Here’s a look at how much Americans have saved in their retirement accounts by age – are you ahead or far behind?

Here's a look at how much Americans have saved in their retirement accounts by age - are you ahead or far behind?

Here’s a look at how much Americans have saved in their retirement accounts by age – are you ahead or far behind?

Almost half of Americans You do not have a special retirement account, according to the Federal Reserve’s 2022 Survey of Consumer Finances. The survey, which includes the latest government data, shows that only 54.4% of American families reported having dedicated retirement accounts, such as 401(k) or IRA.

Although it’s possible they’re saving for retirement outside of these accounts, few survey respondents reported making other investments. Just for example 1.1% hold bonds directly and only 21% hold shares directly.

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Many Americans who rely solely on Social Security benefits to get through their golden years could be in for a rude awakening. The average benefit According to the Social Security Administration, the amount for a retired worker is $1,907 per month, which equals $22,884 per year. That’s not far above that Poverty line 2022 $17,710 for a person over 65 in a two-person household, according to Census Bureau data.

Although there are several factors that determine how much you should save for retirement, age is an important factor. So how can you compare to your competitors?

Average savings vary depending on age

Of course, the Fed’s numbers are a sum of all age groups. So if you’re just starting out in your career, you may not have a retirement account yet, and your savings will likely increase as you get older. Then you might be curious about how you compare to other people in your age group.

According to Fed data, the share of people with retirement accounts is increasing up to the age group 55-64. Savings are greater for older age groups until people reach age 75+. Then it is likely that drawdowns to fund retirement will reduce their savings.

Here’s a breakdown of the data by age group, including Average of retirement accounts and percentage those with such accounts.

If you’re way behind others in your age group, these numbers might spur you to action. But the amount of savings required varies from person to person at each age – and you may be fine even if you save less than others in your age group. On the other hand, even if you are ahead of others in your industry, you may not achieve your retirement goals.

Read more: Suze Orman says Americans are poorer than they think – but knowing that makes achieving your dream of retirement a lot easier 3 easy money movements

Developing a retirement plan

The first step in developing your savings plan is to do this Determine how much money you need for retirement. Consider how old you are now, when you want to retire, where you want to retire, how you want to spend your retirement, and how many dependents (if any) you need to support.

Also keep in mind that your expenses may change, but they won’t necessarily disappear in retirement. For example, you may have paid off your mortgage, but your medical expenses may be increasing. The size of your emergency fund depends on these expenses and how much you need to withdraw each year to fund them.

The strategies include: 4% rule, where you live off a 4% deduction from your assets every year. Other approaches are based more on total returns, which adjust for market fluctuations (as well as your personal circumstances, such as long-term care or other medical expenses).

It is possible to catch up

A 2023 study published by Northwestern Mutual found that Americans expected they would need $1.27 million in savings to retire comfortably. When you compare that number to the Fed data, it seems like many people are falling well short of expectations. But maybe there is still hope.

How much you can save depends on your income and expenses during your working years, as well as the return on your investments. A financial planner can provide you with invaluable help design a strategy and keep you up to date.

But don’t despair if you’re way behind – it’s not easy, but it’s possible catch up. This requires paying off your debts, identifying the best investment vehicles for your goals, and exploring additional sources of income. Even if it’s you 55 years old or at Retirement age with no savingsYou could downsize your home, consider a home equity loan, purchase an insurance policy, or sell assets such as a second vehicle.

Your retirement plan will be tailored to you, but as you get older, your nest egg should grow larger. If you’re behind, now is the time to formulate a plan to catch up.

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This article is for informational purposes only and should not be construed as advice. The provision is made without any guarantee.

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