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Average Retirement Savings

Around half of American households have no retirement accounts at all. No 401(k)s, no IRAs, nothing. You might think that’s because they’re all expecting pension income in retirement. In fact, according to the Government Accountability Office (GAO), around 29% of households age 55 and older have neither retirement savings nor a pension. It doesn’t paint a pretty picture.  

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What Is Average?

According to the National Institute on Retirement Security, almost 40 million households have no retirement savings at all. The Employee Benefit Research Institute estimates that Americans have a retirement savings deficit at $4.3 trillion. That means all U.S. households (with a head of household between the ages of 25 and 64) have $4.3 trillion fewer 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 actually have retirement accounts) was just $59,000 in 2013. The mean balance was $201,300. Those numbers might not sound bad but consider that a retired couple’s medical costs were recently estimated to be about $200,000. And that’s only medical costs. (Here’s some advice to consider if you can’t pay your medical bills.)

Unmet Savings Goals

It isn’t just retirement accounts that Americans lack. Looking at overall net worth tells a similar story. According to the Census Bureau, the (median) average net worth excluding home equity for an American 35-44 years old is $14,226. In the 55-64 age range, average net worth is $45,447. The picture of Americans’ net worth looks better if you include home equity, but not every American will be able to tap into that equity to pay for retirement. The financial crisis showed how borrowing against your home equity can go wrong.

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. Retired workers average a monthly Social Security benefit of $1,354.04 as of October 2016. Add the rising debt levels among older Americans and you have a situation that’s a far cry from most peoples’ retirement dream of travel and leisure.

America’s Retirement Savings Gap

Average Retirement Savings


Yes, 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 U.S. retirement savings landscape.

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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 60’s and 70’s, 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, but saving more certainly won’t hurt.

By the time you retire, it can be a good idea to have between 9 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 percent 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, like a financial advisor that matches your goals, 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 but we can picture what we’d do with our paychecks in the here and now.

The other reason that Americans fall short when it comes to retirement savings is that many of us don’t make enough to both save for retirement and have the life we want. 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 pretty bleak. Average just isn’t enough. Even above-average savings 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. You may say you want, plan or hope to work into your 70s, but what if your boss has other ideas? It’s risky to bank on working longer. The safest thing to do is save as much as you can throughout your career and to start saving as early as you can.

Tips to Help You Save for Retirement

  • Social Security benefits aren’t enough to replace having your own retirement savings. 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.
  • The amount of retirement savings that you’ll need depends on where you live. Try our cost of living calculator to get an idea of how much you’ll need.
  • More people are retiring later and more people are also working in their retirement. If you plan to work into your retirement, consider some of the best cities for a worktirement.
  • Retirement isn’t all bad. Many people look forward to retirement as a time to get out and have some fun. If this is you then check out our list of the best places for an active retirement.

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

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Amelia Josephson Amelia Josephson is a staff writer covering financial literacy topics at SmartAsset. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.


Mylie C 1 year ago
Here's the path to retire on your own terms, in 7 steps: 1) Pay off your debts as fast as you possibly can. If this means living in a crappy studio apartment and eating ramen everyday for a couple of years, do it. If you want to buy a car, get a reliable beater. Get insurance for $25/month from Insurance Panda. Forget about buying a house until your debts are paid off. 2) Once you are out of debt, stay out of debt. The only exception to this rule is a vehicle and a house. If you want to get a nicer car, buy used and be able to pay it off in a year or 2. 3) If you are going to stay in the same spot for at least 10 years, buy a house, preferably with at least a little bit of usable land. An acre is good, 5 acres is better. Take the amount you are pre-approved for and cut it in half - that's how much you should spend on a house. Come to the table with at least 20% down and make a couple of extra mortgage payments every year. If you're going to be transferred or relocate every
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Zahra H 2 years ago
A good insight into how hard it is to save for some people. I really appreciate the point you made about the savings gap for the rich. It's true that being richer doesn't mean that you are saving better than the average person. Being rich only works well, if you are able to curb your desires in the present for a better future. But that's easier said than done. Once you have all that income flowing into your household, people usually tend to spend a lot more carelessly and end up buying luxury items, which they would've lived without had they been in a lower income bracket. It is because of this excessive spending on wants that causes a rich man to save way less than he should.
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