What Is the Average Retirement Savings Balance by Age?

With pensions a rarity nowadays, it’s up to workers to save for their own retirement.

“I tell everyone to begin saving as early as possible,” says Laurie Rowley, CEO and co-founder of Icon Savings Plan, which offers IRAs that can be funded through payroll deductions.

But how much should you be saving? That’s a question a financial planner can help you answer, but it may also be helpful to consider how your personal savings compares to others in your age range.

Average Retirement Savings Balance by Age

Perhaps the most official measure of American retirement savings comes from the Federal Reserve System. The Fed calculated average retirement account balances for individuals in 2019, the latest year for which figures are available. Broken down by age, those balances are as follows:

For many people, a 401(k) plan is their largest retirement account. In 2022, financial app Empower calculated the average 401(k) balances of its users:

“As a starting point, those can be interesting to consider,” says Ben Bakkum, an investing researcher for retirement plan provider Betterment. However, he says workers should go deeper than looking at averages when determining their own savings goals.

Rule of Thumb for Retirement Savings

The amount you’ll need for retirement can vary based on factors such as lifestyle choices and your area’s cost of living. However, financial firm Fidelity suggests people save for retirement using the following rule of thumb based on their annual income:

Financial planners may have their own variation of this recommendation. For instance, Rowley suggests the following savings goals:

If these recommendations feel too ambitious, start with just six months’ worth of salary by age 30, says Lamar Brabham, CEO and founder of the Noel Taylor Agency, a financial services firm in Myrtle Beach, South Carolina. Then, work up to having four to five times more than that by age 40.
While these rules of thumb vary slightly from advisor to advisor, it is apparent that many Americans are falling short. According to the Bureau of Labor Statistics, the average American’s annual wages across all occupations as of May 2022 was $61,900. That means the average retirement account at age 67 should be $619,000, based on Fidelity’s guidelines.

How to Determine How Much to Save for Retirement

Before assuming you can’t reach the recommended level of savings, check to see how your current savings are expected to grow. You may be closer than you think.

“That’s one of the biggest struggles for some people,” says Vanessa N. Martinez, founder and CEO of Em-Powered Network, which provides professional consulting and mentorship. “When they see a big number, that seems scary.”

To provide some perspective, Martinez recommends using the investment calculator offered by the U.S. Securities and Exchange Commission to see how much your money can be expected to grow by retirement.

Younger workers who have decades until retirement – known as having a long time horizon – may find that even a modest amount of savings can grow significantly thanks to compounding gains. The rate of return and inflation are also factors to consider when determining whether you are saving enough.

“We usually talk to (clients) in terms of a combination of balance sheet and cash flow,” Brabham says. While having significant assets is important, retirees need to be able to access their money to create regular income.

“You have to have cash flow,” according to Brabham. “That’s what it’s all about.”

Cash flow can come from many income sources, including Social Security and pension payments, withdrawals from savings and income from rental property investments. Purchasing an annuity is another way to generate steady cash flow in retirement.

Tips to Boost Your Retirement Savings

If you don’t think you’ll be able to achieve the cash flow needed for a comfortable retirement, there are several ways to boost the balance in your accounts.

“One of the best ways is to make more money,” Bakkum says. That could mean looking for a better paying job, picking up additional hours or starting a side gig.

Another way to boost savings is by cutting spending. Martinez suggests using a 50/30/20 budgeting system in which 50% of your income is used for expenses you need, 30% can be spent on wants and 20% is set aside for savings. For those with tight budgets, she notes many people spend money on things they don’t even necessarily want, such as subscriptions they forget about.

Savings will go further in retirement if they aren’t eaten up by taxes. “We think tax is going to be a real problem,” Brabham says. To minimize how much people pay the tax collector later in life, Brabham tries to steer his clients toward Roth accounts. These require taxes be paid on contributions but then can be accessed tax-free after age 59 1/2.

While knowing the average retirement savings by age is one way to determine whether you are on track, meeting with a financial planner may be a better way to check your readiness for retirement. Either way, make saving consistently a financial priority to ensure you can retire when and how you want.