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When it comes to figuring out if your retirement savings are enough, there aren't many easy answers. Add in the habit of comparing your savings with coworkers, friends and family, and it gets even more difficult to find clarity. It can be hard to know if you're on track with your average retirement savings or falling behind.
One way to identify if you're on pace is to look at average retirement savings by age. There are plenty of guidelines and advice on saving for retirement, which can help you get on track — but they don't always tell the whole story.
You know your situation may be different from your neighbors and friends. However, it can be helpful to compare your numbers with what the average person has in their savings. To help you get started, we've pulled some key information, including the average worker income from the U.S. Bureau of Labor Statistics and Vanguard, plus some experts' savings recommendations.
Ready to see how you compare to the suggested savings level? Here's how the average retirement savings by age breaks down through the decades.
- Start early: In your 20s, it's important to begin saving for retirement as soon as possible. Aim to have the equivalent of your annual salary saved by the time you turn 30.
- Gradual increase in savings: As you progress through your 30s, 40s, and beyond, the recommended savings targets increase. The general guidelines suggest having three times your annual salary saved by 40, six times by 50, and eight times by 60.
- Average savings vs. recommended savings: The average retirement savings for different age groups often fall short of the recommended targets. It's important to be aware of your savings progress and take steps to increase your contributions and savings rate.
- Leverage compound interest: The longer you have until retirement, the more time you have to benefit from compound interest. Take advantage of this by starting early and consistently contributing to your retirement savings.
- Review and adjust your savings strategy: As you approach retirement age, it's crucial to review your savings strategy, portfolio allocation, and potential risks. Consider rebalancing your portfolio to ensure it aligns with your retirement goals and risk tolerance.
Retirement Savings When You're in Your 20s
Suggested savings: A common recommendation at this age is to have the equivalent of your annual salary saved by the time you're about to turn 30. The median income of someone in their early-20s is approximately $383,000.1 Aim to have that amount in retirement savings by the end of your 20s.
Average savings: Individuals under 25 have an average of $6,264 in their 401(k)s, while those 25-34 have an average of $37,211.2
In your 20s, you're just starting your career — and your fully independent adult life. You have decades until retirement, which means you have time to learn about personal finance, save for retirement and pay off debt. In particular, reducing student loan debt is a common goal for people in this age group, as carrying significant debt can impact the ability to save down the road.
At this stage of life, having anything saved is better than nothing. Build your budget and stick to it.
Retirement Savings When You're in Your 30s
Suggested savings: Guidelines often recommend having three times your annual salary saved by 40. The median income for a 35-year-old is approximately $63,000, which means having $189,000 saved for retirement.1
Average savings: The average retirement savings for those 35-44 is $97,020.2
Here's where you can start seeing the recommended numbers diverge from reality. Many Americans struggle to save for retirement, but there are steps you can take to help reverse course. In your 30s, focus on boosting your 401(k). If your employer offers matching contributions, take advantage of them by contributing enough to maximize your employer's match. Continue to focus on paying down debt and review your budget.
You have a long horizon to retirement, so you have plenty of time to leverage compound interest to potentially grow your investments (though growth cannot be guaranteed due to market fluctuations).
Retirement Savings When You're in Your 40s
Suggested savings: Having six times your annual salary saved by 50 is recommended. The median wage for employees at 45 is approximately $64,000.1 So, when you're in your late-40s, you'd want to aim to have around $386,000 in retirement savings.
Average savings: The average savings for those 45-54 is $179,200.2
Most people hit their peak salary somewhere in their late 40s to early 50s. Now is when it becomes important to budget carefully. Get your expenses under control and increase your savings rate long before you enter your 40s, so you don't find yourself in a position of having to catch up.
In your 40s, focus on maximizing your 401(k) and retirement saving contributions.
Retirement Savings When You're in Your 50s & Beyond
Suggested savings: The general guidelines recommend having eight times your annual salary saved by 60. The median income for a 55-year-old is about $63,000, which means having $506,600 saved for retirement.1
Average savings: The average savings for those 55-65 is $256,244, and the average for those over 65 is $279,997.2
Your "official" retirement age is usually defined by when you're eligible to receive full Social Security benefits. For most people right now, that's between the ages of 65 and 67, depending on when they were born. Retirement is right around the corner. Now is the time to review your savings strategy and portfolio allocation. You might want to start rebalancing your portfolio to reduce potential risks and maximize your long-term savings.
By the Time You Retire
The suggested savings guidelines say you need about ten times your annual salary in savings as you reach your full retirement age. The median salary of a 65-year-old is $54,000 per year — which means you'd need approximately $540,000 saved if you want to retire at 65.1
If you're not on track right now, don't panic. The most important thing is to be aware and begin to focus on what you can control. You can start taking actions to help impact your financial situation positively — and perhaps even beat the average retirement savings by age in the decades to come.
1 Usual Weekly Earnings of Wage and Salary Workers First Quarter 2023. BTS. https://www.bls.gov/news.release/pdf/wkyeng.pdf.
2 How America Saves 2022. Vanguard. https://institutional.vanguard.com/content/dam/inst/vanguard-has/insights-pdfs/22_TL_HAS_FullReport_2022.pdf.