Editor's Note: This story originally appeared on NewRetirement.
Keeping your retirement savings on track helps you meet your retirement goals. That seems like a very simple concept, and in a way it is. But living with that plan every day isn’t quite so simple.
Knowing how much one should save for retirement is useful — it can motivate you to take action. And it can be interesting to compare your savings with the average savings rates for every age.
Why You Need to Save for Retirement
More than one-third of Americans don’t have a written retirement plan. But with people living longer, you could need to fund retirement for 20-30 years or more. Without being in the workforce, that money has to come from somewhere. And that “somewhere” will be your retirement savings.
But, what about Social Security you say? Well, Social Security isn’t intended to sustain you on its own. And unless your retirement lifestyle goals are extremely modest, it can’t. (Learn about the reality of living on Social Security alone.)
So what should you do to ensure a financially stable retirement?
- Know how much you need to save.
- Save, consistently.
- Invest your savings.
- Develop a retirement withdrawal plan for your assets that ensures your money lasts while minimizing the impact of taxes, inflation, market fluctuations, and other unknowns.
Read on to learn how much people have saved for retirement at every age.
How Much Should I Save for Retirement?
For every person who will ultimately retire, there’s “a way” to plan and save for it. However, there’s no single right amount to save, and there’s also no ultimate wrong amount.
Unless, of course, you don’t plan or save at all.
The important thing is getting started, getting caught up if you need to, and staying on track until you’re ready to start taking those distributions.
How much you need to save is dependent on your lifestyle, how old you are, how long you will live, where you live, when you will stop working, and many other factors unique to you and you alone.
You can use a simple retirement calculator to get a quick estimate for how much you should be saving, but a more detailed and comprehensive tool will give you more confidence and help you discover the many different paths to a secure future.
Average Retirement Savings
Look. You are not average. The following average retirement savings numbers are not going to be that useful in terms of setting savings goals. Why? Average numbers are skewed by the highest and lowest earners. And there is a significant wealth disparity in the United States.
However, averages can give you an idea of how much you should be adding to your accounts each decade — assuming you would like to retire at age 65 and sustain an average lifestyle. Keep reading to see the average retirement savings for your age.
Average Retirement Savings in Your 20s
According to Federal Reserve Survey of Consumer Finances (SCF) data, the average retirement savings for people in their 20s is:
- $4,745 for people ages 18-24
- $9,408 for people 25-29
To be frank, that’s not a whole lot.
How much should a 20-something be saving?
People in their 20s generally earn less than they will later on. But saving is still important, no matter what you earn. In fact, the irony is that it is more powerful to save (and invest those savings) when you are young.
Investing your money in your 20s means that you have many more years for that money to compound and grow. The more you save now, the less you need to save later. Fidelity Senior Vice President Jeanne Thompson says, “When you are young is precisely the time to start saving for retirement. Even though it can be a challenge to save for the future, giving your savings those extra years to grow could make the struggle worth it.”
Many financial experts recommend that people in their 20s save 10%-15% of their income, which would be about $5,000 a year at an average salary that would net you up to $50,000 by the end of this decade.
Now, consider this:
That $50,000, invested in the stock market with historical average returns of 11%, can turn into just shy of $2 million by age 65. That’s without adding anything afterward! Starting early allows you to embrace the power of compounding fully. Because of this, we too agree with Thompson when she claims this is “precisely the time to start saving.”
The more you can sock away now, the better!
Average Retirement Savings in Your 30s
According to Federal Reserve SCF data, the average retirement savings for people in their 30s is:
- $21,732 for people ages 30-34
- $48,710 for people 35-39
How much should a 30-something be saving?
The average savings numbers probably won’t be adequate for a secure retirement. It would be better to have closer to $50,000 or more saved at age 30 and have amassed $108,000 more by the end of the decade for a total of $158,000.
So, think about how you can save more than $10,000 a year in your 30s.
Tips: Earnings tend to improve in this decade as you get settled in a career and start building working relationships. And the savings you started in your 20s keep adding up. Fidelity suggests you also boost your savings rate to 18% of your pre-tax income.
