Do You Have More or Less Retirement Savings Than Other People Your Age?

It’s important to work on saving for retirement throughout your career. That’s because you’ll need money to supplement Social Security, and the sooner you start investing to grow your nest egg, the easier it is because of the power of compound growth working for you.

Since most people acquire more retirement assets the longer they work and contribute to their accounts, average balances in retirement plans tend to increase with age. Still, many accounts of even the oldest Americans have balances below what they should be in order to guarantee seniors a secure future.

Here’s what you need to know about how much Americans of different ages have saved, so you can see where you stand relative to your peers.

How does your retirement savings compare to others in your age range?

Vanguard’s How America Saves report provides details on the average balance of defined contribution plans by age. According to Vanguard, here are the average and median account balances for people within different age ranges:

Table source: How America Saves.

As you can see, account balances rise dramatically as you get older, and that’s not surprising. You need your balance to grow as you get closer to the time when you rely on it, and you should be working toward making that happen by investing in your 401(k) or other tax-advantaged accounts from the earliest possible age.

However, while balances get bigger, they aren’t necessarily big enough. The median balance among those 65 and over, for example, is only $95,425. If you follow the 4% rule to maximize the chances of your money lasting by not withdrawing too much at once, you would only have $3,817 in income from your retirement accounts to live on each year.

Even when you combine that amount with your Social Security benefit, that’s not really enough to allow you to maintain the quality of life you enjoyed before leaving work. Generally, you should aim to replace no less than around 70% to 90% of pre-retirement income. Social Security replaces 40%, so your investment accounts must produce the rest. Getting just $3,817 yearly from those accounts won’t be enough.

How much should you have saved at your age?

Now you know how much most people have saved in different age ranges, but the more important question for your retirement planning efforts is: How much should you have saved?

Fidelity offers some quick and simple guidance to help you get a realistic idea of whether you are on track with deposits into your 401(k), IRA, or other retirement accounts. Ideally, you should have:

• One times your annual salary saved by age 30
• Three times your salary by 40
• Six times your salary by 50
• Eight times your salary by 60
• 10 times your salary by 67 (which is full retirement age for Social Security for anyone born in 1960 or later).

You can make sure to stay on track for these milestones by figuring out what topline number you’re looking to achieve with your savings, and then working backward to decide how much to invest each month. Online calculators, including those at Investor.gov, can help.

You could deposit this money in a 401(k) if your employer offers one, or in an IRA or other tax-advantaged plan. The most important thing is to calculate the amount to save each month to get or stay on target to ensure you have the right amount at every age.

The longer you wait to begin investing for your future, the harder it is to save the amount you need. So, whatever age you are, now is the time to get serious about saving for your retirement goals if you haven’t already. Hopefully, you’ll soon pull ahead of your peers and can end up with the financially secure retirement you deserve.