Retirement Savings by Age – Are You on Track?

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Nearly a third of all workers admit to having less than $1,000 saved for retirement. Fifty-seven percent replied that they have less than $25,000 saved. Without knowing the exact retirement savings by age to reach a comfortable retirement, it’s still pretty obvious that the average American is woefully behind.

Below are the stats for the median retirement savings by age in 2013. Based on the recent news of people continually ignoring their retirement savings, I assume today’s numbers aren’t much different. So, here’s the big question, “Is it good enough to be average?”

retirement savings by age

The average Social Security payout in June 2016 was $1,234.98. Add to that an average spousal benefit of $699.77, and that provides the average couple with an income of $1,934.75.

According to U.S. News, the average cost of retirement per month is $3,411.50. This means that the average retiree needs to come up with $1,476.75 on their own each and every month.

With the typical retirement savings of $148,900, how long could the average couple stay afloat? The answer…approximately 10.4 years… That’s not great news considering the average lifespan of an American is 79 years old.

retirement savings by age

On average, more than half the population will run out of money and be forced to somehow live on Social Security alone. I’m just taking a stab in the dark here, but I’m guessing you do NOT want to retire in poverty… So, instead of ignoring our retirement accounts, let’s figure out your ideal retirement savings by age!

Retirement Savings by Age – Are You On Track?

For a comfortable retirement today, you’ll need to spend about $45,000 a year. Obviously this amount wouldn’t work for those living in New York or San Francisco, but in most locations $45k will get you what you need, plus a little extra for the fun stuff in life. For a retiree to make this happen today, they would need approximately $750,000 in their nest egg.

So what about for the other ages? How much do they need today to reach this milestone for their retirement years?

retirement savings by age - actual

Lucky for you, I did the math. For a 25 year old to live the life of a current 65 year old with $750,000, they’ll need to have $29,241 saved up and continue their regular contributions through the age of 65!

If you’re 40 years old, you should already have $162,657 saved.

At 55 years old, you should really have $429,596. Check out your age and see if you’re on track!

Retirement Savings by Age: Summary

Remember the average retirement savings of a 50 year old? Ill refresh your memory — $87,000.

But how much should a 50 year old actually have saved to be on track for retirement? $319,000….

Ummm Houston, we have a problem.

As decades go by, Americans are becoming increasingly oblivious to their retirement needs. Do NOT become one of these Americans. After reading this article, you know exactly how much you need. If you’re below your target, save more. If you’re above your target, you’re rare, but good for you and keep at it!

Where do you land on the “Necessary Retirement Savings by Age”  chart? Are you on track for retirement?

Assumptions in the “Necessary retirement savings by age” chart:

  • 3.5% avg. inflation
  • 8% rate of return on investments
  • Consistent contributions of $695 a month
  • Assumes no Social Security benefits
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55 comments to Retirement Savings by Age – Are You on Track?

  • It is so important to start young.

    Time is everything in the investing world and the longer you wait, the more difficult reaching your financial goals become.

    • Exactly. Those that are 25 years old need nearly $3 million to live comfortably in retirement (thanks to inflation…. grrr). That’s why you need $29k and consistent contributions all your life!

  • I’m ahead of most according to the chart, but I’m behind on what is actually needed! The scary part is that so many people have so little clue about what they should be doing and what will happen to them in retirement if they don’t.

    Spread the word!
    Josh recently posted..How Does Roku Work and My Review of Roku 3

    • Right on! Hardly anyone knows how much money they should have at any given age. They just put some money away here and there and hope for the best… That’s definitely not the way I want to enter my retirement years!

      • Mark

        Son, good luck. Your life will turn out not exactly how you may think. That is why people end up just doing the best they can.

        • Totally understand, but you’ve got to have a plan! Of course, plans can change, but if you never have that goal that you’re reaching for, you’ll always just do a sub-par job with your retirement savings.

  • CoupleofCents

    The other important point is that we don’t know what Social Security will look like in the future. While I’m not saying Social Security won’t exist, it may get significantly reduced for people in their 20’s and 30’s by the time we start withdrawing. So yes, we definitely need to do better than the current average.

  • Axecleaver

    Your graph should probably be even more dramatic. Early savings matter a whole lot more than later ones. Your 3.5% inflation assumption is probably too high. That’s an historic inflation figure if you include 1979-1982, when inflation averaged 10.8%. But that’s very unlikely to happen again. Inflation from ’83 to present is 2.75%.

