Here Are the Average Retirement Savings by Age
Regardless of your age or plans to retire, you do need to save money. Let’s just call it a retirement savings account for kicks. You do not have to ever retire if you find the idea of playing constant golf kind of boring. It may sound great in theory, but in practice, it may not go the way you think it will.
You do need to save money for the future though. It helps to have a benchmark of where you should be at a specific time in life.
Before we discuss the average savings by age for retirement, let me assure you that you can make up any shortfall with the right techniques. I won’t leave you hanging until the next article either. At the end of the discussion on the average retirement savings, you will find a discussion on how to quickly make up a savings shortfall.
These figures represent actual facts. They do not represent the ideal.
According to Zippia survey, more than half of the US has no savings. That should freak you out.
As of 2022 58% of Americans have less than $5,000 in savings, and 42% of Americans have less than $1,000 in savings.
Of course, that does not bode well for retirement.
The truth of the matter is that the majority of the country expects their Social Security check to cover everything. Some may have an annuity provided by their employer, but most plan to go it on a government check since they have paid into it every year they have worked. The 40 percent that does save for retirement really sock it away.
By the age of 35, the average American has saved $8,362. The number grows a bit for those with employers that provide a 401k savings account, many of which provide matching contributions. A person between the ages of 20 to 29 had saved an average of $11,800, using data for 2019.
Between the ages of 35 to 44, the average American has saved $20,839. That number more than doubles if the individual has an employer provided 401k savings account. Those individuals between the ages of 30 to 39 had saved an average of $42,400, using data for 2019.
Between the ages of 45 to 54, the average American has saved $30,441. That number more than triples if the individual has an employer provided 401k savings account. Those individuals aged 40 to 49 had saved an average of $42,400, using data for 2019. Those 50 years old or older should have at least six times their annual salary saved if they intend to retire at aged 67.
Between the ages of 55 to 64, the average American has saved $45,133. Since those aged 50 and older get to contribute $6,000 per year to a retirement account, you should use that maximum as a benchmark. That number more than triples if the individual has an employer provided 401k savings account. Those individuals aged 50 to 59 had saved an average of $174,100, using data for 2019. Use the catch-up contributions if needed and avoid withdrawing money before the age of 59 years and six months since this typically results in tax penalties.
By the ages of 65 to 74, the average American has saved $54,089. That number more than triples if the individual has an employer provided 401k savings account. Those individuals aged 60 to 69 had saved an average of $195,500, using data for 2019.
By the age of 75, the average American has savings of $42,391 because they have already had to dip into their regular savings. Those with retirement accounts must have begun taking monthly or quarterly disbursements from them, so those numbers also drop.
How Do You Live Off Of $225,000 For Years?
How do you live off of $225,000 for years? Well, you don’t. Only 36 percent have that much. Most of the people barely get by on about $1,500 per month, the amount of the average Social Security check. The savings and retirement accounts merely supplement the Social Security payments. The median US income stands at about $70,000 per year. Compare that to the $18,000 a person gets from Social Security and you quickly understand why saving money while you can matter so much. Imagine being a member of the 60 percent that must reduce their way of life from $70,000 per year to $18,000 per year. Try to fathom what you would never be able to buy without that $52,000. If you tried to live at the same level as when you worked, you would go through the entire savings in three to four years. Most people budget severely and cut their expenses to almost nothing.
But it does not have to be that way!
Keep Your Bills Safe. Be Smart About Your Money.
Help Saving Money
You can save money now. You live comfortably when you retire, if you retire. Many ways exist to come up with more dough every month to stick in a savings or retirement account. Some, you may not like. Tough. It is past time to adult. The sooner you start saving, the better your situation will be if and when you do retire.
1. Budget for heaven’s sake. You laugh, but I prioritize this one in so many articles because so few people do it. You do not actually need high-speed Internet and a data plan on your cell phone. Choose the unlimited data on the cell phone, then use the MiFi on it to share that with the other devices in your abode. You just saved hundreds each year which you can plop into a retirement account.
2. Join a grocery co-op or bulk buying store. I do not mean Sam’s Club. We’re talking local services or online shops that genuinely result in you cutting your grocery bills because they buy in such massive quantities that they can lop off cost hikes.
3. Conduct your commute by subway or bus. You will not only save wear and tear on your vehicle; you will help the environment and save money. A commuter pass typically costs between $55 to $100 per month. Driving would cost you about 57 cents per mile plus you would lose the free time that having someone else drive nets you an average of 26 minutes in the US.
4. Deposit at least 20 percent of your total income each month into savings. You should be able to cover your rent or mortgage and other required expenses with half of your monthly income.
5. Get a second job. Put all of the money earned into savings or your retirement account. You can also start and an investment portfolio.
6. Work on the weekends or after hours using a side gig such as Lyft, Uber, or Taskrabbit. You can set your own hours this way and dump all the money into savings. Just remember to set aside about 30 percent of what you earn for self-employment taxes.
7. Rent out a spare bedroom on AirBnb or another room rental website like Couch Surfers.
8. Create your future budget now. Determine the minimum amount you could comfortably live on and factor in an inflation increase. Determine the age at which you want to retire, if you do. Realize that people now live longer. The average life expectancy of an American male is 73.2 years, but for a female, it’s 79.1 years. You calculate how many years you will need to pay for yourself and multiply it by the income on which you could viably enjoy living. Now, you know how much you need to save.
9. Pay off the big stuff well in advance. Have your mortgage paid off by the time you hit your 40s or at least your 50s. That saves you from needing to make payments in retirement, especially a huge balloon payment. Pay off the car. Pay off any loans. Get these items taken care of quickly so you can save money. You will pay less in interest and get to earn on the savings or retirement account interest.
10. Assess your investment portfolio. Try some medium risk alt investments to quickly earn money. If you already have some savings, you can join a lending group that provides individuals loans on a person-to-person basis rather than a bank to person basis. You and the other members loan your money to individuals which they repay with interest. Rather than paying 18 percent to a bank, you become the bank and earn 18 percent on what you loan. You can invest in cryptocurrency although you need to know a bit about the various types of coins/tokens first. You can invest in real estate using an investment pool that spreads the risk across many individuals to purchase buildings for rentals, flipping, or other investment purposes.
11. Sell your existing home and downsize to a smaller one. You could pick a lovely plat at a popular vacation spot and build a swank tiny house or mid-sized home. Many tiny house designs provide multi-use areas that make them seem much larger than they are. They cost less to build and to heat and cool. Another bonus is they are currently all the rage and architects have lots of fun designing them. You could easily afford a retirement home on a lake, beach, or in the mountains by doing this. Invest the funds from your home sale in your savings and retirement on a 40/60 split. You need enough to completely pay off the new home outright so you avoid mortgage payments.
FINAL THOUGHTS
Regardless of where you are in savings, you can make up the funds. You just need to work, earn, and start saving now. Downsizing does not mean downgrading. You can live in a smaller home that provides just as many amenities plus a vacation location. You could downsize before retiring to pour money into the savings and investments to maximize your retirement funds.