Are you trying to figure out how much money you should save for retirement? While the average retirement savings by age can provide you with a useful benchmark to see how you stack up against the rest of the population, it’s not the only thing to take into account. Your lifestyle and income, in addition to your age, are important considerations when figuring out how much money you should save for your golden years.
The average retirement savings by age, the amount you should save for retirement by age, and other things to think about when estimating how much money you might need to retire are broken down here.
Keywords: Retirement Savings, Average Savings, Age-Based Benchmarks, Retirement Planning, Financial Advisor
Retirement planning is a crucial aspect of financial security. As you approach your golden years, it’s essential to have a clear understanding of how much you should have saved to ensure a comfortable and financially independent retirement. This article explores average retirement savings benchmarks by age, providing insights into how much you should aim to have accumulated at different stages of your career.
Average Retirement Savings by Age
While averages can provide a general guideline, it’s important to remember that individual circumstances vary widely. Factors such as income, spending habits, investment choices, and retirement goals all play a significant role in determining how much you need to save for retirement.
Here’s a breakdown of average retirement savings by age:
| Age | Average Savings |
|---|---|
| 35 and under | $30,170 |
| 35 to 44 | $131,950 |
| 45 to 54 | $254,720 |
| 55 to 64 | $408,420 |
| 65 to 74 | $426,070 |
| Over 70 | $357,920 |
Source: Federal Reserve Survey of Consumer Finances, 1989-2019
Limitations of Average Savings Benchmarks
While average savings benchmarks can offer a starting point for evaluating your progress, it’s crucial to understand their limitations:
- Individual Circumstances: Averages don’t account for individual factors like income, spending habits, and retirement goals.
- Market Volatility: Investment returns can fluctuate significantly, impacting the growth of your retirement savings.
- Inflation: Inflation erodes the purchasing power of your savings over time.
Retirement Savings Goalposts by Age
To provide a more personalized perspective, Edward Jones has developed generalized retirement savings goalposts by age and salary. These goalposts consider factors such as taxes, spending preferences, and market volatility to offer a more nuanced view of how much you might need to save at different stages of your career.
Here’s a table of retirement savings goalposts by age and salary:
| Age | $50,000 Salary | $100,000 Salary | $150,000 Salary | $200,000 Salary |
|---|---|---|---|---|
| 20s | $0 – $0 | $0 – $0 | $0 – $40,000 | $0 – $140,000 |
| 30s | $15,000 – $55,000 | $30,000 – $105,000 | $175,000 – $320,000 | $330,000 – $540,000 |
| 40s | $105,000 – $160,000 | $215,000 – $315,000 | $500,000 – $690,000 | $790,000 – $1,070,000 |
| 50s | $230,000 – $300,000 | $465,000 – $600,000 | $930,000 – $1,180,000 | $1,405,000 – $1,780,000 |
| 60s | $395,000 – $485,000 | $795,000 – $975,000 | $1,500,000 – $1,840,000 | $2,225,000 – $2,725,000 |
Source: Edward Jones Retirement Savings Benchmarks
Methodology and Assumptions
Edward Jones’ retirement savings benchmarks are based on the following methodology and assumptions:
- Lifestyle and Savings Habits: Benchmarks assume maintaining current spending levels (adjusted for inflation) in retirement.
- Savings Rate: Savings are assumed to be 15% of gross income, adjusted for inflation at 3% annually.
- Tax Rate: An effective tax rate of 25% is applied to income after deducting pretax savings.
- Investment Returns: A 6% annual return is assumed pre-retirement and 5% post-retirement.
- Retirement Age and Life Expectancy: Retirement is assumed at age 65 with a life expectancy of 90.
- Income Sources: Retirement income is assumed to come from Social Security and portfolio withdrawals.
- Social Security Benefits: Maximum Social Security benefit in 2022 is $35,916, with a minimum of 35% of gross income.
- Portfolio Withdrawals: Withdrawals are taxed at 25%.
The Importance of a Personalized Approach
While retirement savings benchmarks can provide a helpful starting point, it’s crucial to work with a qualified financial advisor to develop a personalized retirement plan. A financial advisor can consider your unique circumstances, goals, and risk tolerance to create a tailored strategy that helps you achieve your retirement aspirations.
Understanding average retirement savings benchmarks and personalized goalposts can help you gauge your progress towards a secure retirement. However, it’s essential to remember that these benchmarks are just guidelines. Working with a financial advisor is the best way to develop a personalized plan that aligns with your individual needs and ensures a comfortable and financially independent retirement.
Additional Resources:
- Edward Jones: Average Retirement Savings By Age
- Synchrony Bank: Median Retirement Savings by Age
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor for personalized guidance on your retirement planning.
How Much Money Do You Need to Retire?
Although it can be helpful for comparisons, looking at the national average and median retirement savings by age doesn’t necessarily reflect where you are in your savings journey. In the end, there’s no magic number that works for every person’s financial situation, and there are various approaches to figuring out how much money to set aside for retirement. Take into account the following elements to determine how much you need to retire:
Why You Shouldn’t Rely on Social Security
Social Security isn’t meant to be your sole source of income when you retire, even though many Americans rely on it. As of December 2022, the average monthly salary for a retired worker is $1,680, which is marginally above the minimum wage.
Social Security won’t be sufficient if you want to travel or if you have a lot of debt that you can’t pay off before you retire. For this reason, it’s crucial to open a retirement account and not rely solely on Social Security income. Furthermore, keep in mind that your Social Security benefits are unaffected by the amount of money you save in an IRA or 401(k).
Average Retirement Savings by Age 62 – Entering the Retirement Years
FAQ
How much should a 62 year old have saved for retirement?
|
Age
|
$50,000 salary
|
$200,000 salary
|
|
62
|
$435,000 – $530,000
|
$2,420,000 – $2,945,000
|
|
63
|
$455,000 – $555,000
|
$2,520,000 – $3,065,000
|
|
64
|
$475,000 – $580,000
|
$2,625,000 – $3,185,000
|
|
65
|
$500,000 – $605,000
|
$2,735,000 – $3,305,000
|
How much money should I have when I retire at 62?
How many people have $1000000 in retirement savings?
What does the average American retire with?