“How am I doing?”
That’s a big question that most people have when it comes to their money – especially when they are thinking of retirement. One way we tend to look for answers is by comparing what we have to our neighbors, friends, and family. Even if we know that “the grass is always greener on the other side,” it can be hard to look away when our phones, computers, and TVs are practically forcing us to make these comparisons.
We understand the worry that you might not be keeping pace with your peers. If you’re wondering about where your retirement savings “should be,” it’s important that you look at these numbers with the proper context.
What Do the Numbers Say?
According to Nerdwallet, here’s how average retirement savings break down by age. (Keep in mind that averages can be moved by the extremes of the group. Median numbers may give you a better idea of the reality.)
- Under 35
— Average household retirement savings: $32,500
— Median household retirement savings: $12,300
- Ages 35 to 44
— Average household retirement savings: $100,100
— Median household retirement savings: $37,000
- Ages 45 to 54
— Average household retirement savings: $215,800
— Median household retirement savings: $82,600
- Ages 55 to 64
— Average household retirement savings: $374,000
— Median household retirement savings: $120,000
- Ages 65 to 74
— Average household retirement savings: $358,400
— Median household retirement savings: $126,000
Retirement savings tend to ramp up as we age. In part, this is because the older we get, the more real retirement becomes, and the more prepared we want to be.
As fiscally responsible people age, their debt level tends to drop. No more kids to support. No more student loan payments. Vehicles and houses get paid off. Credit cards get used less (unless you are focused on accumulating points) and paid down.
There is only so much you can keep in a low-interest savings account before you want to put more of your money to work.
The Numbers Behind the Numbers
If these figures seem a bit low to you, you’re not wrong. Financial experts believe that most Americans are not saving nearly enough for retirement.
Having a couple hundred thousand in your savings and investment accounts may sound like a lot of money. The difference is, however, that people are living longer and more active lives than ever before. That means your retirement assets are going to have to last longer than your parents’ and grandparents’ retirement savings did.
As pensions continue to dry up, the responsibility for preparing for retirement has shifted more and more to individuals. That’s going to be a challenge for anyone who is significantly below these savings levels. It will also be a BIG problem for the 43% of households headed by someone 35-44 who do not have any retirement savings at all.
Is an “Average” Retirement Good Enough?
Let’s say you’re the average 65-year-old with just over $300,000 in the bank. How long is that $300,000 going to last? Is that nest egg going to provide the retirement you’ve been dreaming about and working for most of your life?
There’s no one-size-fits-all answer to those questions. We all have different passions, goals, healthcare needs, and lifestyle expectations. Some retirees might live quite happily at or even a little below the average level.
Consider these questions:
- What happens if your spouse has an accident and needs to see a specialist or your roof needs a major repair? Will an emergency stretch your “average” retirement too thin?
- What happens if, five years into a twenty-year retirement, you start to feel bored and restless? What if you decide you need to see more of the world? What if you can’t let go of that passion project you’ve always wanted to develop into your own business? Will your nest egg provide for changes that will make your retirement more fulfilling?
How Does Your Money Measure Up?
Successful retirement planning balances things that we can anticipate with things we can’t. That is why we never hold up a graph comparing where our clients’ money is to where their peers are. We’re not interested in outside standards of “measuring up.” We’re interested in how your money measures up to what YOU want out of life, and what you’ll need to stay comfortable on rainy days.
Successful retirement planning focuses on making your financial foundation solid as you move forward in life. It’s important to make the necessary adjustments throughout the years to make sure you are on track to hit the standard that matters most — yours.