What is retirement age for most Americans?
For many of us, 65 used to be the magic number. Reaching age 65 meant it was time to put an end to the daily grind and begin to enjoy retirement. But according to the 2023 Retirement Confidence Survey, 33% of workers indicated they expect to continue working until the age of 70 or later.1 Today, there are many factors dictating when most of us will be able to retire, including Social Security, medical costs, and how much we've saved.
How do you compare?
Retirement. It's about working hard all your life while saving money and investing so you can spend your twilight years financially independent while relaxing, playing, and enjoying all the things life has to offer. According to a recent study from Bankrate, 56% of Americans in the workforce think they're behind where they should be with regard to their retirement savings.2 However, that same report indicates that 64% have thought about or have a plan already in place to save for retirement. And while the idea of “enough” is different for each individual, have you ever wondered how you compare with many other Americans in this race to the retirement finish line? In a Bankrate survey, thousands of respondents across the U.S. of various age groups disclosed how much they've managed to save for retirement.3
Average retirement savings by age
Under age 25
Respondents in this age group had saved an average of $5,236 for retirement.
Ages 25 - 34
Those in their late 20s and early 30s have saved an average of $30,017.
Ages 35 - 44
Individuals moving toward their 40s have saved an average of $76,354 for retirement.
Ages 45 - 54
Individuals in their late 40s and early 50s have an average of $142,069 in savings.
Ages 55 - 64
The time is nearly here and participation rates of this age group in defined contribution retirement savings plans jumps to 86%. Individuals in this age group have an average of $207,874 in retirement savings.
Age 65+
As retirement creeps closer, individuals seem to increase their contributions to their 401(k)s. Savings for this group have reached an average of $232,710.
How much will you need to retire?
Begin by asking yourself the following questions about how much you should be saving for retirement.
- Will you potentially outlive your nest egg? If you're healthy and have a family history of longevity, then you might want to factor in those additional years so that you don't outlive your money.
- How are your current savings and investments working for you? Are your savings generating enough return? If not, see where you can make adjustments in your portfolio - the sooner the better.
- Do you plan to “age in place” (remain in the same home when you retire)? If so, will your mortgage be paid off by the time you retire?
- Do you want to work part-time in retirement (potentially reducing the amount you'll need to save)?
- Will your kids (or your parents) need financial help from you?
- Should you consider moving to a less expensive area or downsizing to a smaller home and using home equity for investments or retirement income?
- And what about that new roof (or other unexpected expenses that will come out of your emergency fund)? Will you pay for that before or after you retire?
- What will your living costs look like when you retire? Many people are surprised to learn that they could very well end up spending more in retirement than they did when they were working.
So how much should you save today?
The amount of money you will need for retirement will vary widely based on a number of factors, including your average salary, goals for retirement and the answers to the questions above. However, many financial professionals have suggested using a formula of setting aside 10 - 15% of your annual income in order to pursue a comfortable retirement lifestyle. But keep in mind that even if you can't afford that much right now, you should contribute what you can and commit to making regular increases each year.
Regularly review your retirement investments
Having enough for retirement will require you to review your investment portfolio each year to make sure you are still comfortable with your investment choices. This might mean readjusting or balancing your portfolio holdings to stay aligned with your risk tolerance and time horizon. Everyone's situation is unique. Regularly reviewing your plan will help you understand whether you are on course to meet your goals or need to change your strategy.
1. YouGovAmerica.
3. Vanguard, How America Saves 2023.
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