The pain of giving up more spending money can be made easier if you put your raises directly into your retirement account.
And if your employer offers a 401(k) match, take it! That’s free money, and who would turn down free money?
Also, if you didn’t do it in your 20s, consider setting up a Roth IRA while your earnings are still relatively low compared to what you might be earning in your 40s. Roth IRA contributions are taxed when you put them in, but the distributions — after they’ve had 40 years to grow — are tax-free.
Average Retirement Savings in Your 40s
According to Federal Reserve SCF data, the average retirement savings for people in their 40s is:
- $102,000 for people ages 40-44
- $149,000 for people 45-49
Nope, this won’t be enough to sustain an “average” lifestyle in retirement. Though, do remember, you are not average.
How much should a 40-something be saving?
It would be better to have closer to $158,000 or more saved at 40 and to amass $140,000 more by the end of the decade for a total of $298,000.
(Though, yes, you can always catch up or make adjustments to your lifestyle or retirement date later …)
And, remember, you are not average. The average salary for someone in their 40s is around $70,000 a year.
You may be making much more or much less than this, and that can help determine how much you should be saving. But, your earnings are not the only determining factor. Your future plans, your home equity, and other factors will impact your savings needs.
While you may be raising a family and be overwhelmed with expenses, now is the time to boost your savings rate. You are beginning to close in on retirement, and you don’t have that many years to allow your money to grow.
Average Retirement Savings in Your 50s
According to Federal Reserve SCF data, the average retirement savings for people in their 50s is:
- $146,000 for people ages 50-54
- $249,000 for people 55-59
Yikes, the averages are still not adding up to be enough for an average retirement.
How much should a 50-something be saving?
The average American worker in their 50s earns $75,000 to $80,000.
If that is the course you are on, it would be better to have closer to $298,000 or more saved at 50.
And, closing out the 50s, you should add $156,000 more for a total of $454,000 by the time you are pushing 60.
That’s quite a leap from a decade earlier, but the more that you save the more that it grows, and the more confident you can feel about your future security.
Your 50s are a particularly crucial decade for retirement. One thing to keep in mind is that workers over 50 are more likely to be laid off than younger workers, and the Center for Retirement Research at Boston College estimates that 75% of workers between ages 50 and 62 don’t have an employer-sponsored retirement plan. This is the decade when keeping up-to-date on your retirement plan is absolutely crucial.
However, you have options. Side gigs can bump your income. And did you know that most entrepreneurs are over 50? Learn more surprising facts about starting a business when you are older.
More good news? You can contribute more to your 401(k) and IRA when you are over 50.
Average Retirement Savings in Your 60s
According to Federal Reserve SCF data, the average retirement savings for people in their 60s is:
- $221,450 for people ages 60-64
- $206,800 for people 65-69
How much should a 60-something be saving?
Saving? Saving in my 60s? Shouldn’t I be retired and spending those savings at this point?
Well, the average savings for most 60-year-olds is still not going to support an average lifestyle. So, yes, if you are average, it is advised that you keep working and saving.
At 60, the average you should probably have is around $454,000 in retirement savings. And, if you were to max out all tax-advantaged catch-up savings opportunities for 401(k)s and IRAs, you could be saving an additional $34,000 a year to amass $170,000 more between ages 60 and 65.
That is a lot in just five years, but totally possible. Your 60s may be the pinnacle of your earning years. By age 65, the average American salary is $80,000 (though only $31,000 for the lowest 25%).
At this stage, you have probably put some major costs (kids and housing) in the rear-view mirror and can really accelerate your savings.
You also need to get serious about when you will retire. If you haven’t saved enough, you still have options. Tapping home equity, working longer, reducing expenses, part-time jobs or side hustles are all viable ways to make retirement work.
What to Save If You Are Not Average?
Averages are not a good benchmark. Almost no one is average, and there are huge differences in earnings and the cost of living in various areas of the country.
So, how do you know how much you should be saving?
The widely accepted rule of thumb is to save 20% of your salary. But rules of thumb are like averages: They just don’t apply to everyone.