We all want to retire, don’t we? More and more, working seems like a burden that costs a lot to sustain over time, because of tiredness, out of boredom, because we don’t like work. No matter why, saving for retirement should be next to this constant discomfort, because the body is not eternal and its strength is not either. Retirement savings should be a priority even among the youngest, those who are in their 20s and 30s.
According to a recent AARP survey, approximately 1 in 4 Americans aged 50 and older say they no longer even have hope of retirement, while 70% of these respondents are worried about rising prices, and that those increases will accelerate.
And for those who have the idea of quitting working in their sights, determining how much is the right amount of money they should save becomes more and more diffuse and confusing. The other problem is the distance between the amount of money that people have saved on average in the United States, and what the analysis indicates that one should have to live minimally comfortably.
An analysis conducted by GOBankingRates revealed that to finance a 25-year retirement in Miami, Florida, it would take more than $1.1 million, in contrast to the almost $570,000 needed in McAllen, Texas. These calculations are based on the annual cost of food, housing, utilities, transportation and medical care.
How Much Do Americans Have Saved for Retirement on Average?
One way to understand if your savings are at a good level or not, is to compare them with the average savings, but this is not necessarily an exact metric: it will only tell you how much most Americans have saved.
But, the amount of money you are going to need varies depending on your quality of life and how much the cost of living is of what you require. Data from the Federal Reserve’s most recent Consumer Finance Survey (2022) indicate that the average retirement savings account balance of all American families is $87,000.
According to the age range, these are the averages of savings that American individuals have been able to accumulate:
- Under 35: $18,880
- 35-44: $45,000
- 45-54: $115,000
- 55-64: $185,000
- 65-74: $200,000
- 75 or more: $130,000
The average balance of retirement savings accounts for all families is higher, reaching $333,940, mainly because more affluent households tend to raise this average. The same is true for individual account balances, as shown in the table below:
- Under 35: $49,130
- 35-44: $141,520
- 45-54: $313,220
- 55-64: $537,560
- 65-74: $609,230
- 75 or older: $462,410
How Much Do Experts Recommend Saving for Retirement?
According to the Fidelity consulting firm, there is a savings guideline that can work as a guide to achieve retirement savings goals, which take into account your age and your salary.
According to the savings guideline, you should aim to save the equivalent of a year’s salary every year, so if your salary is $65,000 in a year, then you should be able to save $65,000.
Here’s a quick review of the Fidelity guidelines:
- By age 30: have saved 1x of income
- By age 35: have saved 2x of income
- By age 40:have saved 3x of income
- By age 45: have saved 4x of income
- By age 50:have saved 6x of income
- By age 55: have saved 7x of income
- By age 60:have saved 8x of income
- By age 67: have saved 10x of income
Remember that each case is particular and that these numbers are not mandatory.