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Average Retirement Savings by Age

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Tradeking - Discount Online BrokerI don’t put much stock in most “averages,” whether they’re rules of thumb or average net worth, but every once and a while it’s good to know where you stand.

So where do we find the average retirement savings by age? We are forced to rely on the internet. Unfortunately, with the recent stock market crash, writing about nest eggs and average retirement savings hasn’t been very popular. To get data, we turn to the Employee Benefit Research Institute’s latest report on Individual Account Retirement Plans (August 2009).

The EBRI’s report has a ton of detailed information on almost everything you might want to know about retirement savings and participation, from defined contribution plans to IRAs. For the purposes of our comparisons, I’ll just look at the age breakdown (2007 figures adjusted to 2009):

  • < 35: $6,306
  • 35 – 44: $22,460
  • 45 – 54: $43,797
  • 55 – 64: $69,127
  • 65 – 75: $56,212
  • 75+: (sample size insufficient)

Some words of warning after you read this:

  • Remember that this data is just data, you can’t draw any conclusions of what’s right or wrong from the statistics alone.
  • If you’re “below average,” you shouldn’t feel bad about it. Age is not a good indicator of where you are in your life. Some people get a later start and others have a more inflated lifestyle, how much you’ve saved by when should only give you a bar to reach.
  • If you’re “above average,” you shouldn’t rest on your laurels and think you’re doing great. Much like the words I wrote for those who are below, being above doesn’t mean you’ll have enough for retirement. You have a few years until retirement, a lot can happen then, so keep at it.
  • Average doesn’t mean someone in their 20s that has more than $6,306 is set in retirement (or that someone with less is screwed). It’s estimated that you should spend about 4% of your nest egg each year. At 4%, your nest egg should last long enough. How does that 4% figure translate to your estimated yearly expenses? Divide how much you think you’ll spend by 0.04 and you have your target (based on that rule of thumb) – $50,000 a year requires a nest egg of $1.25M.

Much like average net worth, it’s useful to know where you stand but don’t put too much stock in it.

How do you stack up? :)

{ 284 comments, please add your thoughts now! }

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284 Responses to “Average Retirement Savings by Age”

  1. Tak Nomura says:

    Scott, That’s the funny thing about the taxes we pay; some very rich people (and that’s also subjective as to income level) complain that their taxes are too high. If some rich folks making $5 million/year, and pay $2.5 million in taxes, I think that’s a fair tax for the rich. If another makes $200,000/year, I do not believe it’s fair to tax them at the 50% rate.

    The reason we are able to live so well on so little is the simple fact that we have no mortgage or car payments. Our property tax is also small compared to our neighbors who bought recently. Their property taxes for one month exceeds our taxes for the whole year.

    We can thank Prop 13 for our current property taxes, but I also believe Prop 13 was not developed properly; there should have been more a balance between older home owners like us vs the people who purchased when prices of homes peaked a few years ago – with all the attendant inflation in prices over the past 40-years plus.

    • Scott says:

      I think the Prop 13 thing should have been tied to something, say wage inflation, for property taxes. Prop taxes are a big reason I have not bought here in Cali. We can pay cash for a home, but I can’t buy a home in our neighborhood for under $700k and the taxes on that would be appx. $800-900 / month.

      We average a measley 3% on most of this money ($21k annually) and pay $2,100 / month for a 1700 sq ft home. I figure that’s a net rent of $1,200 / month, not to mention the money we make on our pathetic 3% CD’s and other fixed income investments.

      We’re coming out way ahead unless we hit some hyper-inflation and then I might just jump in…

    • Spokes says:

      Why do you think a 50% tax rate is fair for anyone living in this country?? Insane, everyone should be taxed at the same rate across the board. What is my incentive to make more money if I just get hit with higher taxes to pay for a wasteful government? Pah.

      • Wharf Rat says:

        Amen – why is it fair that someone who makes $5 million get half their income taken away?! What a crock – people should be rewarded for their success, not punished.

        It should be the same rate for everyone, and let the producers keep their profit.

        • ALH says:

          Totally agree!!! Who are these people who think they are important enough to “decide what to take from the rich”? It should be a flat tax. And even with a flat tax, the rich pay WAY more than someone making $50K a year! And funny thing is, they use WAY less government subsidies as well. It is just a redistribution of wealth. Punish the risk takers and successful people, give it to people who are okay with “settling” for a measley income and take minimal risks.

          • mickey says:

            pretty judgemental there ALH. If your not rich, your just “settling” ?

