Average Retirement Savings by Age Group

If you are curious as to the average retirement savings by age group, you’ll first want to understand the terminology and what is including in the savings.

Retirement is defined as the point in time when an individual stops working.

Average Retirement Savings by Age Group

Savings is defined as funds set aside and not used for day-to-day living expenses. The savings typically earn interest or dividends as opposed to cash in a safety deposit box or in a non-interest bearing checking account.

Savings is any one or more of the following:

  • Cash on hand

  • Bank accounts – Money Market Account or Certificates of Deposit

  • Defined contribution plan: 401K, 403b, 457

  • Traditional IRA or Roth IRA

  • Employee benefit –company pension plan

  • Mutual funds

  • Current market value of real estate and other investments (coin collection, antique cars, etc.)

Retirement Savings is Not

When you are studying the average retirement savings by age group, there are some savings vehicles you should not consider as a good retirement investment:

  1. You should not count or consider what you anticipate receiving in Social Security benefits since the eligibility age may change and/or the amount of the benefit is subject to change.

  2. Whole life insurance – the amount of money you pay does not provide as good of a return as all of the other options. You should only have term life insurance.

Age Group:

Source:

24

and Younger

25-34 Age Group

35-44 Age Group

45-54 Age Group

55-64 Age Group

65

and Older

CNN Money

1,475

8,525

51,757

98,350

180,215

232,000

Reference.com

0

25,279

81,308

156,124

271,920

207,321

Employee Benefit Research Institute: Average: based on income level & age

0

31,338

75,000

148,568

179,980

179,913

Employee Benefit Research Institute: Average by age group

0

0

37,000

63,000

100,000

60,800

When averaging the savings in the table:

24 and Younger $ 1,475

25-34 $ 21,714

35-44 $ 61,266

45-54 $116,515

55-64 $183,028

65 and Older $170,008

The reason the 65 and older savings is less than the 55-64 is because the majority of senior citizens have retired at this point and their savings remains flat and slowly decreases as they use the funds.

When calculating the average retirement savings by age group, there are several factors which move this number, both up and down:

  • Stock market – 401K, stocks and other investments

  • Inflation – value of the dollar

  • U.S. political platform – philosophy of political party in office.

Net Worth

As you looking at the average retirement savings by age group, also consider net worth. Net worth is your assets (savings, value of house, etc.) minus your liabilities (all of your debt, such as student loans and mortgage).

Examples of Net Worth

Debbie and Dale, both are 30 years old, are engaged to be married. Before they pool their money and debt into a joint account, each one had an opinion of their net worth and their partner’s net worth. See if you can determine whether Debbie or Dale have a higher net worth today and at age 55.

Debbie’s Story:

Debbie doesn’t have any debt; she has a good job with retirement benefits (401K with the employer matching the first four percent). She is currently earning $75,000 per year with the potential for an annual raise of five percent.

She has a Money Market Account with a current balance of $50,000.

The current balance in her 401K is $40,000. She plans to continue investing six percent in her 401K.

Dale’s Story:

Dale just completed medical school. His student loan debt is $200,000. The first year he will earn $80,000 and each year his income will increase by $20,000. He doesn’t have any savings, including retirement or liquid balances in a Money Market Account.

Dale’s goal is to pay off his student load debt in five years. Once the loan is paid off, he will begin investing 8% towards his retirement, since he is self-employed, he will not have an employer matching 401K).

Which one has a higher net worth today and at retirement?

Debbie’s net worth today is $90,000 and Dale’s is zero.

Debbie’s net worth at age 55 is estimated to be $511,686 and Dale’s will be $702,240 (see calculations below):

Debbie's Annual Salary

Debbie's Annual Savings

Dale's Annual Salary

Dale's Annual Savings

Beginning Balance* Age

90,000

0

30

75,000

8,250

80,000

0

31

78,750

8,663

100,000

0

32

82,688

9,096

120,000

0

33

86,822

9,550

140,000

0

34

91,163

10,028

160,000

0

35

95,721

10,529

180,000

15,840

36

100,507

11,056

200,000

17,600

37

105,533

11,609

220,000

19,360

38

110,809

12,189

240,000

21,120

39

116,350

12,798

260,000

22,880

40

122,167

13,438

280,000

24,640

41

128,275

14,110

300,000

26,400

42

134,689

14,816

320,000

28,160

43

141,424

15,557

340,000

29,920

44

148,495

16,334

360,000

31,680

45

155,920

17,151

380,000

33,440

46

163,716

18,009

400,000

35,200

47

171,901

18,909

420,000

36,960

48

180,496

19,855

440,000

38,720

49

189,521

20,847

460,000

40,480

50

198,997

21,890

480,000

42,240

51

208,947

22,984

500,000

44,000

52

219,395

24,133

520,000

45,760

53

230,364

25,340

540,000

47,520

54

241,882

26,607

560,000

49,280

55

253,977

27,937

580,000

51,040

511,686

702,240

*Did not include value of BMW. Automobile will be replaced.

Debbie’s salary increased five percent per year and Dale’s increased by $20,000 per year.

The average retirement savings by age group for Debbie when she turns 55 years old is based on her 401K six percent investment and her employer’s four percent matching with a 10% return each year.

Dale does not have a 401K or employer providing a match. He is investing five percent per year and he has an annual return of 10%.

Average Net Worth by Age

The average retirement savings by age group should include your net worth. According to CNN Money, here is the average net worth today by age group:

  • Under 25 $ 1,475

  • 25-34 $ 8,525

  • 35-44 $ 51,575

  • 45-54 $ 98,350

  • 55-64 $180,125

  • 65 and over $ 32,000

Bottom Line

When you are looking at the average retirement savings by age group, it isn’t what your salary is, it’s what you spend that will help you save for your retirement. You can’t save it if you’ve spent it.

When considering the average retirement savings by age group, the average return rate isn’t always 10%, a flat rate or a positive rate. There may be losses. This example indicates with a positive 10 percent return, Dale will eventually have a higher net worth than Debbie. Even though Debbie’s income is a great deal less than Dale’s when they turn 55, given her salary, if she can live within her means and not go into debt, she could possibly save more for retirement and match Dale’s net worth.

Are you on track from your retirement savings, if not evaluate one of the many investment options keeping safety and soundness in mind.

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