According to the How America Saves 2022 report by Vanguard, an investment firm representing more than 30 million investors, Americans have on average about $141,542 saved for retirement.
However, most people probably have a lot less: the median 401(k) balance is just $35,345.
This means that half of the account balances are lower than this amount and the other half are higher. And since averages can be skewed by a few outliers, the median balance is considered to be more representative of what most people actually have saved in their 401(k) accounts.
Here’s a look at how much money Americans have saved for retirement, by age:
In addition to age, many other factors influence retirement provision, such as an employee’s income and length of service. For example, older workers with longer tenures tend to have higher bank balances than workers who are just starting out in the workforce.
But try not to fixate solely on your exact balance. “If you focus too much on your account balance, you may be tempted to react to short-term volatility at the expense of your long-term financial goals,” says Nilay Gandhi, senior wealth advisor at Vanguard.
Instead, Gandhi encourages investors to focus on factors they can control, such as spending, investment decisions, and their savings rate.
“We believe participants must achieve an overall savings rate of 12% to 15%, including employer contributions,” said John James, managing director of Vanguard’s Institutional Investor Group.
Don’t panic if you aren’t already — most investors aren’t yet.
Here’s the average retirement savings ratio for investors of all ages:
Gandhi recognizes that reaching the recommended 12% to 15% retirement savings ratio can be daunting for workers, especially those just starting out.
It’s okay to start with what you can afford. “But be sure to save at least enough to get the full benefit from your employer,” Gandhi recommends.
From there, “increase your savings rate by 1% to 2% each year until you reach your target savings rate of 12% to 15%.”
Vanguard offers a free retirement income calculator that anyone can use to estimate how much money they’ll need after retirement. The tool takes into account specific individual factors, including current age, projected retirement age, current income, savings rate, expected income needs in retirement, and additional sources of income.
You can also check out CNBC’s Make It retirement planning tool, which can calculate how much money you need to comfortably retire based on your age and income.
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