Average Retirement Savings by Age: Are You on Track?

Many Americans worry they’re not saving enough for retirement, and rightfully so.
retirement savings

Originally published by SmartAsset.

Nearly 71% of U.S. adults admit their financial planning needs improvement, yet 29% of Americans work with a financial advisor, according to a recent study.

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

SmartAsset’s no-cost tool simplifies the time-consuming process of finding a financial advisor. A short questionnaire helps match you with up to three fiduciary financial advisors that serve your area, legally bound to work in your best interest. The whole process takes just a few minutes, and in many cases you can be connected instantly with an advisor for a free retirement consultation.

Shocking Savings Statistics

The National Institute on Retirement Security reports that almost 40 million households have no retirement savings, while the Employee Benefit Research Institute estimates Americans have a retirement savings deficit of $3.68 trillion.

But it’s not all doom and gloom, and many Americans are saving for retirement.

Fidelity reported that the total 401(k) savings rate for the first quarter of 2022 reached a record 14%, while the total number of Fidelity IRA accounts increased 11% over the first quarter of 2021. The average 401(k) balance for those who’ve been saving for over 10 years averaged over $380,000.

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General Guidelines for Retirement Savings

You should have saved the equivalent of one year’s salary by the time you hit 30, according to Fidelity research, but saving more certainly won’t hurt. By their estimates, you should aim to 3x your average salary by 40, 6x by 50 and 8x by 60 with the hopes of having 10x saved when it’s time to retire.

These recommendations are based on a person saving 15% of their income beginning at age 25, investing at least 50% in stocks and a target retirement age of 67. Of course, saving for retirement is different for everyone. If you feel like you’re behind in savings, want to make sure you’re on track, or want to find investment vehicles to help you save more, talking to an advisor can help you set and execute a retirement plan.

Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all in on stocks, an advisor that prefers bonds and index funds is not a great match for your style.

Average American Retirement Savings by Age

American’s Average Retirement Savings by Age

An October 2020 study by the Center for Retirement Research calculated median retirement account (401(k)/IRA) balances by age from Federal Reserve survey data. Here are the numbers:

  • 35 to 44: $51,000
  • 45 to 54: $90,800
  • 55 to 64: $120,000

The Best Way to Boost Your Retirement Savings

Regardless of where your retirement savings stand right now, one way you can help get a retirement plan in place is by working with a financial advisor.

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

Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one.

Our no-cost tool makes it easy to find a reliable, reputable advisor so you can make an informed decision and choose the right one for you. Now you can get matched with up to three local fiduciary investment advisors that have been vetted and subject to our due diligence criteria. The entire matching process takes just a few minutes.

Click here to get started.

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