Want to Beat the Average Retirement Savings? Here's How

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There are many people who unfortunately end up retiring with very little or no savings at all. These seniors commonly end up relying heavily on Social Security to pay most or all of their bills, which isn't great, seeing as how the typical retired worker today only collects about $23,000 a year.

If you want to avoid financial hardships during your senior years, you'll need to make an effort to build up a nice balance in your individual retirement account (IRA) , 401(k), or retirement savings plan of choice. But how much savings should you aim for?

You may find it helpful to know that the average retirement account balance among Americans aged 65 to 74 is about $609,000, according to the Federal Reserve. But with the right strategy, you can do a lot better. You might even manage to kick off your senior years with twice that much saved -- and without even breaking a sweat.

Time is your greatest asset

You might assume that to retire with twice as much savings as the average older American, you'll need to give up a lot of your paycheck each month and stick it into your IRA or 401(k). But actually, that's not even necessary.

If you give yourself a long savings window and invest your money in stocks for many years, you may find that you're able to seamlessly build up a giant nest egg -- and retire very comfortably.

Over the past 50 years, the stock market has rewarded long-term investors with an average annual 10% return. This accounts for years when the market did very well as well as years when it utterly tanked.

Meanwhile, let's say you're able to start saving for retirement at age 25. This means you're not necessarily funding an IRA or 401(k) from the moment you start working full-time, but you're starting at a fairly early point in life.

If you were to put $250 a month into a retirement plan loaded with stocks that generate an average annual 10% return, by age 65, you'd have a little over $1.3 million. That's more than twice the average savings balance today, and it's a sum you can probably feel confident retiring on.

What happens if you start later?

Let's say you're already in your 30s and haven't started saving for retirement yet. The good news is that you still have a chance of accumulating twice the average savings balance today.

You'll need to prepare to part with more money on a monthly basis. But if you have 30 years to save and your portfolio gives you that same 10% return, a monthly contribution of $600 will get you to just about $1.2 million.

Of course, saving $600 a month isn't as easy as saving $250. And that's why it pays to get started as early as you possibly can.

You may not need to beat the average retirement savings, but it doesn't hurt to try

A retirement savings balance of $609,000 is nothing to scoff at. So you don't necessarily have to push yourself to double that sum, or even beat it, if you're confident you'll be able to live well on a nest egg of that size.

Remember, that average $609,000 in savings is on top of Social Security. And some seniors have other income sources at their disposal, too, whether it's a pension from work or earnings from a part-time job.

So if you want to aim for a savings balance that's comparable to the typical American's today, that's fine. But you should also know that retiring with much more is doable if you take the right approach. That means harnessing the power of the stock market and giving your money as many years as possible to grow.

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