What Is the Average Retirement Savings Balance by Age?

If you’re struggling to save for retirement, you’re not alone. 

Over half of Americans are behind on their retirement savings goals, while another 10% don’t know where they stand at all, according to a recent survey by CNET’s sister site, Bankrate. And 80% of households with older adults are financially struggling or at risk of facing economic insecurity as they age, according to data from the National Council of Aging. 

Inflation, wage loss, the high cost of health care and student loan debt have added to the pressures of not being able to save. How much do you need to feel comfortable without a regular paycheck? Will Social Security payments be enough to cover expenses? 

Read on for a rundown of the average retirement savings by age and for advice from experts so you can prepare to hang up your work clothes forever. 

Average retirement account savings by age

To get a sense of the average retirement savings by age, we looked at the Federal Reserve’s most recent Survey of Consumer Finances. The latest data is from 2019, so keep in mind these figures might be different today, particularly if we factor in economic hardship around the pandemic. 

It’s important to note that these figures reflect people in each age bracket who have dedicated retirement savings accounts. Less than 60% of people have retirement savings accounts, and only 45% of those 35 or younger have any retirement savings. 

If you’re trying to figure out how your retirement savings stack up, the average isn’t always the best indicator. Many financial experts prefer to look at the median, which indicates the middle marker -- half of people have more, and half of people have less. Here’s a rundown of the median retirement savings by age of those with dedicated retirement savings accounts.

Read more: I’m 37 and Have Already Enough Saved to Retire. Here’s Why You Shouldn’t Wait Any Longer

How much should you save for retirement?

Though retirement savings data might be helpful in telling the story of how financially ready (or not ready) people are to stop working, these figures won’t help you find the magic figure you need for retirement. 

“Every family has a different number,” says Casey T. Smith, president of Georgia-based Wiser Wealth Management. For example, large families with a lot of needs and hobbies are going to have a different financial target than a small family without as many pastimes. 

Still, there are some goalposts you can set. According to Smith, you should be able to save at least 10% of your income in your 20s. Try to increase that to 15% of your income in your 30s. If you’re just getting started in your 40s, try to save 25%. 

To figure out how much you’ll need for your retirement, schedule a meeting with a financial adviser so you can get some professional assistance in making your plan. And think about the answers to these questions before you do. 

• Where do you plan to live? If you’re comfortable downsizing and moving to a more affordable destination, you might be able to save some cash to cover additional expenses. You’ll also need to consider property tax bills. Even if you’ve managed to pay off your mortgage, you’re going to need to budget for your property tax installments, which vary widely across the country.

• What do you want to do every day? If your idea of the good life is going on hikes and reading, you won’t have as many demands on your bottom line. If you want to play a round of golf each morning and spend a week of each month traveling somewhere new, though, you’ll need a significantly bigger cushion.

• How long do you think you’re going to live? There is no crystal ball here, of course, and it can be a daunting question to consider. However, it’s helpful to think about your family history as well as your health. You might end up spending money longer than the average person.

Forms of retirement savings

401(k): A 401(k) is an employer-offered plan that allows you to start saving for retirement and reduce your taxable income. For example, if you earn $70,000 this year and you contribute $10,000 to your 401(k), you will only pay taxes on a $60,000 income (although you’ll pay taxes on the money in your 401(k) when you eventually withdraw the funds). Many employers offer 401(k) matching programs that contribute additional money up to a certain percentage amount.

IRAs: IRA stands for Individual Retirement Account, and there are two types to choose from: a traditional IRA, which offers some tax advantages in the here and now, and a Roth IRA, which allows tax-free withdrawals in the future but comes with some salary limitations. Regardless of which you choose for your specific financial situation, IRAs are a nice option for self-employed individuals, and they can make a solid addition on top of a 401(k).

Social Security benefits: If you’re earning an income and paying Social Security taxes, you’ll be eligible for Social Security benefits down the road. You can start taking Social Security payments as early as 62, but if you want to receive a maximum benefit, it’s wise to wait until you reach your full retirement age. If you were born after 1960, your full retirement age is 67. 

At what age do most people retire?

According to the latest research from Gallup, the average retirement age is 61, a four-year increase since it started collecting data in 1991. Looking ahead, people are planning to work even longer. In fact, the average retirement age of people who are currently working is 66. And, according to data from the Bureau of Labor Statistics, the number of people 75 and older in the labor force is projected to grow by 96.5% by 2030.

Data from the Federal Reserve and other sources shows that retirement age varies based on race/ethnicity and overall level of education. 

Why are Americans struggling to save for retirement?

According to recent research from Fidelity, 52% of households are at risk of not being able to cover essential expenses when retirement arrives. Currently high levels of inflation have forced the average American household to spend more than $700 more per month to buy the same products and services they did two years ago.

However, saving for retirement was difficult well before the recent rise in prices. There has always been a struggle to balance saving for the future with paying off debt. The collective consumer debt in the country is more than $17 trillion. As consumers work to pay off mortgages, auto loans, student loans and credit cards, it can be very difficult to set aside money for the long term. 

Are Social Security benefits enough to retire on?

Social Security benefits are critical for retirees, making up approximately 90% of income in around 25% of households of people 65 and older. However, that doesn’t mean you should count on Social Security as your only source of income for your future. 

The reality is that Social Security will probably only cover a portion of household needs, according to Wiser Wealth’s Smith. “Saving for your future self through a 401(k) or an IRA is necessary to cover everything else.”

To get a sense of the kind of Social Security benefits you can expect to receive, use this calculator.

Tips to save for retirement

In order to not rely solely on your Social Security benefits down the road, take whatever steps you can now to boost your retirement fund. Consider these tips from Paul Deer, vice president of Wealth Private Client at Empower.

First, max out your 401(k). If your employer offers a matching program for your retirement savings, take advantage of this feature since it’s part of your compensation as an employee. “Contribute to your 401(k) at least as much as is required to receive your employer match,” Deer says. “If you don’t, it’s like leaving free money on the table.”

Second, leave your retirement funds untouched until you actually retire. There are loads of temptations to dip into retirement money, but don’t give in, and avoid taking early withdrawals. “Try to think of your retirement savings accounts like a pension,” Deer says. “People working toward a pension tend to forget about it until they retire. While that money is locked up until later in life, it becomes a hugely powerful resource in retirement.”

Next, keep your spending in check. Deer looks at saving for retirement through a similar lens of building net worth. To build net worth -- meaning the difference between your assets and your debts and liabilities -- focus on saving for tomorrow versus spending for today. Some families are tempted to “keep up with the Joneses” and resort to excessive purchases as incomes go up. But while it’s OK to enjoy the fruits of your labor, Deer recommends keeping unnecessary expenditures in check. 

Lastly, talk to a professional. You can read loads of advice about retirement, but developing a financial strategy isn’t always best with a DIY approach. “Be honest with yourself about how much time you want to devote to learning about your 401(k) and organizing your financial goals,” Deer says. One way to make sure you’re on track is to work with a financial professional who can show you the way. 

The bottom line

It’s objectively hard for many to save for retirement. But setting yourself up for the distant future is one of the most important things you can do. No matter how old you are and how your cushion stacks up to the average retirement savings balances, now is the time to get started.