    If you use an historic S&P return of 10% instead of 8%, real returns change from 4.5% in your graph, to 7.25%. Your point still stands: save early, save often.

    • Hi Axecleaver. I always heir on the side of conservative since I’d rather have too much money in retirement than not enough. With your numbers, the savings goals at each age would be less, but it would put you at more risk as you near retirement. Make sense? Thanks for the comment!

  • I always find these type of benchmarks interesting to see, but hard for professionals like myself to compare since we start our careers so late. I didn’t get my first real job until I was about 27 years old. Ms. FP won’t have her first job until she is 32 years old. At the same time, we’ll have good incomes, so we should be able to catch up and reach those benchmarks you outline in your post.

    • Just remember to live frugally off the bat and don’t expand your lifestyle to match your professional friends! This will leave you broke in retirement. No matter your profession, the numbers on the chart still hold so do your best to catch up quickly! Thanks for the comment, TFP!

  • WOW! This a great article, trying to find a direct number to shoot for in retirement isn’t easy but these graphs make it super simple for everyone to understand. I’m happy to be well above average for my group but definitely still a lot of work to do! Great post, just subscribed looking forward to reading more!

    • Awesome! I figured this article would really help people out. They always want to know where they need to be with their savings – well, here it is plain and simple!

      • Bobby Hundal

        Thank you so much, I’ve saved around 20K within 3/4th’s of year after college. This article gave me the Motivation/Reality check I needed. VIVA LA Frugally -Amen.

      • Mark

        Many other things happen along the way. For instance, situations with children, divorce, illness, or just compromising with your significant other. But, you are right, frugality should be a habit. Also, you may find you don’t need as much as the financial gurus would have you think as you approach retirement. You will see that better by late 50’s or older.

  • liz

    Sooo…I have 2 years to make an additional $126K of savings. Oh boy! I am, however, ahead of the game by comparison, so that’s a little reassuring.

  • It’s true…time can be your closest ally or biggest nemesis when it comes to investing. The earlier you start the better of you are. But better late than never.

    This bring so much clarity to the topic, Derek. I love the chart, numbers, and how you simplify it. Thanks! I’m off to share this one
    Francis recently posted..Managing Your Money: 5 Overlooked Tools Your Can’t Afford To Ignore

  • Derek,

    I really like the article and how you walk the reader through the progression.
    As much as we all want to play with the numbers, the biggest point here is that you are making people THINK.
    Now we can all go tweak the numbers to see what happens!

    Good read and I look forward to more!

  • AustinTXTracy

    Hi Derek,
    I’m assuming these numbers are based on a person retiring at 65 and lasting for 30 years. What about those that wish to retire early, such as in our mid-50’s? Based on the article, I am doing great! However, I want to retire early and think based on that I hopefully am on target but doesn’t look like the benchmark chart is valid to use as a gauge. What are your thoughts?

    • That’s right, Austin. The numbers assume you’ll retire at 65 and potentially live until 95 (because it happens all the time).

      For those that plan to retire early, it’s not so much about a single number. It’s about the cash flow your investments provide. In fact, if you want to retire early, then I wouldn’t invest very heavily in your 401k or Roth IRA since these accounts will penalize you for early withdrawal. Instead, I would invest in a business and within large cap funds that pay a hefty dividend.

      For my wife and I, we would be comfortable living on $5,000 a month. We have one rental property that nets us $850 a month. Obviously not enough for us to retire. BUT, if we had 6 rental properties, guess what? It’s time to trade in the dress shoes for flip flops! 😉 Basically, if you have investments that provide more cash flow than you need (and that cash flow keeps up with inflation), then you have enough to retire. Does that help?

  • Glad to see I’m on track here. Thank you so much for the interesting chart/article. Helps put everything in perspective and serves as a great reminder that we need to keep saving/investing as much for retirement as possible at this age.

    Take care!

    Dividend Diplomats recently posted..Lanny’s August Dividend Income Summary

    • Glad you liked it DD. We are on track with our retirement savings. In addition, we consider our rental property part of our retirement savings as well. I would recommend this strategy to anyone else that’s interested in real estate too!

  • Grr, still a little behind but we are catching up… Only 33 at this time though, so hopefully we will be able to right ourselves on track! Thanks for the awesome post!
    Steven Goodwin recently posted..August 2016 – $97,660.20- Net Worth Update (+$8,080.81)

    • Glad it could help you our Steven! Also, keep in mind that these amounts are what you should have in your retirement accounts, not counting the value of your home (because let’s be real, very few elderly people want to sell their home and downsize late in life).

