How do you know if you’re saving enough for retirement? You’ll find several charts and guidelines online to give you an idea of where you should be. When you look at those numbers, you could do as Alana Benson wrote about in articles that appeared in NerdWallet and Tampa Bay Times.
“The desire to know where you land in the sea of retirement savers is natural, and it can help either kick-start more progress or give you a feeling of satisfaction. But no matter how the numbers make you feel, they may not be the best measure of whether you personally are on track for retirement.”
According to the 2019 Survey of Consumer Finances, the average retirement savings for all families is $255,130. Their median retirement savings sits at $65,000.
Just looking at those numbers isn’t overly helpful. And breaking them down by age won’t give you a great picture of where your finances should be. Age is only one factor because not everyone will retire at the same age.
Retirement savings’ balances tend to increase with age. The closer you are to retirement, the more you should have stashed away.
Retirement Savings By Age
Just so you can compare where you are according to the Survey, here’s a list by age. It’s also from the NerdWallet article. Benson explained how over- and underachievers in each group can skew the averages. Therefore, included is a median balance to give a more realistic picture of retirement savings.
Average household retirement savings: $131,950
Median household retirement savings: $ 60,000
The survey found 56% of households have retirement accounts. For those under 35, these are strong earning years, happening alongside peak spending years.
Ages 45 to 54
Average household retirement savings: $254,720
Median household retirement savings: $100,000
About 58% of households have retirement holdings. These can be peak earning years.
Ages 55 to 64
Average household retirement savings: $408,420
Median household retirement savings: $134,000
Close to retirement, about 54.5% of these households have retirement holdings.
Ages 65 to 74
Average household retirement savings: $426,070
Median household retirement savings: $164,000
Because most in this category are in retirement or at least of retirement age, they are probably spending instead of accumulating savings. According to the survey, 48% of this group have retirement accounts.
Says Benson, “After this point, average and median retirement account values begin to fall, as does the percentage of people who have retirement accounts. Households headed by someone age 75 or older, the median value of retirement holdings is $83,000 with an average holding of $357,920.
Learn From The Numbers
Most aren’t saving enough for retirement and are entering retirement with very little stashed away. Those numbers are benchmark numbers. “If you use them as your guiding star, you’ll likely be in the same state as most of the country: unprepared for retirement, writes Benson.
She continues, “How much you should have saved, and how much you should be saving, have nothing to do with where others your age stand. It has everything to do with your income, planned retirement spending, expected retirement age and life expectancy.”
How Much Should You Save
An article from Synchrony Bank gives a “rule of thumb” for how much individuals should have saved in their retirement accounts for a goal of retiring by age 67. It says:
Americans in their 30s: 1-2 times their annual salary
In their 40s: 3-4 times their annual salary
50s: 6-7 times their annual salary
And Americans in their 60s need to have accumulated 8-10 times their annual salary.
The same article also references the 80% rule. It states you should plan to live on 80% of your pre-retirement income. Also mentioned is considering your personal goals. Do you plan to retire early, leave a nice inheritance for your heirs, own a second home or have money for accommodating health challenges? You may need to adjust your planning.
Online you’ll find several retirement calculators to help you know how you’re doing. They tell you how much you should be saving, how much to plan on spending annually and how much social security you can hope to receive. They’ll give you a few suggestions for your personal retirement planning.
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