Have You Saved Enough – American’s Average Retirement Savings by Age

28 Oct 2022 0 Comments

Have You Saved Enough – American’s Average Retirement Savings by Age. Have You Saved Enough? American’s Average Retirement Savings by Age. Many Americans worry they’re not saving enough for retirement, A 2020 Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor.

The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.

A recent Vanguard study found that, on average, a hypothetical $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio. The National Institute on Retirement Security reports that almost 40 million households have no retirement savings.

General Guidelines for Retirement Savings

The consensus suggests you should have saved the equivalent of one year’s salary by the time you hit 30 but saving more certainly won’t hurt. Financial planners suggest you should aim to 3x by 40, 6x by 50, and 8x by 60 with the hopes of having 10x saved when it’s time to retire.

American’s Average Retirement Savings by Age

An October 2020 study by the Center for Retirement Research calculated median retirement account (401(k)/IRA) balances by age from Federal Reserve survey data. Here are the numbers:

35 to 44: $51,000

45 to 54: $90,000

55 to 64: $120,000

Regardless of where your retirement savings stand right now, one way that you can help get a retirement plan in place is by working with a financial advisor. As previously mentioned, research suggests people who work with a financial advisor versus doing it by themselves, feel more at ease about their finances and could end up with more money to spend in retirement.