Understanding your financial health is key, regardless of your retirement stage . But how does your financial situation stack up against others your age?
Comparing yourself to the average baby boomer can offer valuable insights and potential peace of mind.
We explore eight key metrics to help you assess your financial well-being relative to your peers. Get ready to demystify your finances and discover where you truly stand.
Find Out: 8 must-do things before 60 for a stress-free retirement
1. You have more than $202,000 saved for retirement
Per data from a 2022 survey conducted by the Transamerica Center for Retirement Studies (TCRS), the median amount saved by baby boomers for retirement is around $202,000.
Ideally, you’ve saved more than that. Following the general rule to withdraw around 4% of your investment savings per year, you’ll have just $8,000 to live on that first year of retirement (without factoring in Social Security or other savings funds).
But even if you haven’t saved much more than $202,000, it’s helpful to know that if you’ve managed to put away more than that, your total savings is higher than the median amount saved by your peers.
Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.
2. Your Social Security check is more than $1,844
According to the most recent data from the Social Security Administration, the average retired American worker receives just over $1,844 as a monthly Social Security benefit.
Benefit amounts are calculated based on how long you spent in the workforce, how much you earned, and whether you take your Social Security benefits early, late, or right on time.
If you’re already taking Social Security benefits and receive more than $1,800 a month, you’re receiving more than the average beneficiary — which is great news for your monthly budget.
3. You have more than $10,000 in emergency savings
Unlike a retirement savings fund, an emergency savings fund contains money you can access easily to cover you in an emergency, like a sudden job loss or medical emergency.
Of course, depending on whether you’ve retired already, you might not have to worry much about losing your job, but it’s still a good idea to have an emergency fund.
The median amount of money baby boomers have saved as part of an emergency fund is $10,000.
That amount might not be enough to cover a months-long emergency. However, it’s still higher than the median amount saved by any other generation — and it’s better than having nothing in your emergency savings account.
Enjoying our content? Click the Follow button above to see more from us.
4. You’ve never had to make an early withdrawal from your retirement savings
Per TCRS, 34% of all workers have had to take an early withdrawal, hardship withdrawal, or loan from their IRA or 401(k).
That number includes just 17% of baby boomers, so statistically speaking, it’s unlikely that your retirement savings have had to take a hit to tide you over in an emergency.
Still, if you’ve never had to borrow money from your savings account, you’re doing better than over a third of American laborers.
5. Your legal documents are in order
No matter how old you are, it’s important to have legal documents like a will and power of attorney in order.
In terms of legal documentation, baby boomers are better prepared than younger generations. While just 27% of all American workers have a will, that number jumps to 46% among boomers.
Of course, that means more than half of all baby boomers still lack a will. If you’ve already created yours, give yourself a pat on the back. And if you haven’t drawn yours up yet, consider this your gentle reminder to stop procrastinating and get it done.
6. You’ve worked with a financial professional in any capacity
Less than 40% of working Americans have consulted with a financial advisor about retirement, investing, and saving for emergencies . Baby boomers (41%) and millennials (43%) are the generational groups most likely to have worked with a financial advisor.
If you’ve worked with a financial professional in at least some capacity, you’re increasing your odds of success and probably ahead of any baby boomer who isn’t discussing finances with a professional.
Make Money: 8 things to do if you're barely scraping by financially 7. You’ve talked directly to your financial advisor about retirement
A whopping 75% of seniors who say they’ve met with a financial advisor have used their services to strategically invest as they plan for retirement.
At the same time, just 10% of boomers said they could provide an estimated cash amount they’d need for retirement based on advice from a financial planner.
Put another way, it’s rarer to talk to a financial advisor directly about your retirement needs than to meet with one in the first place. If you’ve done both, rest assured you’re well ahead of the curve.
8. You know how high your retirement savings goal should be
Regardless of age, millions of Americans are simply guessing when it comes to retirement. When TCRS asked those surveyed to write down the dollar amount they’ll need to retire comfortably, 43% admitted they’d offered their best guess.
Only 20% of baby boomers said they’d used a tool like a retirement calculator or planning worksheet to figure out how much they needed for retirement.
Of course, no one knows precisely how much money they’ll need to retire. Unexpected medical issues, natural disasters, or global events can throw a wrench in the best-laid retirement savings plans.
But you’ll have a better chance of planning for retirement if you know what number to aim for based on estimates from a worksheet, calculator, or financial professional.
Bottom line
Ultimately, comparing yourself to others is a recipe for financial frustration. What matters most is your own unique goals and circumstances.
If you haven't reached your savings target yet, don't despair. There's still time to get creative, boost your savings , or rethink your retirement strategy.
Remember, financial health is a journey, not a destination. Keep exploring, keep optimizing, and keep striving for the retirement you deserve.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt . Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
Local News