  • We are far ahead of the curve, but we also don’t want to wait till 65 to quit our jobs. =)
    Ms. Montana recently posted..Cherries, Cherries and More Cherries

    • Same here, MM. While I actually enjoy my job, I don’t want to put blinders on and assume that I’m going to work at it for life. Many things could happen:

      – I could get let go
      – I could get a new, terrible boss
      – I might have a personal accident that no longer allows me to work
      – I might climb the corporate ladder, but hate how it takes time away from my kids

      So many things can happen. I’d rather at least provide myself the option to quit my job early in life, and then if I still love it I’ll just keep working! 🙂

  • Great read and analysis. I hope this opens peoples eyes up and serves as a bench mark for where they are today and where they need to be. Saving early and often is the best recipe for success. Based on the chart I am 10-15 years ahead of where I need to be but I also want to retire in my early 30s.

  • Woohoo! I’m happy to see that we’re on track. However, we don’t count on having government retirement benefits so maybe we’re a bit behind after all…

  • Not quite on track, but very close and on the way there, which feels great since my true retirement savings started last fall.
    ZJ Thorne recently posted..Net Worth Week 21 – Tacos Trucks On Every Corner

  • Bryan

    Hi Derek,

    This is a great article. Very informative. One thing I’ve realized dealing with my father as he gets older is that most people don’t consider health care costs into retirement. Living expenses are nothing compared to healthcare costs and how they can eat into your retirement savings. What are your thoughts regarding long term health care insurance? I’m at the point where I think long term health care insurance should be included in monthly saving goals.

    • Hi Bryan. My first goal is always to become self insured. That being said, long-term care insurance is one of the most difficult things to insure yourself against because of the potential expense of doing without it. If you’ve got $5 million, I’d say you probably don’t need long-term care insurance. If you’ve got just $500k in retirement savings in your old age, then you should probably insure yourself against those potential $70k/yr retirement homes.

      The rule of thumb – most people should get long term care insurance after the age of 60 years old.

  • retiredJeff

    At 63 I was only able to put 200k in the bank. Luckily I bought real estate that is worth 1.25 million. Without that I’d be still working. Having a pension sure helps too.

    • Real estate investments? Or your home residence and then you downsized? Remember that even in retirement you can still earn some income here and there. That can really help too!

  • Nicole

    Yikes! I am better than most my age but about 85,000 behind based on the 2nd chart.I am trying to pay down on my house but I see I need to focus more on retirement funding. Which should I pick considering I owe almost the same on my house as the amount I am short on retirement?

  • […] invest more heavily for our future (early retirement perhaps??) […]

  • Darren Bednarz

    I work for the fire department I’m 53 years old I’m in the drop plan I’ll make 5,200 a month and it’s up to me how much longer I want to wort I have 52,000 in the drop I plane on have around 250,000 will I be ok

    • Hi Darren – do you also get a pension? How much is that per month? If it’s not much, I’d be very uncomfortable retiring on just $300,000 at your young age. If it were me, I’d want to have at least $2 million. The cost of living will only go up and you could live for another 40+ years!

  • Kayla

    Are the figures in the graph based off how much a single person should be saving at any given age or as a couple? If a 30 year old needs to have $64k saved, does that mean a couple should have a combined $128k saved at 30 years old? Thanks!

    • Hi Kayla – No, the figures are actually based on a person (or couple) living on $45,000 a year. If you’re under/at that threshold today, then these numbers will work for you!

  • […] Related: Retirement Savings by Age – Are You On Track?? […]

  • Tanya Robertson

    Are these median retirement values based on the current valuations of equities and real estate and cash or is it cash savings exclusively? If the market drops do these median values go down? Also slightly confused by household savings, I am single would it be half?

    • Great questions Tanya. Consider household and single to be the same number. They’re not obviously, but two people under one roof doesn’t make everything twice as expensive…there’s still just one house, and that’s the largest expense of most.

      When I think of retirement savings, I consider all of my investments – rental properties, mutual funds, 401k’s through work…everything. Oh, and if you are legitimately going to downsize in your older age, you could consider a portion of your house value. BUT…most people never give up their house. It just end up being a huge expense that kills their net worth. So…I don’t include our own house in our retirement tracker.

      Does that help? Thanks for the questions!!

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