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Average Retirement Savings by Age: Are You on Track?

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

retirement by age

Originally published by SmartAsset.

A recent Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor.

The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns. Still, 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.

A recent Vanguard study found that, on average, a $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.

Shocking Savings Statistics

Around half of American households have no retirement accounts at all, according to the Government Accountability Office.

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 $4.3 trillion.

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

In August 2021, Fidelity reported that the average 401(k) balances were over $129,300 and average IRA balances over $134,900 and those who’ve been saving for over 10 years averaged over $400,000.

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

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General Guidelines for Retirement Savings

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

Conventional wisdom has been that saving between 10% to 15% of your salary each year will get you on your way to a comfortable retirement so long as you choose a low-fee investment vehicle that consistently earns inflation-beating returns. Talking to an expert can help you set and execute a retirement plan.

Average American Retirement Savings by Age

According to Fidelity, the following is 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 Boost Your Retirement Savings

Regardless of where your retirement savings stand right now, one of the best ways to increase your contributions 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.

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