How much do you have saved for your retirement? Obviously, the answer depends on everything from your financial situation to retirement goals. And, another consideration? Your age.
As an example, in terms of retirement savings and personal savings, Millennials are right smack in the middle when compared to older generations. That’s not too shabby considering that, generally speaking, Millennials are scared of retirement.
Gen Xers (age 41 to 56) have more savings than younger generations, with an average of $67,100 saved for personal use and $98,900 set aside for retirement. Neither generation, however, comes close to the personal savings and retirement accounts of Baby Boomers (ages 57 to 75), who have an average of $102,400.
What about Gen Z? In comparison with their elders, the youngest generation, who are aged 6 to 24, has an average of $35,900 in personal savings and $37,000 saved for retirement.
The survey, on the whole, found that Americans have grown their personal savings by 10 percent from $65,900 in 2020 to $73,100 in 2021. What’s more, the average retirement savings have increased by a reasonable 13 percent, from $87,500 to $98,800.
The Median Retirement Savings by Age
Based on a survey conducted by Transamerica Center for Retirement Studies, the median retirement savings by age is:- Americans in their 20s: $16,000
- Americans in their 30s: $45,000
- Americans in their 40s: $63,000
- Americans in their 50s: $117,000
- Americans in their 60s: $172,000
- Ages 18-24: $4,745.25
- Ages 25-29: $9,408.51
- Ages 30-34: $21,731.92
- Ages 35-39: $48,710.27
- Ages 40-44: $101,899.22
- Ages 45-49: $148,950.14
- Ages 50-54: $146,068.38
- Ages 55-59: $223,493.56
- Ages 60-64: $221,451.67
- Ages 65-69: $206,819.35
Twenty Somethings
Paychecks are based on experience. So if you’re in your 20s and just starting out, you’re probably near the bottom of the pay scale. Additionally, you’re likely to owe a lot on student loans. In fact, those paying student loans in 2019 pay an average of $299 to $299 a month, found the Report on the Economic Well-being of U.S. Households.The good thing is that those in their 20s have at least 40 years left before they retire. As such, you have more than enough time to catch up on your retirement savings. Contributing to your employer-sponsored retirement accounts, such as 401(k) plans or 403(b) plans, is the most important step you can take. If you’re curious, the contribution limit in 2021 and 2022 are $19,500 and $20,500, respectively.
Pro-tip for Saving for Retirement in Your Twenties
While contributing to a company-provided 401(k) is an excellent start, don’t forget to build an emergency fund first. In the event of unexpected expenses, such as car and house repairs, setting aside money to cover these expenditures prevents you from depleting your retirement savings.Thirty Somethings
When in your 30s you’ve probably increased your status at work or gained enough work experience. As a result, you’ve moved up from entry-level to the middle or upper echelons. At the same time, you have more responsibilities than you did when in your 20’s.Most likely, you’re married with a few children, own a home, and you’re still paying off your pricey student loans. As a consequence, you may be tempted to put saving for retirement on the back burner. After all, you need to pay off your mortgage and take family vacations. Also, there will always be unexpected expenses, like trips to the mechanic or urgent care.
If possible, shore up your family’s budget and increase the amount of salary that you save annually to reach your retirement goals. And, your annual income will need to be saved at a higher percentage if you have not yet begun saving.
Let’s say that you don’t begin your retirement savings until 30. If so, Fidelity suggests you include 18 percent of your salary a year, while someone starting at age 35 is recommended to include 23 percent. This is a big chunk of your income to save—especially if you have monthly bills and debt to pay.
Pro-tip for Saving for Retirement in Your Thirties
It’s easy to just focus on short-term expenses, but make long-term goals like retirement a priority as well. You might also want to consider saving for your children’s college. By keeping a close eye on your cash flow now, you may not have to work as hard to reach your retirement savings goals later. You should also encourage your children to practice good money habits by making savings a family affair.Forty Somethings
When you are in your 40s, your career is probably at its peak. You’ve worked hard and now, hopefully, you’re being rewarded for your efforts. Also, it’s likely that you’ll be able to stop paying student loan payments sometime this decade—it takes an average of 19.7 years to pay off a bachelor’s degree loan. In turn, you can throw that money toward other things, like your retirement savings.At the same time, you may have additional expenses to cover during these years. Examples include maintaining your home and helping your kids with items like their first car or college education.
In August 2021, the median household savings amount was estimated to be $93,000. As a rule of thumb, Fidelity recommends having three times your annual salary in savings by 40. For instance, if you’re earning $55,000, you should already have $165,000 in your bank account. At 45, you need to have four times your annual salary set aside. And, by 50, you should have six times your annual salary saved.
