Retirement Savings: How Much Will You Need?
How much other people have saved for retirement isn’t a savings benchmark. Age is just one of the factors when thinking about how much you should save for retirement. It shouldn’t be taken as a rule of thumb, however, looking at how much a person should save by the time they’re in their 20s, 30s, 40s and so on is great to give you a general idea of what to work towards.
It should come as unsurprising to you that as you get older, retirement saving balance expectations tend to increase. In other words, the closer you get to retire, the more money you need to already have in your bank account.
Let us look at the average retirement savings based on how old a person is.
Average retirement savings for a person in their 20s
Massive student loan debt burdens and stagnating wages are the biggest obstacles for millennials when it comes to saving for retirement. The Transamerica Centre for Retirement Studies has estimated that the median retirement savings for millennials are $31,000. Fidelity has said that a person in their 20s who are saving for their retirement should have about one year's worth of their salary saved by the time they reach 30. With that logic, a 25- year old should have 25-50 percent of the aforementioned number.
Average retirement savings for a person in their 30s
A person in their 30s paints a different picture from a person in their 20s. A person in their 30s usually earns more than a person in their 20s. They do typically have more responsibilities than a person in their 20s. They might get married or have children which raises their expenses. This makes it harder for them to save for their retirement. The Economic Policy Institute 300 has done the math and said that the average retirement savings of Americans who are 32 to 37 are $31,644. The number sharply jumps up when you talk about people in their late 30s as well as early 40s. When you go to the late 30s and early 40s, savings sharply jump up to $62,270 when you talk about Americans who are 38 to 43.
Fidelity has recommended that by 35, an American should have twice their salary saved for retirement with that number rising to thrice your salary by the time you hit 40.
Average retirement savings for a person in their 40s
A persons 40s is usually thought of as their peak earning years. However, when you factor in costs such as paying for a son or daughter’s college education, it puts a damper on a persons ability to save.
Americans in their early 40s have a median of a little bit over $67,000. 44 to 49-year-olds have their average savings clocking in at $81,349.
Average retirement savings for a person in their 50s and over
A person in their 50s should have a large nest egg setup over careful years of saving. Data from the EPI shows that the reality is quite different with people in their 50s and 60s still having a long road ahead.
Research has shown that families aged 50 to 55 typically have $124,831 saved up with the number jumping to $163,577 for families aged 56 to 61. These numbers look large but are a far cry away from the $1 million that many experts recommend as a target for people to strive towards when it comes to their savings.
There are many things you can do to put you back on course if you haven't saved as much as you need to for retirement. Talking to a financial planner about your options is the first step in the right direction if you're thinking about change.