often nearing retirement. So, now is the time to work extra hard to meet your financial objectives. Data indicates that you should have at least $16,554 to $33,108 in savings but $433,559 (or seven times your salary) in retirement savings by the time you turn 60, reflecting the emphasis on retirement. This may sound ambitious, but if you remain on course, it will be well worth it whenever you are ready to retire and enjoy your free time.
Save for Your Retirement
You must contrast the quantity of money saved with the amount that retirees in your demographic will need to get a fair appraisal of your chances. But there are a lot of unknowns along the route that you need to take into account. So, look at the data above and start saving for retirement now.