If you feel that the fear of running out of money in your retirement keeps you up at night, do not worry that you are not alone, saving enough for your future and that money will reach you over a good 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 make an approximate, that they will need about 1 million dollars or maybe more, to achieve their retirement comfortably, although the average American does not have anything similar, the average household retirement account balance in 2022 was about $334,000, according to the latest Consumer Finance Survey.
First of All, Don’t Panic as Retirement Approaches
Before you get scared, you should take into account that averages can be somewhat misleading when we talk about finances, this is because in large part because they include those who are very wealthy, who probably 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) has a more vivid 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, firstly, 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.
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.
Focus on What You Need for Retirement, the Magic Formula
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) retirement 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.
