On average, Americans have about $141,542 in retirement, according to How to Save America 2022 A report compiled by Vanguard, an investment firm that represents more than 30 million investors.
However, most people likely have much less: the average 401(k) balance is just $35,345.
This means that half of the account balances are below this amount and half are above. And because averages can be skewed by just a few outliers, the average account balance is more representative of what most people have already saved in their 401(k) accounts.
Here’s a look at how much money Americans have saved for retirement, by age:
Besides age, there are many other factors that affect retirement savings, such as income and how long an employee has been with the company. Older employees who have worked longer tend to have higher account balances than employees who are just beginning their careers, for example.
But try not to focus exclusively on your exact balance. “If you focus too much on your account balance, you may be tempted to react to short-term fluctuations at the expense of your long-term financial goals,” says Nilay Gandhi, Vanguard’s senior wealth advisor.
Instead, Gandhi encourages investors to focus on the factors they can control, such as expenses, investment options, and the rate of their savings.
“We believe participants need to have access to an overall savings rate of 12% to 15%,” including employer contributions, says John James, managing director of Vanguard’s Institutional Investor Group.
Don’t panic if you haven’t been there yet – most investors aren’t.
Here is the average retirement savings rate for investors at each age:
Gandhi recognizes that reaching the recommended 12% to 15% retirement savings rate can be daunting for employees, especially those just starting out.
It’s okay to start with what you can afford. However, “make sure you save at least enough to get a perfect match with your employer,” Gandhi recommends.
From there, “Increase your savings rate by 1% to 2% each year until you achieve your target savings rate of 12% to 15%.”
Vanguard provides free software retirement income calculator Anyone can use it to estimate how much money they may need after retirement. The tool takes into account specific individual factors, including current age, expected retirement age, current income, savings rate, expected income needs in retirement and additional sources of income.
You can also check out CNBC Make It Retirement Planning Tool It can help you comfortably calculate how much you’ll need to retire based on your age and income.
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