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Average Retirement Savings

If you’re wondering what’s a normal amount of retirement savings, you’re probably one of the 64% of Americans who either don’t think their savings are on track or aren’t sure, according to the Federal Reserve’s “Report on the Economic Well-Being of U.S. Households in 2020.” Among all adults, median retirement savings are $65,000, according to the Federal Reserve’s most recent data from 2019. The Fed estimated that by retirement, that number would grow to an average of $255,200.

Of course, these figures reflect the situation of people who have retirement accounts. About a quarter of us don’t. Those of us who do, 54% have employer-sponsored accounts and 48% having savings in non-retirement accounts. A small percentage (21%) have pensions.

As we get closer to retirement, we tend to save more. So knowing how your retirement savings compare to your peers – and to older Americans – can be helpful. It can put your mind at ease to know that you’re ahead of curve – or let you know that you need to pick up the pace. A financial advisor can help you manage your retirement savings and plan for the future.

What Are Average Retirement Savings by Age?

First, it can’t be stressed enough that too many of us aren’t even saving for retirement. According to a PwC report, one in four Americans have no retirement savings. Taking them and people who aren’t saving enough into account, the Employee Benefit Research Institute estimated the retirement savings deficit to be $3.68 trillion in early 2020. That means all U.S. households (with a head of household between the ages of 25 and 64) have a total $3.68 trillion less in savings than they should have for retirement.

Research by the Federal Reserve found that the median retirement account balance in the U.S. – looking only at those who have retirement accounts – was just $65,000 in 2019 (the survey is conducted every three years). The conditional mean balance was $255,200. Those numbers might not sound bad, but consider that the medical costs alone for a couple over the course of retirement is estimated to be about $200,000.

An October 2020 study by the Center for Retirement Research calculated median retirement account balances by age from Federal Reserve survey data. Here are the numbers:

Median Retirement Account Balance by Age
Age Group 401(k)/IRA Balance
35-44 $51,000
45-54 $90,000
55-64 $120,000

What Is the Median Household Net Worth?

It isn’t just retirement accounts that Americans lack. Looking at overall net worth tells a similar story, although these figures have been consistently rising since the Great Recession. In the same Federal Reserve report, the median household net worth for a head of household age 35-44 years old is $91,300. For a head of household age 45 to 54 years old, that figure is $168,600. In the 55-64 age range, average net worth is $212,500. Including all age groups median net worth rose 18 percent from the 2016 survey to $121,700.

Why Social Security Benefits Alone Won’t Be Enough

For many Americans, Social Security benefits are the only source of income during their retirement. Social Security was never meant to be the sole source of retirement income, though. Retired workers average a monthly Social Security benefit of $1,543 as of January 2021 – roughly the equivalent of a minimum-wage job. Add the rising debt levels among older Americans and you have a situation that’s a far cry from most people’s’ retirement dream of travel and leisure.

America’s Retirement Savings Gap

Average Retirement Savings

America has a retirement savings gap to match our income gap. People with higher incomes are more likely to have retirement savings and their average retirement savings are higher, too. Meanwhile people with the lowest incomes have no savings and plenty of debt. That shouldn’t come as a huge surprise, but it’s one of the most notable features of the retirement landscape.

It may be counter-intuitive but those near the top can still have big retirement savings gaps. Think of a high-earning family with an expensive mortgage and kids in private school. They may not save much for retirement, and their high standard of living means there would be a big gap between the income they’re used to and the retirement income they’ve saved.

Think lower-income folks can simply work longer and retire later to make up for their lack of savings? Not so fast. Americans with lower incomes may be the ones least able to work into their late 60s and 70s, either because their work is too physically demanding or their employers won’t want to keep them on. It’s a good idea even for white-collar workers not to count on working later as a substitute for retirement planning.

Where You Stand

Average Retirement Savings

Experts generally think of retirement savings as an end goal with a series of mileposts along the way. Some say that you should have saved the equivalent of one year’s salary by the time you hit 30. Saving more certainly won’t hurt, though.

By the time you retire, it can be a good idea to have between nine and 11 times your salary in retirement savings. These aren’t hard-and-fast rules, and experts disagree about how much to save by 30, 35, 40, 45, 50, 55, 60, 65 and beyond.

Conventional wisdom has been that saving between 10 and 15% of your salary each year will get you on your way to a comfortable retirement so long as you choose a low-fee investment vehicle that consistently earns inflation-beating returns. Talking to an expert can help you set and execute a retirement plan.

So why don’t Americans’ average retirement savings match up to what experts say we should have? There are two very good reasons. One is that our brains have a hard time giving up present reward for future reward, especially when that future is decades away. Saving is tough. We can’t picture ourselves choosing between food and prescription drugs in our old age. However, we can visualize what we’d do with our paychecks in the here and now.

The other reason for the retirement savings shortfall is if you don’t earn enough to save for retirement. Juggling necessary expenses, student loan payments, childcare and all the rest can leave us with nothing left for an IRA.

Bottom Line

When it comes to average retirement savings statistics in America, the picture is fairly grim. That means that keeping up with the Joneses in this respect just isn’t enough. Even above-average savings and a healthy Social Security benefit might not be enough to let you maintain your lifestyle in retirement.

Many Americans say they expect to work longer and retire later to get around the retirement savings gap. That’s one strategy but it isn’t a sure thing that you’ll be able to keep working into your 70s. The safer bet is to save as much as you can, as early as you can – and throughout your career.

Tips to Help You Save for Retirement

  • A financial advisor can help you build a long-term strategy for reaching retirement. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Social Security benefits alone won’t be able to support your current lifestyle. However, they can certainly help with your living expenses in retirement. Try our Social Security calculator to see how much of a benefit you can expect.
  • While you’re at it, check out our retirement calculator to see if your savings are on pace; and try our cost of living calculator to get a better idea of your income needs.

Photo credit: © iStock/jpa1999, © iStock/Vernon Wiley, © iStock/Squaredpixels

Amelia Josephson Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia's work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
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