Average Retirement Savings by Age

A successful retirement, one that delivers little to no financial stress, requires planning and consistent saving.

A Gallup survey said that while most Americans expect to retire somewhere around the age of 66, the actual age they retire is 61. In other words, retirement is coming sooner than you think and the sooner you make and implement a money-stashing plan, the easier your retirement years will be.

Regardless of today’s financial pressures, we recommend thinking about what you need to retire comfortably. Which begs the obvious next question: How much money should you have in the bank at different ages to feel confident that you’ll get to the end of your work life with enough money to maintain your standard of living?

We’ve put together a detailed look at how much you will need to save for retirement at various ages — and suggestions of how much you should save.

While everyone’s situation is different, examining the average retirement savings by age gives you a valid benchmark for your savings plan. We recommend using the average retirement savings by age as a guide, not a hard rule. Your savings goals will depend on your income, desired retirement lifestyle, life expectancy, and more.

According to Vanguard’s “How America Saves 2023” report that studied five million investors, the average and median retirement savings balances at different age ranges are:

Unfortunately, Americans don’t save enough for retirement. The median retirement savings for all families is $87,000, according to the 2022 Survey of Consumer Finances conducted by the U.S. Federal Reserve. Plug that number into the table above and you can see it falls well short short of the targets.

Retirement Savings by Age Group

The biggest takeaway about saving for retirement is this: the sooner you start, the better off you will be.

Your age when you start saving plays a key role in determining how much money you have at the different stages of your career and life. The younger you are when you start saving, the more time your investments have to grow through compounding returns. That is the reason it’s so critical to contribute to retirement accounts early, especially if your employer offers a matching 401(k) plan.

By saving when you’re in your 20s and 30s, you take advantage of decades of compound growth and employer matches, building a sizeable nest egg when you reach retirement age. People who wait to save until their 40s and 50s have to contribute much higher amounts to catch up.

Although specific savings goals depend on your individual circumstances (your income, living expenses, long-term debts like student loans, etc.), your age serves as a benchmark to assess if you’re on track with retirement savings.

Grouped by age, the following sections summarize:

• The average savings by age group according to Vanguard’s “How America Saves 2023” report
• Life factors influencing the amount individuals in each age group can save for retirement
• Strategies that can help different age groups achieve their retirement goals

These will help you determine if you’re on pace with retirement savings based on your age — and what to do about it if you’re not.

Under 35

» Average Savings: $30,017
» Median Savings: $11,357

For Americans under 35, retirement seems too far away. Many younger adults are more focused on paying off student loan debt or saving for major purchases like a house or car. Those objectives limit how much they can set aside for the future.

Most people younger than 35 aren’t at their income peaks. Salaries are lower than they will be for people as they get into their 40s and 50s. Location affects the cost of living more than age. Competing financial priorities like living on their own for the first time, traveling, getting married, and starting families also strain the ability to save money.

Given these constraints, some tips for younger workers to build their retirement savings include:

• Save even small amounts early to take advantage of compound interest.
• Take advantage of 401(k) matching. If your employer offers matching contributions, contribute enough to get the full employer match. An employer match is free money.
• Open a Roth IRA, which lets you grow your savings tax-free. Contribute up to the annual limit. If you also have a 401(k), this supercharges your savings.
• Make lifestyle cuts. Limit expenses like dining out and vacations and allocate more money to retirement accounts. Minor changes like skipping Starbucks in the morning go a long way.
• Set up an emergency fund that can cover 3-6 months of living expenses. This might prevent you from having to tap your retirement accounts if you need money for a personal emergency.

Ages 35-44

» Average Savings: $76,354
» Median Savings: $28,318

While people ages 35 to 44 often enjoy peak earning years, this period also brings peak expenses: mortgages, childcare costs, and saving for college strain budgets for many. As families grow, healthcare costs also rise. Mid-career professionals may also face training or moving costs associated with career development.

Given these financial pressures, some tips that can help maximize retirement savings include:

• Review retirement goals and increase savings rate to 10%-15% of income.
• Use tax-advantaged accounts like 401(k)s, IRAs, and Health Savings Accounts to save efficiently.
• Aggressively reduce high-interest debt like credit cards to free up more money for retirement contributions.
• Put any bonuses, tax refunds, and windfalls directly into savings.
• Cut discretionary spending and divert that saved money to savings.

Ages 45-54

» Average Savings: $142,069
» Median Savings: $48,301

From 45 to 54, you’re fast approaching retirement age. Time is critical to shore up savings. However, income growth often plateaus leading up to retirement. And healthcare costs also usually rise.

Some people in this age group may make college tuition payments. And for some, aging parents may become financially dependent and require increased care.

To optimize retirement savings during this pre-retirement period:

• Assess projected retirement income needs and adjust savings strategy accordingly.
• Make catch-up 401(k) and IRA contributions to maximize last-minute savings.
• Shift investments to a more conservative asset mix.
• Pay off or consolidate debts.
• Avoid taking loans or making early withdrawals from your retirement account, a sure way to give up past gains. Leave retirement funds untouched before age 59 1/2.

Ages 55-64

» Average Savings: $207,874
» Median Savings: $71,168

People in this age range are close to retirement but sometimes face complications with their financial planning. Many balance enjoying their lifestyle against continued saving. Healthcare costs rise more. Some people in this demographic still provide financial support for adult children.

