What is the recommended retirement savings by age?

The average family saves $333,940 by the time they retire, according to the Federal Reserve’s 2022 Survey of Consumer Finances. Compare this to the median nest egg amount, which according to the Fed is $87,000.

When looking at the average retirement amount down by age, however, the numbers are a little different. Here are the average nest egg families had saved as of 2022 by age group:

• Less than 35: $49,130
• 35-44: $141,520
• 45-54: $313,220
• 55-64: $537,560
• 65-74: $609,230
• 75 or Older: $462,410

Averages get skewed by outliers, especially during times when income inequality is stark.

When comparing to an “average” person, look at figures for median rather than average retirement savings.

For the same age groups outlined above, here are the median retirement savings amount according to the Fed:

• Less than 35: $18,880
• 35-44: $115,000
• 45-54: $115,000
• 55-64: $185,000
• 65-74: $200,000
• 75 or Older: $130,000

A person’s income level is one of the major determinants of how much they’ll be able to save, and thus, retire on.

Here’s a numerical representation of that statement. The more a family earns, the more they can save, but just how much is telling.

• $90K–$100K: $558,600
• $80K–$89.9K: $200,000
• $60K–$79.9K: $74,200
• $40K–$59.9K: $39,000
• $20K–$39.9K: $20,000
• Less than $20K: $17,500

Unfortunately, there really is no recommended savings by age group to retire comfortably, because everyone has different goals. Ideal retirement savings by age 65 looks different if you make an average of $70,000 or $170,000 a year and want to maintain a consistent lifestyle.

While knowing the average retirement savings by age 65 or age 35 might give a high-level idea of how you compare, knowing that doesn’t mean you can or will change your savings plan. It also doesn’t guarantee you’d have enough to live out your retirement at your desired standard of living.

While there are several ways to gauge your retirement health outlook, such as saving as much as your annual income by age 30 or 10-12 times your annual income at retirement age, these are oversimplified parameters that you shouldn’t rely on to guide your savings goals.

Find out more about how much you need to retire.

Rather than consulting statistical averages, median retirement count amounts, and retirement savings goals by age, we recommend speaking to a trusted retirement financial advisor about your own retirement goals and plan for your retirement after careful research, planning, and consideration of your needs.

Specifically, it’s important to find someone who is a named fiduciary and therefore works for your financial best interests, contractually, by law.

This may be the single most impactful step someone looking to save enough for retirement can take, because such professionals are skilled at partnering with individuals to provide them a realistic snapshot of what their retirement might look like now compared to if they were to institute strategic savings initiatives and make guided investment decisions.

That said, saving for retirement is something only you can do. And the earlier you get started, the better prepared you are to take advantage of compound interest.

The Department of Labor provides some additional tips on the road to retirement:

1. Experts estimate that you will need about 70-90% of your pre-retirement income to maintain your standard of living when you stop working.
   
   
2. How much you save is only one dimension of retirement planning. Just as important is how you choose to save. Investing in a Roth IRA or 401(k) puts your money into the stock market, and this type of investment can be riskier, but the return can be much higher than other forms of investing.
   
   
3. Don’t withdraw funds. Compound interest can only work its magic if you add to, not remove, from your retirement account(s).
   
   
4. Don’t forget about Social Security. For most retirees, Social Security income will make up around 40% of their pre-retirement income.
   
   
5. Diversify your savings. Start by investing in your employer’s retirement account and maxing out your contributions to whatever they will match. Then, open a Roth IRA, to which you can typically make annual contributions based on your income and annual contribution limits. Explore other savings instruments that are low-risk such as high-yield savings accounts and CDs. While they may not generate as much interest to be your main source of retirement income, they can help offset any potential losses incurred by investing in the market. High-yield savings accounts can also be used to maintain an emergency fund throughout retirement.

Here's another way to look at how to save for retirement, according to AARP. Ask yourself and talk to your trusted retirement planning professional about these questions:

1. How much will you realistically spend during retirement?
2. How much will your money earn?
3. How long will you live?
4. How much can you withdraw from savings each year?

Before saving for retirement outside of your employer’s plan, most financial experts recommend saving some money, typically the equivalent of 6 to 12 months of income, into an emergency fund.

The range of high-yield savings accounts, high-yield CDs, and no-penalty CDs offered through the Raisin platform can allow you to build up and maintain an emergency fund, both before and during retirement.

Learn more about how to get started with Raisin and save with us.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Sources:

U.S. Department of Labor

Federal Reserve's 2022 Survey of Consumer Finances