Are You on Track? Here’s How Much You Should Have Saved for Retirement at Every Age
Imagine you are at a friend’s dinner, and the topic of retirement comes up. Your friend mentioned that she recently saw a financial planner who told her how much she should have saved by now. Suddenly, everyone at the table starts wondering, Am I saving enough? What does “enough” even look like?
This is a question many of us have, and it’s easy to feel unsure. However, knowing the median retirement savings by age can be a helpful guide that gives you a clear idea of where you stand and what you might aim for. If you are just starting or checking if you are on track, this blog will help explain the numbers and offer easy ways to build up your retirement savings.
Courtyard Luxury Senior Living is here to help you navigate the journey to a secure retirement. In this, we will walk you through what retirement savings typically look like at each age, why these benchmarks are important, and practical strategies to help grow your nest egg at any stage of life.
Why Knowing the Average Retirement Savings by Age Matters
Saving for retirement can feel like a big task, but seeing actual numbers can make it easier. Average and median retirement savings by age gives you a clear idea of where you stand. It helps you adjust your plan as you go through different stages of life. Whether you are in your 20s or 30s or getting close to retirement, these numbers can show how your savings compare, help you set goals, and point out areas where you can improve.
Average and Median Retirement Savings by Age
Retirement savings can vary, and it depends on individual circumstances. Research from leading financial institutions such as Vanguard and Fidelity offers valuable insights into typical savings by age group. While averages are often used, median savings figures provide a more accurate picture, as averages can be influenced by a small number of high earners with exceptionally large savings. Below, we will explore the typical retirement savings benchmarks for each age group.
Age 20-29: Starting Out
For most people in their 20s, retirement might seem like a long way off. Many are just starting their careers, paying off student loans, and managing everyday expenses. But even small savings can make a big difference over time, thanks to compound interest.
Average Retirement Savings: Around $10,500
Median Retirement Savings: Approximately $4,500
Goal: A good goal is to save the equivalent of one year’s salary by the time you are 30. For example, if you earn $50,000 a year, aim to have $50,000 saved by age 30. It will help create a strong foundation for the future.
Age 30-39: Building Momentum
In your 30s, planning for retirement becomes more important, especially as your income usually increases with career growth. However, this is also a time when big expenses, like a mortgage and family costs, might make it harder to save for retirement.
Average Retirement Savings: Around $42,000
Median Retirement Savings: Approximately $16,000
Goal: By the time you reach 40, financial experts suggest having at least three times your annual salary saved for retirement. So, if you earn $70,000, try to have about $210,000 saved up.
Age 40-49: Accelerating Savings
For many people, their 40s are the peak earning years, which makes it an important time to focus on saving for retirement. Even though retirement may seem far away, it’s actually getting closer than you think. It is also a time when "catch-up contributions" can really boost your retirement savings, especially if you are behind.
Average Retirement Savings: Approximately $102,000
Median Retirement Savings: Around $63,000
Goal: By the time you turn 50, financial experts suggest having 5 to 6 times your salary saved for retirement. For example, if you earn $80,000 a year, try to have between $400,000 and $480,000 saved by then.
Age 50-59: Catching Up
In your 50s, retirement feels closer, and maximizing savings becomes a priority. With the possibility of retiring within the next decade, making the most of this time is essential. Fortunately, those over 50 can contribute more to their retirement accounts each year.
In your 50s, retirement starts to feel like it's just around the corner, so focus on saving more. Since you might retire in the next 10 years, making the most of this time is key. The good news is if you are over 50, you can contribute more to your retirement accounts each year.
Average Retirement Savings: Around $174,000
Median Retirement Savings: Approximately $117,000
Goal: By the time you are 60, aim to have saved about 8 times your salary. For example, if you are earning $90,000, try to have around $720,000 saved up.
Age 60-69: Nearing Retirement
As you near retirement, it's important to make sure your finances are in order. You are probably thinking about when to start taking Social Security and how to manage your withdrawals. At this time, knowing how much you’ve saved can give you the confidence to step into retirement.
Average Retirement Savings: Approximately $211,000
Median Retirement Savings: Around $170,000
Goal: A good rule of thumb by the time you are 65 is to have saved about 10 times your final salary. For example, if your last job paid you $100,000 a year, you should aim to have a nest egg of around $1 million to support your lifestyle.
Factors Affecting Retirement Savings
Several factors affect these benchmarks and your ability to meet them, such as:
Income: Higher earners often save more, which skews averages upward.
Expenses: High expenses, like student loans, housing, or medical costs, can limit your savings ability.
Investment Growth: Returns vary depending on investment choices. Compound interest and asset allocation play big roles over time.
Life Events: Career breaks, family needs, and health issues can also impact savings goals.
How to Improve Your Retirement Savings at Any Age
If your retirement savings don’t align with these benchmarks, don’t worry. Here are a few tips to help build your retirement savings regardless of your age:
Start Saving Early: The earlier you begin, the more time compound interest has to work in your favor.
Increase Contributions Regularly: Aim to increase your contributions annually or as your salary rises.
Maximize Employer Contributions: Take advantage of any employer match programs. This is essentially “free” money added to your retirement.
Catch-Up Contributions: If you’re over 50, use catch-up contributions to boost your savings. These allow you to contribute extra to retirement accounts like IRAs and 401(k)s.
Diversify Investments: A well-diversified portfolio can help increase returns and reduce risk over time.
Adjust Your Budget: Even small lifestyle changes can free up extra funds to allocate toward retirement savings.
Conclusion
No matter your age or where your retirement savings currently stand, it’s never too late to take steps toward a secure financial future. Use these benchmarks as guidelines, not rigid rules, to understand your progress. With careful planning, regular contributions, and smart investing, you can set yourself up for a comfortable retirement.
FAQs
What is a good amount to have saved for retirement by age 40?
By 40, experts recommend aiming for about 3x of your annual income in retirement savings. This provides a good foundation as you move closer to retirement.
Can I catch up on retirement savings in my 50s?
Yes, many people make the most progress in their 50s. Use catch-up contributions and maximize your savings rate to help close any gaps.
Is it okay if I don’t meet these benchmarks exactly?
Yes, everyone’s situation is unique. These benchmarks are general guidelines, so adjust based on your individual needs, lifestyle, and goals.
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