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If you want a secure retirement, you have to create it. Social Security only replaces about 40% of pre-retirement income. The retirement savings in your 401(k) or brokerage account has to produce the rest.
Where do you stand on retirement savings? Look at how much other people your age have invested to get an idea of whether you're ahead of the pack or falling behind.
The average retirement savings account balance by age
According to research conducted by The Motley Fool, here is the median retirement account balance by age:
- Under 35: $18,880
- 35 to 44: $45,000
- 45 to 54: $115,000
- 55 to 64: $185,000
- 65 to 74: $200,000
- Over 74: $130,000
Now, if you have more than this amount, that doesn't necessarily mean you're on track to a secure future, since the amount you'll need depends on your income. If you have less, this also doesn't mean you're headed for disaster.
Still, seeing how your fellow Americans are doing can help motivate you to make positive changes in your retirement savings rate.
The important thing is to ensure you're on track based on how much you have saved at each age relative to your income. Your goal should be for your nest egg to replace about 40% or more of what you were earning before leaving work, to maintain your living standard as a retiree.
Here's how much you should have saved based on your age
Fidelity Investments has some simple rules of thumb for how much you should have saved by certain ages:
- By 30: One times your salary
- By 40: Three times your salary
- By 50: Six times your salary
- By 60: Eight times your salary
- By 67: 10 times your salary
Of course, these guidelines are pretty general since they're meant to apply to the average person. But if you stick to them, you have a good chance of saving what you need by the time you're a senior.
You can compare what you have saved to these benchmarks to see if you're on track. If you aren't on track, here are a few ways to try to fix that:
- Make retirement savings a must-pay bill. This should be a priority in your budget, along with food and rent or your mortgage payment. Don't allocate money for fun stuff until retirement is taken care of. If there's not enough money to save, you may need to consider lifestyle changes like finding a new job or moving someplace cheaper.
- Pay yourself automatically. Have money transferred automatically to your 401(k) or IRA to ensure you don't cheat yourself of the secure future you deserve. If you do this, you shouldn't miss contributions since investing for retirement will be the status quo.
- Save your raises. If you get a salary bump and aren't investing enough for retirement yet, divert that entire extra amount of money to retirement savings. After all, you don't rely on it yet, so if you move it to savings right away you'll never miss it.
Following these steps can help you increase your account balance. You may end up with more than others your age in the future, but regardless of whether you do, as long as you're hitting your personal milestones, you'll be setting yourself up for success.
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