          • phil says:

            I would think that if you are rich then you made your money, inherited, or won it. I believe most that earned it somehow had special opportunities, good luck, or had specail talents one doesn’t find in all people. SOme are very good with words, think fast on their feet, and make friends well. Others are good with art, music, and other fields. There are many that are average as God couldn’t make us all the better ones.
            So when one jumps out on top with millions of dollars, yes, working hard with those special talents that not all have, one ought to should share in the good fortune as it doesn’t take millions to live. One can spend only so much money on oneself. Taxes, sharing the wealth isn’t bad. Like the 2.5 million in taxes one pays on 5 million earned isn’t going to leave the individual starving, wanting for, but it may motivate them to want to earn more.
            I accept the taxes I pay as a part of being able to live in a country that allows me the opporutnity to make that money. There are times I pay less and other I pay more but it is better than not having the opportunity to exploit my luckly talents that others don’t share.

  2. Tak Nomura says:

    Rental makes a lot of sense for people right now when you consider the property taxes in buying a home – especially in our ZIP code. Our prices have remained pretty strong, because most who live in our ZIP code are engineers, doctors, and other professionals who’s income justifies it. Most of our neighbors are old-timers like us or have PhDs, or work in some management capacity. We have a couple across the street from us who renovated their home (it took about 2 years) to expand their home, install a new bathroom with floors that warm up, and a master bedroom with custom made cabinets, and spent over a million bucks just to stay here. Our “major” renovation cost $100k two years ago.

    I’m not sure when we’ll be selling and moving out, because that decision will be made by my wife – when she thinks it’s time to move into a retirement home.

  3. Scott says:

    Yeah, most I know who own homes (some have lost them) already are grandfather’d in to the lower tax bill. I’ll have to wait for my own satisfaction of tax / life quality.

    Regarding retirement home, we would love to get a small place in North Central Arkansas (Blanchard Springs area). Great trout fishing and not many people know about it. I’ve been going there since I could walk and love it for a vacation area. Otherwise, we will eventually go back Dallas way one day, but loving it a lot here. We will have a hard decision to leave here as we’ve come to love it…

    I’m glad I’m not the only one with the wife situation…

  4. Paul says:

    The article is weak.

    It talks about “averages” and then presents data that I believe is medians, not means(averages).

    It also fails to define what savings is included and what is not.

    For example, most of my retirement money is in beachfront homes, tracts of growing trees, etc.

    I cashed out my 401K about 4 years ago because I wanted the money to invest overseas.

    So where do I fit into this data??

    Given the deficiencies in how it is written, I have little idea, except to note that somebody in the 55 and upwards age bracket with only $50 – $70K in retirement savings is probably doomed to catfood on stalebread.

    • Scott says:

      I like catfood & stale bread…agreed on all your comments. I would assume that this is based on retirement accounts in banking / investing institutions as you’s have a hard time quantifying the other data. The only other way to get an average would be to take random data from all (or at least, similar) states & cities of married and un-married individuals and make a few assumptions.

      I have nothing in homes or alternative investments, so I’m an “average” 39 year old with $850k in the bank / investments / 401k’s…married, of course.

      I fear for my kids growing up in this mess of a world…

      • Paul says:

        Scott, if you have $850k in the bank, congratulations, you are in the top 10% in this country. In other words, you’re rich. Most people in this country make less than $50k a year and have $0 in the bank. Don’t complain too loudly about taxes, you can afford it apparently.

        • Danbronx71 says:

          Don’t complain too loudly about taxes?

          We live in a representative Republic. It’s your duty as a citizen to make sure bureaucrats don’t walk allover your paycheck like a doormat.

        • robert says:

          Paul start saving small amounts in 401k now and use Fidelity or Vanguard IRAs to dump into when you loose jobs. Thats what I do. You wont get rich but it adds up. Us under 50k people need to look out for eachother. Politions wont

    • joe says:

      I disagree about the cat food on stalebread. They won’t be able to afford the cat food.

  5. Tak Nomura says:

    Like income and taxes, averages have very little meaning. There are too many variables to obtain accurate data.

    It’s human nature to seek financial information to see where one fits in the general scheme of things, but that’s not an important issue. What is important is how the individual makes plans and goals for the long term to have enough $$$$ to live comfortably in retirement.

    Making plans for later never works.

    • phil says:

      Tak, are you saying you $$$$ plans didn’t work.

