If you think that the fear of running out of money during retirement keeps you awake, calm down, you are not alone, saving enough for your future and extending that money over a long term are not an easy task, although you may not be in the place where you want to be right now economically speaking, your savings may not be as below those of the average US citizens as you think, for many, there is still a lot of time to make a change.
Many workers have made an estimate, that they will need about 1 million dollars or maybe more, to retire in a comfortable way, although the average American does not have anything similar, the average household retirement account balance in 2022 was just under $334,000, according to the latest Consumer Finance Survey.
Is Your Retirement Fund Enough?
Before you get scared, you should keep in mind that averages can be misleading when we talk about finances, this is largely because they include those who are very wealthy, who, possibly, have tens or even hundreds of millions of hidden dollars, seeing the average savings (how much the household has exactly in the middle of the data set) gives a more realistic picture of how Americans are doing in saving for their retirement.
The average savings was only 87,000 dollars in the year 2022, there are some things worth emphasizing here, first of all, it is about household savings, not personal savings, if you are married, make a comparison of your combined savings and those of your spouse to see how they compare with this, not those of each person alone.
Saving for Retirement is Harder Than You Think
Secondly, this takes into account all types of workers and families, including the young single adult who is just starting out in the working world, to those who are on the doorstep of retirement, so, while it may be comforting to know that you may not be as below the typical American as you thought, this figure of $87,000 does not say much about how you compare with others at your time of life or about how much you really need to save for retirement.
Instead of overthinking, by how your savings compare to others, make a calculation of how much you think you have for retirement and make a plan to achieve it. Start by taking note of how much you have in all of your retirement accounts. Don’t forget about any accounts you have over time with previous employers.
Then, make a calculation, of how much you need to save per month to achieve your goal, a retirement calculator can help you, if you expect a contribution equivalent to your employer’s 401(k) plan, remove that from your monthly savings goal to calculate what you have to save on your part.
When this number is within reach, the way forward is quite easy. Keep working and remember to save money every month. Things are more complicated if you can’t save as much as you would like right now.
How much to expect if you plan to rely on Social Security benefits
The maximum Social Security retirement benefits increased in 2024 by 3.2% compared to 2023, thanks to the cost of living adjustment (COLA), an increase that is made every year so that beneficiaries do not lose purchasing power in the face of inflation.
If part of your retirement plan is to rely on Social Security benefits, keep in mind that although the maximum that the SSA can pay to beneficiaries is $4,873, the average that most beneficiaries are receiving is $1,907 per month.
These are the maximum in 2024, depending on the age at which they choose to start receiving payments:
| RETIREMENT AGE | MAXIMUM SSA BENEFIT IN 2024 |
|---|---|
| 62 | $2,710 |
| 65 | $3,426 |
| 66 | $3,652 |
| 67 | $3,911 |
| 70 | $4,873 |