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Average Retirement Savings by Age
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I 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? 
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Well according to that, I am doing pretty well but in the U.S. I don’t really think there is much comfort in knowing that you are just better than the average American – especially when it comes to retirement savings.
Wow, those numbers seem really low. Or maybe I just know a lot of above average savers
I’m 30 and fall near the 45-54 category.
Looks like a lot of people aren’t saving for retirement.
I’m in the 55-65 range, but only 26.
I guess that’s why everyone is still hoping for SS or some other program.
Nice, I’m not that high yet. I’m in the 35–44 and 23 years old.
Oh, I misread and thought the article was for more than just IRAs. In that case, I am above average still but not in the next age range. (yet)
Either way it sounds like you’re on the right track, the fact that you’re saving at the age of 23 is a good thing.
Please keep in mind that the numbers above are for IRA’s only. That is, even if you’ve been working for the last 10 years (since you’re 26 now), maxing out your IRA every year, and earning at an INCREDIBLE rate, I still don’t believe you can be in the $69K range. I think you’re looking at your overall retirement savings, not just IRAs.
I had to dig up the historical numbers. IRAs started in 1974 and, until 2001, the annual maximum was $2000. Given this information, I think that the numbers above are actual extremely realistic.
There is a lot of detail in the EBRI report, so I had trouble figuring this out. It seems these numbers are for IRA savings only. Are 401(k) savings included? What about employer-sponsored pension plans? I have all 3, but only a small amount in IRA. Seems the numbers are a lot higher for “all plans” — so a lot of people aren’t counting on SS necessarily.
Those #’s appear to be the *median* balance for defined contribution plans given in Figure 9. Defined contribution plans are pensions or 401ks offered by employers and does not include IRAs.
Figure 9c gives the *average* balance for all defined plan and IRAs which is much higher.
# < 35: $20,512
# 35 – 44: $64,681
# 45 – 54: $126,788
# 55 – 64: $222,067
# 65 – 75: $217,305
Median will be lower than average since the average is pulled up by the rich people.
Ok that makes more sense. So i am in the 35-44 group.
I was going to say the table in the post is very low.
Being laid off several times (with long periods of unemployment) never having a high salary, medical bills and disability has put me below average at age 30. I really need to make some changes since “retirement” may be a moot point.
Not to scare anyone, but if you want to get a rough idea of how much money you need to accumulate in savings, investments, IRAs, 401Ks, etc. for a comfortable retirement, take the income per year you think you’ll need and divide it by .04. So if $60K a year is your number to live comfortably and without worries…… $60,000/.04 = $1,500,000 that you need to accumulated for retirement. Why a .04 withdrawal rate? It is a low enough draw down rate that you should never run out of money as long as you stick to the plan and are invested at least 50-50 between stocks and bonds and earn a long term return of 6 – 8%.
Anyone who is counting on social security alone in retirement is going to be disappointed with their lifestyle.
You are absoluetly correct. and here’s another calculation that people should know. the average social security check is about $1,000 per month,that’s $12,000 per year. Inorder to generate $12,000 per year at 4%, (and no bank is paying 4%right now), it takes $300,000 because $12,000 divided by 4% equals 300,000. Once people understand what it takes to generate income, they freak out and freeze. The wise people will start saving. this is going to affect the economy in a significant way. as people save more, they spend less, on everything. our economy will continue to contract.
What are you using as retirement age?
How many people have no retirement savings at all? Are they included in these numbers or not?
Tyler, the report says : “In 2007, 66.2 percent of families had a participant in a current or previous employer’s retirement plan or an IRA/Keogh,”
I’d read that to mean about 1/3 of families have no sort of pension, 401k or IRA.
I was a bit shocked at how low these were until I read the comments.
Still, if we’re trying to aim in the millions of dollars range, we’re performing woefully as a nation.
There is hope, perhaps, as the markets look to rebound further in the future…
These averages are atrocious… And confirm my experiences… 90% of my friends who get a raise immediately spend all the new money upgrading their lifestyle. At best, they’ll sock away 3-5% of the raise into a retirement account.
We as Americans should be thinking about socking away 20%+ for retirement if we want to live the dream the cruise lines and travel agents are selling… Social security may be a good safety net, but it won’t delivery “the good life.”
The 4% withdrawal rate depends on your age…If you are 90, I truly think you could withdraw more than 4%…LOL
What Anthony (above) is overlooking is the more exotic IRA products like SEP IRA and SIMPLE IRA that can include company contributions. That makes the “limit” far above $2,000 in the years to which he refers. It’s also likely that this is why the median numbers are so much higher than the average numbers.
If you have your own business (even just a sideline one that you report on Schedule C) you can put 20% of gross income every year into a SEP IRA. If more people did that, the prospects of retirement would be greatly enhanced. This is IN ADDITION to the current $5,000 limit on personal contributions.
Based on those numbers, a lot more people need to be thinking about what career it is they plan to be working in well into their golden years.
$56k for the 65-75s is little more than a generous cushion, and certainly not enough to take investment chances with.