    • robert says:

      Mr Nomura Keep it simple. Go to IRA?401K calculator add your age and 7-8% return print it out.That way you know if you are on track. Find out abought Fidelity or Vangard IRAs to dump your 401K money into when you loose you job. Sad but it happens to me too often. You wont get rich but a plan that needs work is better than no plan

  6. Greg says:

    To all those complaining about the taxes they pay. I find it very interesting that anyone making a million plus would complain. For instance there are people making 70K paying 12-15k in taxes and never complaining. Remember to be grateful as one of the other people on this tring mentioned for your good fortune. It is true that we are all not born with the same intelect,abilities are social status. What we do all share is the country in which we live and for many of us the opportunities we have been able to acheive. Think of yourself in context of being part of society and your ability to contribute part of your civic duty and stop complaining about helping your fellow man and be grateful and thankful for all you have…

    • maestra says:

      Amen!! In our current economy with a virtual highway from the middle class to poverty I whole heartedly agree. A great nation such as ours should be judged by how well we care for those who cannot. Not just those that can.

      • Matt M says:

        Greg and Maestra you guys should move to a socialist country, the U.S is obviously to great for you guys.

      • babyjake says:

        Okay, I agree but having the government do this for us is not the way to go. Leave this to the charities, churches and individuals that have the interest and abilities. Otherwise you are taxing an economy that is trying to compete with the world that is much less taxing on the companies and individuals that are supporting their economies.

    • K Macmullen says:

      Spoken as a dedicated socialist liberal; aka communist. No sir, this is capitalism, I know many people who started with $less than $20, had no handouts and made millions, It’s not their civic duty to pay for their loser neighbors son’s drug addictions and idiotic choices in life. We are born with pretty much the same opportunities – and that’s where it ends folks. Don’t buy that communist propaganda for a minute; it’s a cancer on society and it was proven with the recent downfall of the soviet union (collapse) lazy no incentive society!!!

      • z pak says:

        Amen K Mac. Life is choice. Wake up and complain or do something different. Make good choices and learn from mistakes.

  7. CDub says:

    I’ve been working for 4 years now. I am 27.

    These numbers don’t make sense to me. I have $84k in my 401k currently.

    Can some shed some light how this happened?

    • Don says:

      For every person in your situation with $84,000 in retirement under the age of 35 there are 12.33 people under 35 years that have no money invested in their retirement.

      • Matt says:

        Don i don’t want to say your lying because there is a chance your 401k could be at 84k after 4 years if you saw returns of close to 30% (possible since you got in at the bottom in 2008, but still not probable). But I still think your lying unless your including other accounts as well since even in todays limits you can only put in 16,500 a year.

    • Zak says:

      I’d say you have an extremely well paying job for someone who has only been working for 4 years. If you can afford to put away 21K a year…that’s more than many 27 year olds make in a year. That’s how that happened.

      • ryan says:

        Actually zak,

        Im 22 and in the military. I make 26k taxed and through housing benefits etc i actually net 39k a year.

        Not alot but damn good for not having a college education.

        Anyways. I have no famliy and no debt to speak of. After all bills fixed and variable I have roughly 2300 to live on for the month…no this is not a joke. If i only spend 500 on food and activities a month I will easliy save 21k a year.

        Its quite simple actually. I drive the same old car ive had since i was 17-I dont have cable-I do not have a “smart” phone. The only luxary I pay for is internet. Other than that I live with a roomate in a cheap apartment.

        Its not hard to save money if your smart about your spending.

        I have one year left-and I should leave with roughly 40k-50k. 10k of which will be in a retirment account. (roth ira)

        • babyjake says:

          Ryan,
          That is great you sound like my son. Only thing I would say is the military is a pretty good gig you sure you don’t want to stay in! They need folks with a good head on their shoulder like you!

    • Anonymous says:

      Because you are saver that makes a good income. Most people in their 20s are busy drinking and trying to get layed. You might be able to retire well off by 60.Tey might retire late 60s broke

  8. A.scott says:

    Phil is an idiot.

  9. jdub says:

    I am 57,my wife is 55 we currently have about $640000.00 in our 401Ks, hope to have at least a mil when I turn 65

  10. K Macmullen says:

    For all these communists out there, take a look at the recent downfall of the soviet union. You see, people had no “incentive” because government provided everything for everyone. With no incentive, the society can’t keep up with capitalistic, competitive societies and it ends in collapse.Yes, some people are born into very wealthy families, but that’s a small fraction. In general, we are all born pretty much with the same opportunities. We all make choices, some choose to go onto college and get a dentis degree or engineering degree; others choose to take drugs and rob party stores. It is completely illogical for those who make smart choices to pay for those who make poor choises.

  11. K Macmullen says:

    This is a communist site – they won’t let me post anything on how communism is a cancer proven by the downfall of the soviet union. Just because I made some good choices such as going to college, why should I pay for upkeep of my pot-smoking, party-store robbing neighbor? Not 1 red cent buddy…. You make some good choises, you reep the benefits, you make stupid choices….


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