Average Retirement Savings by Age - How Does Your Savings Stack Up? - Good Financial Cents® (2024)

You’ve been busting your butt, scraping by, trying to save as much as you can into your retirement accounts, but you never feel like it’s enough.

Money is such a taboo subject that most of your co-workers don’t feel like opening up about how much they have saved (or how much they wish they would have), so it’s tough trying to gauge if you’re even in the ballpark of actually retiring one day.

How do you know how you compare to the average retirement savings figure?

According to a recent survey, 51% of workers over the age of 55 have less than $50,000 saved for retirement. And 39% in that same age group have less than $25,000 in retirement savings. Those are frightening numbers if you consider that those people are very close to the typical age of retirement.

Guide to Retirement Savings

Time Magazine’s 2023 survey data reveals a trend of increasing bank account balances among Americans, generally correlating with age. The recent findings are as follows:

• Workers under the age of less than 35 have $11,250 in savings.

• Those between the ages of 35 and 44 have roughly $27,910.

• Workers ages 45-54 have saved just under $48,200.

• Baby boomers, those aged 55-64, have approximately $55,320 in savings.

• Those 65 and over have saved $57,670.

The data categorizes savings across various age groups, from workers under 35 to those aged 65 and over, highlighting a consistent upward trend in savings with age progression.

Half of the Baby Boomers don’t have enough money saved for retirement just to cover basic needs.

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What can you do? First, you need to figure out how much money you will need for your retirement. There are many variables that must be considered including:

• At what age do you plan to retire? If you are thinking about leaving the workforce early, you will need more money for retirement as you will be retired longer. Consider how long you will be retired. Not a thrilling thing to ponder, but crucial nonetheless.

• How much of your current income do you feel you will need on a yearly basis once you retire? A common percentage range is 65-75%. Be sure to think about whether you will want to travel or relocate. Some people would like to have money to leave to their children. If this is true in your case, you might want to work with a percentage closer to 100.

• Don’t forget inflation. Figure about a 3% per year inflation rate. Say you make $100,000 yearly and have decided that you require 65% of that per year during retirement. It is not sufficient to multiply $100,000 by 65% and come up with a neat amount of $65,000. Adding in inflation means you need to multiply your yearly salary by 1.03 and then take 65% of that.

Remember you’ll have to factor in a 3% growth each year! Although, honestly, inflation could be so much more by the time you get closer to retirement. A sobering thought.

How to Get Your Retirement Savings Above Average

Once you come up with a rough estimate of what you will probably need for retirement, you need to start saving more. Seriously. With the average savings figures what they are, chances are you are not saving enough. Here are a few simple tips to kick your savings into gear:

1. Save more. Add to whatever you are currently putting aside. Even a small amount, over a number of years, will add up. Put aside the most you possibly can.

2. Take advantage of any plans your employer may offer. If you haven’t already, find out if your place of work offers 401(k)s. Many companies contribute matching funds up to a certain percentage of your salary. But make sure you know how your money is being invested. Just because Dave Ramsey says to “get your free money first” doesn’t always mean it’s a good idea, especially if you are clueless about how it’s invested.

3. Open an IRA. Even if you have a 401(k) you can usually put aside extra funds into an Individual Retirement Account.

Remember, you may think you are prepared for retirement. But statistics show you probably aren’t.

Adjusting Your Retirement Savings Plan Over Time

Adjusting your retirement savings plan is a dynamic process that evolves with life’s inevitable changes. Various factors, such as market fluctuations, changes in income, health, and personal goals, necessitate a regular reassessment of your retirement strategy to ensure it remains aligned with your objectives.

Initially, a higher risk tolerance may allow for aggressive investments, aiming for substantial long-term gains. However, as retirement nears, shifting towards more conservative investments, like bonds or fixed incomes, helps preserve the accumulated wealth, reducing vulnerability to market volatilities.

Additionally, life transitions such as marriage, parenthood, or career advancements bring about shifts in financial priorities and disposable income. These transitions require a recalibration of your savings rate and investment choices to adequately support your changing financial landscape and retirement aspirations.

Regularly reviewing and adjusting your retirement savings plan, in consultation with financial advisors, ensures its resilience against economic uncertainties and personal life changes, keeping your retirement goals within achievable reach.

Best Places to Kickstart Your Retirement Savings

It is never too late to kick your retirement savings into high gear. Getting started isn’t difficult.

All you need:

• a brokerage account to hold your Traditional IRA or Roth IRA

• the discipline to save each week or month

Here are some great places to open your Individual Retirement Account:

E*Trade

E*Trade is one of our favorite brokerage firms. With E*Trade, you get access to tools that can help both novices and seasoned investors reach their retirement goals. E*Trade is one of the best in the business, offering Traditional IRAs, Roth IRAs, and 401(k) rollovers.

When it comes to trades, E*Trade’s costs are extremely competitive at $0 on stocks, options, and ETFs.

Open an account with E*Trade to enjoy the perks of having an account with one of the best online brokers.

TD Ameritrade

TD Ameritrade makes the process of opening and funding your Roth IRA very easy. It can take you less than 15 minutes to open up a brand-new IRA.

(That means you can’t say “I don’t have time to open a Roth IRA!”)

Even better, TD Ameritrade is willing topay you to open an account with them. Bonuses range from simply being able to trade free for 60 days to up to $600 in cold hard cash deposited into your account.

Open an account with TD Ameritrade and get up to $600 just for opening an account.

Betterment

Betterment takes the issue of analysis by paralysis out of retirement accounts.

One of the common complaints people use as an excuse for not saving enough for retirement is that it is too difficult to choose investment options.

Deciding between ETFs and stock mutual funds, bond funds, and the like can be very confusing.

Not so with Betterment. The company uses a sliding scale of risk to balance your portfolio between two baskets of investments: a bond ETF basket and a stock ETF basket.

It’s incredibly simple and makes having to decide what to do a lot easier.

Plus, you get $25 if you open an account with at least $250.

Open an account with Betterment to kickstart your retirement savings.

Best Places to Open a Roth IRA (And Get Sign-up Bonuses, Too!)

Want to look at all of your options for brokerage firms? We’ve culled the list of major retirement account providers down to show you which ones are the best. We also want to make sure you are getting the most bang for your buck — brokerage firms offer big sign-up bonuses for you to open an account with them.

If you’re going to open an account, you might as well get a bonus, right?

Here are the two resources we’ve created:

• Best Places to Open a Roth IRA
• Best Online Stock Broker Sign-Up Bonuses

What are you waiting for? Stop putting off saving for retirement, get your savings into gear, and open a great account today to help you get there.