Also, I wonder if these numbers are compiled based on the total number of people who have retirement plans, or by the total population including the 1/3 who have no plans.
We have over $500,000 for retirement. We both have participated in employer match plans which we maxed out. We have also paid off all major debt including 2 houses and land.
I generally don’t follow rules of thumb, and I’m glad that I’m well over the average for my age group. But I’m disheartened for people my age who fall below the average. At least there’s still time to right the ship.
Inflation is the culprit in retirement, those on fixed income with the next storm of inflation will be left in the dust!
For those people in a stable large company or government job that provides a regular pension, the value of that pension can be computed by using the same 4% formula in reverse (if the pension goes up with inflation). By this I mean that a person who retires with a pension that sends them a check for $1000 every month when they retire ($12,000/yr), that pension is equivalent to them having an additional “nest egg” at retirement of $12000/.04, or $300,000. Figuring a $2000/month payment from Social Security starting at age 66 today, that would be equivalent to a “nest egg” of an additional $600,000 in that program just for you. Inflation is the killer for pensions, however, unless they are indexed to go up with it, as Social Security presently is.
Who cares! I think everyone will have millions in retirement! Inflation makes everything better. Maybe you should figure on a 9-12% inflation rate and then a real return of 1%. That makes moot any discussion your having now. Just think you might actually need 10 million dollars for a $20,000 salary in today’s terms! It is better to have some gold/silver-it can’t be inflated away.
I guess I’m rich. I don’t get it, what do people plan to live on when they retire?
I’m thrilled that I FINALLY set up my Roth IRA today and fully funded it. So I’m 26 with 5000 in retirement savings.
Congratulations!!!
IRA’s only? Weak. How about some real data.
Anyway, I agree with other commenters – these numbers are pathetic no matter what component of “savings” they represent. And the commentary such as it were not to worry about it if you are below average, is not appropriate. Being below average is bad as everyone knows. The money quote should have been something like this, “If you at 200% of the average or below, and have any debt at all, you’ll be screwed. Better get busy!”
Don’t behave like the Greats. The Greats? Just a Brokaw angle for selling books. The most confiscatory, unreliable, generational and future-stealing generation in history. At least Ponzi convinced his dupes. The Greats use the power and truncheons of the federal government ’cause they ain’t got the talent to trick us. Please have a heart you Greats and stop now.
Josh–HOW TRUE!!!
30 years ago people aspired to a $100,000 retirement nest egg–at then interest rates of 10-15%, you could have easily earned $1000/mo risk free in T-bills or CD’s, which would have been a generous supplement to social security and pension (which most people had back then).
Today we’re being told we need at least $1 million, which might earn 3% risk free, or $30,000/yr. And sad reality: $12,000 would buy you a lot more in 1979 than $30,000 buys in 2009.
How many will save $1 million??? Not many according to the charts above.
Like I said in my earlier comment, people better spend some time and effort planning what they plan to do to EARN what they’ll need past age 65.
you can trade options and make fifty percent a year. easy.
so you only need 120,000 saved to get that 60,000.
and the great part is, anyone can learn to trade options in about a week.
While the numbers appear pathetic, they are for IRA’s and defined contribution retirement plans. One should supplement those vehicles with with an aggrssive plan. Worked for us. I retired in 1995. If I had to line on SS, I would starve. I don’t much believe in rules of thumb. Have a percentage in fix income investments much below the recommended for age. Current annual income is greater than the annual income I ever earned working and it exceeds current annual expendtures. Some day I may have to tap into capital. Get an investment education. A few hour a week can be very profitable and great fun.
I’m below average (by freeby50’s measure), if you look just at my 401(k). I stopped contributing to it as soon as my company stopped matching contributions this year because of the economy. I prefer to control my own money, so I don’t particularly like the idea of government-restricted retirement plans. The bulk of my savings goes into discounted stock purchase initially and I don’t really separate ‘retirement’ savings.
I never really bought into the you can’t pass up free money argument for IRA/401(k) etc. I decided to contribute up to my employer’s match because you can remove money from a 401(k) if you switch jobs, and pay a 10% penalty, for a 90% profit. But why would I want to lock up my money until I’m 65 for hypothetical tax advantages? Who’s to say I will live that long? Or that the United States will even exist? Or that I’ll want to retire? I’d rather pay taxes now and control my own money.
By July 4th, 2008 at 5PM, a bottle of beer cost $100 billion Zimbabwean dollars, but an hour later, the price had gone up to $150 billion; the Los Angeles Times further reported on July 15th, 2008 that the printing presses were running out of paper to print the money, and it was feared that because of human rights concerns, Germany would cut off the supply of paper and the software license for creating designs for even higher denominations of currency. [26] On July 16, the official inflation rate was reported by Zimbabwe’s central bank as 2.2 million percent.[27]
so when its 150 billion dollars for a coke what do i do? save my $? or can i try something different?