Given all that, here are tips to optimize the final years of retirement saving:

• Solidify your planned retirement age and estimate associated lifestyle costs.
• Contribute maximum amounts to retirement accounts and utilize catch-up contributions.
• Add a guaranteed income product, such as an annuity, to your portfolio.
• Consider buying long-term care insurance.
• Assess all available retirement income streams.
• Plan inheritance goals and make estate plan updates.
• Model different Social Security claiming strategies.

Ages 65-74

» Average Savings: $232,710
» Median Savings: $70,620

By the time age 66 rolls around, 69% of Americans are already retired. Key changes in their lives include moving from accumulation of savings to drawing down their nest egg. Healthcare can also rise, even with Medicare.

A large portion of people over 75 have moved into assisted living facilities, which entails higher monthly costs. Inflation erodes the purchasing power of fixed retirement income sources. For some, cognitive decline may make ongoing financial management more challenging.

To preserve retirement savings during the drawdown phase:

• Follow a sustainable withdrawal rate from your portfolio based on market conditions and income needs.
• Minimize the impact of taxes by strategically drawing retirement funds from the right accounts.
• Maintain a balanced, diversified investment mix to mitigate risks.
• Arrange a power of attorney for finances if necessary.
• Create a retirement budget and review spending regularly.
• Delay drawing Social Security as long as possible.

Recommended Retirement Amounts by Age

To maintain your standard of living in retirement, there are indicators of the amount you should have saved for retirement based on your annual salary. You should aim to have a certain multiple of your annual income saved by each age milestone. According to Fidelity’s “10x income rule,” you should try to save 10 times your annual income by age 67. Here are some guidelines for retirement savings targets by age.

What Is the Recommended Retirement Savings by Age?

For example, a 35-year-old earning $50,000 annually should aim to have 2-times their salary, or $100,000, saved in retirement accounts by age 35. This table provides retirement savings benchmarks to aim for at different ages based on your salary.

Other common guidelines are to save:

• Half your salary by age 25
• Your full salary by age 30
• 3 to 5 times your salary by age 40
• 5 or more times your salary by age 50

The exact multiplier depends on factors like your target retirement age and expected spending needs. Ultimately, there’s no magic number that suits everyone’s financial situation. Use these age-based rules of thumb as a starting point when planning your retirement savings goals. A financial advisor can also help develop a goal tailored to you.

How to Save for Retirement

The most important part of retirement planning is executing the plan. Although it’s always better to plan for retirement sooner rather than later, it’s never too late to secure your retirement future.

There are the several options for saving for retirement. While many Americans rely on Social Security upon retiring, at an average of $1,680 a month, that total isn’t remotely sufficient to be a sole source of income. That’s why it is crucial to set up retirement accounts to supplement your Social Security benefits.

Options include 401(k) plans, traditional IRAs, Roth IRAs, and self-employment retirement accounts. Here are details of each:

401(k) plans: These retirement accounts are only offered through employers, and not all employers have one.  You contribute pre-tax dollars, lowering your current taxable income. Many employers offer matching contributions up to a certain percentage of your contributions, typically 3%-6%. This matching component is free retirement money, but you have to contribute a certain percentage of your paycheck to receive the full match. The maximum employee contribution for 2024 is $23,000.

Traditional IRAs: These individual retirement accounts are savings accounts you set up for yourself outside your employer. You can make tax-deductible contributions, similar to a 401(k), using pre-tax dollars, lowering your taxable income. The traditional IRA has income limits that determine eligibility and contribution amounts, although the SECURE Act of 2020 removed the age cap for contributions. However, you may be penalized and taxed if you withdraw funds from your traditional IRA before age 59½.

Roth IRAs: With a Roth IRA, you make contributions after paying taxes on your money. However, qualified withdrawals (after five years and you are at least age 59 ½) are tax free. Income limits also apply to eligibility for Roth IRAs. In 2024, the maximum contribution for IRAs is $7,000 for people under age 50 and $8,000 for those over age 50.

Self-employed plans: Small business owners, freelancers and contract employees have access to plans like solo 401(k)s, SEP IRAs, and SIMPLE IRAs. These plans permit higher contributions compared to traditional IRAs.

The key is to save early, ideally by your mid-20s to early 30s, to take advantage of decades of potential compound growth. Contribute portions of your income consistently over time and increase your contributions as your salary rises. Take full advantage of any employer matching contributions to boost your account further.

Start Thinking About Retirement Today

It is easy to put off thoughts about being old enough to retire, especially when it seems so far in the future. Focusing on immediate needs and wants in the present may seem more pressing and convenient. However, saving for retirement today is critical to ensuring your financial security in the future.

One helpful approach for getting your retirement planning on track is to work with a nonprofit credit counselor. Reputable nonprofits, such as InCharge Debt Solutions, provide unbiased guidance tailored to your specific financial situation. The benefits of using a nonprofit credit counseling service include:

• Experienced counselors who can help you create a realistic spending plan and savings goals for retirement based on your income and expenses.
• Advice on managing and reducing debt, freeing up money to save for retirement.
• Guidance on building an emergency fund to cover unexpected costs without having to tap retirement savings.
• Recommendations on retirement savings accounts and strategies based on your income level and your debts.
• Periodic reviews to assess savings progress and make needed adjustments.
• Resources to improve overall financial literacy on topics like budgeting, investing, and estate planning.
• Ongoing access to counselors who can answer retirement-related questions with no hidden fees.

While retirement may be decades away for some, getting an early start your planning, budgeting, and saving can make an immense difference down the road. Assessing your projected retirement needs and building savings takes time. Starting now gives you the opportunity to identify any potential savings shortfalls and make adjustments while you still earn a steady income.