What if you are behind schedule? Well, it’s in your best interest to max out your 401(k). You should open an Individual Retirement Account (IRA) if you do not already have one, and max out that account as well. Contributions for both 2021 and 2022 are capped at $6,000 each.
Pro-tip for Saving for Retirement in Your Forties
The good news is that there’s still plenty of time to catch up to funding a comfortable retirement. Put retirement at the top of your budget after essential needs, such as your mortgage and utilities. And, if you’ve maxed out your 401(k), consider buying an annuity. It offers a guaranteed lifetime income, grows tax-deferred, and there are no contribution limits as well.Fifty Somethings
Just because you’re approaching retirement age doesn’t mean that you still can save your golden years. On the flip side, if you’re a parent, you may be helping your kids with tuition or expenses like car insurance or phone bills. In addition to your house getting older and needing repairs, you are likely facing rising medical costs.In terms of median savings, fifty somethings are estimated to have about $107,000-far short of the six to eight times annual income that Fidelity recommends.
It’s possible to make “catch-up contributions” to your IRA and 401(k) or 403(b). If you’re over 50, you can contribute an extra $1,000 to your IRA and $6,500 to your 401(k) or 403(b) in 2021 and 2022. Instead of downsizing, you could sell your home and collect any appreciation.
Pro-tip for Saving for Retirement in Your Fifties
Again, you may contribute an additional $1,000 to your IRA and $6,500 to a 401(k) or 403(b) if you’re 50 or older as a “catch-up” contribution. And, by age 59 ½, you’ll be able to withdraw from your IRA or annuity penalty-free. But if you can afford to put that off, you’ll likely accumulate a larger savings pool in the long run.Sixty Somethings
You usually begin reaping the benefits of decades of saving during this decade. According to Fidelity, by the time you turn 60, you should have accumulated eight times your annual salary, and by the time you turn 67, ten times your annual salary.Sadly, Transamerica reports that the median savings for sixty-somethings are at merely $202,000. Let’s not sugarcoat this. If you’re behind on your retirement savings, the clock is running out. Take a look at your assets if you are behind on your savings and see what kind of monetization might be possible at some point in the future.
Pro-tip for Saving for Retirement in Your Sixties
Calculate your savings and other investments as you prepare for retirement. You should also keep in mind how much income you will need to sustain your lifestyle during retirement. What’s more, you should begin factoring in health care costs, knowing when to claim Social Security benefits and continue to take advantage of catch-up contributions.Figuring Out Your Retirement Savings Target
A retirement savings calculator can help you set a target. You can compare your retirement savings progress to your peers by comparing your retirement contribution and annual income.Due to the large number of variables involved in retirement planning, it might seem daunting. But the important thing is just to get started. As early habits become strong, the rest of the numbers will gradually become more visible and achievable. If you’re unsure where to begin, talk to your financial professional.
Frequently Asked Questions About Average Retirement Savings by Age
1. How Much Will I Need to Retire?
Several factors affect the amount you need, such as your age when you retire, your life expectancy, and how much income you receive from retirement plans and Social Security. In the event that your spending needs exceed your retirement income, you’ll need to withdraw from your retirement savings in order to fill that gap.You should consider three factors when deciding how much to withdraw, how long to do it, and how much you earned or lost on your savings.
2. How Long Will My Retirement Savings Last?
Depending on how much you save for retirement, how much you withdraw each year, and the market performance during the years you withdraw from your account, you will be able to sustain your retirement savings. Combining these factors and estimating how long your planned savings will last can be done with the help of a financial advisor.3. When Should I Claim Social Security?
When it comes to retirement planning, your age is important. In many cases, it makes the most sense to wait until your full retirement age (or later) before taking your Social Security benefits. You can start claiming at age 62, but your benefit is reduced at that point. In the long run, this reduction can cost you a lot, and a surviving spouse will have to be paid that reduced amount after your death.The increase in benefits occurs at the rate of roughly eight percent per year if you delay claiming until age 70. Technically, however, the calculation looks at every month, so you don’t have to wait until your birthday. However, after the age of 70, waiting is rarely beneficial.
4. Should I Buy An Annuity?
Investing in an annuity provides lifelong income protection. You may not need additional income insurance in retirement if you have other guaranteed sources of income, such as Social Security and a pension. Nevertheless, you may consider buying an annuity if you don’t have much-guaranteed income.5. When Do Most People Retire?
Whenever you’re financially able to stop working, you can retire, but there are times when you’re not able to do so. A whopping 40 percent of people have had to retire earlier than planned, primarily because of health issues (caring for themselves or an elderly relative) or job changes. These numbers come from Employee Benefit Research Institute (EBRI), a nonprofit organization.The median retirement age in the United States is 62, according to EBRI.
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