Nice post. Two thoughts:
1) You will always need more than you think
2) I have always found that it is better to be above average in most aspects of life!
those numbers are incredible. I’ve never made a ton of money, better than average, but I’m well off the charts and I’m only in my early 30s. I save the maximum on my 401k every year and I’ve never owned a car. (huge waste of money unless you need it to get to work)
there are going to be an awful lot of sick and homeless old people if this is the case. what is everyone thinking????? how can you live on this amount except hand-to-mouth, and in complete health? people need a reality check.
The handwriting is on the wall, and at everyone that I listen to or read is still stuck in some kind of trance. There is no way, at least no pleasant way, to seize the government from the hands of the socialist/Marxist types that are following the plans set from the fifties Toward Soviet America, William Z Foster; or ‘The Venona Secrets: Exposing Soviet Espionage and America’s Traitors,’ or finally, The Communist International, which tell inch by inch how they have covered the USA in threads so tight, Gulliver himself could not get loose.
What is everyone thinking? is like “who didn’t take the trash out?” You will be dust and bones by the time there is an answer to that. I determioned that I was not going to rely on anyone’s charity to survive this devestation. Experts see famine, huge geological upheaval over the next ten years at least. Add that to the agenda to “Cull” the population by 80% and prospering is not an issue, simply surviving will be good enough for me. I work remotely now, from a very nice spot in a grimy third world country. I love it here, its 70 allmost all the time, and wish I had come fifteen years ago. I only have $50k, but here it is like a fortune. I can own a property big enough to grow all my own food on for that, own meaning fully paid for. People starved in the Depression. How soon we forget. If trucks don’t deliver one day, for any reason, there is only three days supply of food in stores. Elite owned news media does not tell you of global drought, and inevitable famine. You all have just a little time left to buy food and store some water, start a garden and put some cash into that useless mattress. The ones that made fun of the mattress lost everything in the bank disaster. Do you think ATM’s will be open if any riots start? If the power goes out, can they call in your credit card? Amerikans have turned into sloppy ignorant baby’s, “sucking at the governments tit.” I wondered how it was that Germans just allowed the Reich to take everything over. Well, there was a plan. False flag attacks, “owning” the media, lots of government spending, indoctrination of the youth, loss of guns, loss of free speech. Same play book. The gun legislation here passed in 1970’s was literally copied from the German documents on file at the library of Congress. Look that up!
I am 49 and seem to have much more in total retirement, investments, etc. put back. I have over 1M +military retirement at 60 (probably worth 350K-400K if in a single premium annuity. I have no debt. I will probably work another 3-4 years tops. My father died at 58, so I want to make sure I at least enjoy life. I am not sure I have enough and am not counting social security in my future income stream, if it happens it is a plus. I think if the numbers above are real, people are in deep doo doo.
The 4% withdrawal rule doesn’t make sense. Suppose your capital is guaranteed,(no stocks!)
and is also guaranteed to grow at least 3% per year. Then, if you withdraw 3% per year, the capital will remain intact and perhaps grow.If you withdraw 7%, then the capital is reduced 4% per year, and will last 20 years.On the other hand, stocks are flat (0% growth over the past 10 years). Financial planners say that in the long run stocks outperform other investments. But, what is “long run”? 30 years ????????????
Most financial planers use 4% withdrawal rates as a rule of thumb, but everyone’s situation is different. I will give you mine as an example. Most current retirees have a defined benefit pension, like the one I have, but more and more employers are going to the 401k or employee funded plan, in which case you would need over 1 million plus dollars to receive $60,000 a year in retirement. $40,000 from your IRA and $20,000 form Social Security, before taxes. I retired at age 58 from the teaching profession and have been retired for almost 8 years. I have an ok life style, but no villa in the Bahamas, that’s for sure. I was able to save $290,000 in my 403b and other investments, which are now all in fixed income accounts. I don’t trust the stock market right now. My pension includes $31,920 from teaching (which usually goes up 3 to 4 % per year) and $15,360 from SS before taxes. That’s $47,280 annually. If I start withdrawing 4% of my 403b, that would put me close to the $60,000 income level. Since the funds are in a variable rate account, there is no guarantee that I will continue to get 4%, however it is guaranteed to pay a minimum of 3%. My wife is still workings part time and does not yet collect SS.
So, it is true that if you have a 401k as your retirement fund you had best save 10%-15% of your income. You also have to remember that an annuity taken at retirement never goes up, so inflation can eat up your income. I think that the average retirement savings chart above is very low, but I saw stats from the US Dept of Labor that only 1 in 3 retirees pay taxes on their SS. That means 2 out of 3 retirees make less than $35,000/year.
If anyone is interested, I have an Excel spreadsheet I posted on line that gives all the info that you need to figure your retirement income. It is base on a 3% annual return and a 4% annual withdrawal. You can also change the numbers to fit your situation. I got it from the Wisconsin Education Association.
http://www.frontiernet.net/~hurlbdou/Income%20Distribution.xls
Looks like I’m doing something right since I’m in my mid 20’s and have almost twice what the average under 35’s er has saved.
I just wish my employer matched contributions to my 403(b). They do give a flat 10% of my salary towards it, so I guess that’s something. But it would be nice to get rewarded to save, just the same.