Average retirement savings by age: are you normal?

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Many Americans fear that they are not saving enough for retirement, and rightly so.

A recent study by Northwestern Mutual found that 71% of American adults agree that their financial planning needs to be improved. However, only 29% of Americans work with a financial advisor.

The value of working with a financial advisor varies by person, and advisers are legally prohibited from promising returns. Still, research suggests that people who work with a financial advisor feel more comfortable with their finances and could end up with around 15% more money to spend in retirement.

A recent Vanguard study found that, on average, an investment of $ 500,000 would grow to more than $ 3.4 million under the supervision of an advisor over 25 years. In contrast, the expected value of self-management would be $ 1.69 million, or 50% less. In other words, a portfolio managed by an advisor would have an average annualized growth of 8% over 25 years, compared to 5% for a self-managed portfolio.

Shocking savings statistics

About half of American households have no retirement account, according to the Government Accountability Office.

The National Institute on Retirement Security reports that nearly 40 million households have no retirement savings, while the Employee Benefit Research Institute estimates that Americans have a retirement savings deficit of $ 4.3 trillion. dollars.

But all is not catastrophic, and many Americans are saving for retirement.

In August 2021, Fidelity reported that average 401 (k) balances exceeded $ 129,300 and average IRA balances greater than $ 134,900, and those who had been saving for more than 10 years averaged over $ 400,000.

In addition, the number of 401 (k) millionaires reached a record high of over 365,000 in the first quarter of 2021.

General guidelines for retirement savings

Some say you should have saved the equivalent of a year’s salary by the time you hit 30, but saving more certainly won’t hurt. When you retire, it may be a good idea to have between 9 and 11 times your salary in retirement savings.

It is widely accepted that saving between 10% and 15% of your salary each year will lead you to a comfortable retirement as long as you choose a low-cost investment vehicle that consistently generates returns above inflation. Talking to an expert can help you build and execute a retirement plan.

Average U.S. retirement savings by age

According to Fidelity, here’s what the average American has saved for retirement:

  • 20 to 29: $ 15,000

  • 30 to 39: $ 50,800

  • 40 to 49: $ 120,800

  • 50 to 59: $ 203,600

  • 60 to 69: $ 229,100

The best way to increase your retirement savings

Regardless of your current retirement savings situation, one of the best ways to increase your contributions is to work with a financial advisor.

As previously mentioned, research suggests that people who work with a financial advisor feel more comfortable with their finances and could end up with around 15% more money to spend in retirement.

Chances are there are several highly qualified financial advisers in your city. However, it can seem intimidating to choose one.

Our free tool makes it easy for you to find a trusted and reputable advisor so you can make an informed decision and choose the right one for you. You can now be matched with up to three local Trust Investment Advisors who have been selected and subject to our due diligence criteria. The whole pairing process only takes a few minutes.

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