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What's the Median Retirement Savings by Age?

By Synchrony Staff

  • PUBLISHED August 01
  • |
  • 8 MINUTE READ

Median Retirement Savings by Age

According to this survey by the Transamerica Center for Retirement Studies, the median retirement savings by age in the U.S. is:

  • Americans in their 20s: $16,000
  • Americans in their 30s: $45,000
  • Americans in their 40s: $63,000
  • Americans in their 50s: $117,000
  • Americans in their 60s: $172,000

Suggested Retirement Savings by Age

The above savings amounts may seem impressive, but consider this "rule of thumb" given by some financial experts on how much individuals should be saving for a goal of retiring by age 67:

  • Americans in their 30s: 1–2 times their annual salary
  • Americans in their 40s: 3–4 times their annual salary
  • Americans in their 50s: 6–7 times their annual salary
  • Americans in their 60s: 8–10 times their annual salary

That means, for example, that a 35-year-old making $45,000 a year should have up to $90,000 in retirement savings—twice what most Americans have saved.

How Much Money Will You Need to Retire?

Some experts will cite the "80 percent rule" of retirement planning, which states that you should plan to live on 80 percent of your pre-retirement income.

Your personal goals—retiring early, owning a second home, leaving a nest egg for your heirs or accommodating health challenges—could mean that your needs require different planning. The unpredictability of economic factors, medical costs and your longevity will also affect your expenses in retirement.

Many financial advisors suggest saving 10–15% of your gross income starting in your 20s. That's in addition to money set aside for short-term goals such as a new car or emergencies.

Online retirement calculators can also help you determine if you're on track to meet your financial needs in retirement.

Savings Options That Can Help

From your 20s to your 60s, planning for a comfortable retirement starts with looking at your income and expenses and finding ways to save more money. Here’s how to make the most of your retirement savings at every age.

Saving for Retirement in Your 20s

Many Americans in their 20s begin their careers with entry-level paychecks. It may seem too early to think about retirement, especially if you’re paying off student loans.

However, an effective way to start saving for retirement in your 20s is by contributing to a company-provided 401(k). Your employer may give a matching contribution up to a certain percentage. Take advantage of this offering, but don’t stress—you have at least 40 years to build your retirement.

Experts also recommend starting an emergency fund. Putting aside money for surprise expenses, such as house and car repairs, protects your retirement savings from being your back-up fund. In fact, according to the IRS, withdrawing money from an IRA before age 59½ isn’t ideal. The withdrawn amount is considered part of your gross income and has a penalty tax of 10%.

Saving for Retirement in Your 30s

Buying a house and starting a family are common life events for Americans in their 30s. These changes are not only expensive, but they distract from saving for retirement.

On the other hand, people in their 30s are often more established in their careers and have higher paychecks than those in their 20s. So, how do you balance handling your current expenses and planning for the future?

First, tighten down on your budget. It’s tempting to just plan for your short-term expenses, but don’t forget to make long-term goals like retirement a priority. By paying better attention to where your cash is going now, you may not have to work as hard to meet your retirement savings goals down the road.

Second, try to save up to 15% of your income on retirement. If you aren’t doing so already, take full advantage of your employer’s 401(k) match. Subtract the 401(k) percentage that your company matches from 15, and your results are what you should contribute on your own.

Saving for Retirement in Your 40s

While the recommended retirement plan savings amount is up to four times your annual salary, this is not a reality for many Americans. The average income for those in their 40s is around $50,000, but the median retirement savings amount for this age group is $63,000.

What steps can you take to meet this goal? Try putting any money you get from a raise into retirement savings. If you’ve paid off your student loans, take the money you used to contribute to paying those down each month and put it toward retirement.

Even if you’re behind in funding a comfortable retirement, there’s still time to catch up. Make retirement a priority in your budget right after essentials needs, such as your mortgage, utilities and food.

Saving for Retirement in Your 50s

At age 50, retirement is closer than you think and it’s time to get serious about saving, if you haven’t already. It might seem ambitious to save up to seven times your annual salary, but meeting this goal could set you up for success.

If your salary is $50,000 or higher, you should have at least $350,000 saved. If you’re nowhere close to that, take a look at your budget and see what changes you can make to get on track. You can also talk to a financial advisor about making adjustments to your IRA.

Saving for Retirement in Your 60s

Now that the finish line is in sight, consider your goals and plans for retirement. Keep in mind that these savings help support your current lifestyle. They also cover medical costs during retirement—around $275,000. If you want to purchase a beach house or travel the world, your savings need to reflect that.

Put the finishing touches on your savings plan or make any necessary changes. If you’re still far from the savings benchmark of 8–10 times your annual salary, think about what assets you can monetize. You may also consider working for a few more years. This not only provides more income but decreases the time you’ll need to use your retirement savings.

IRAs and Your Retirement Savings

To meet the suggested median retirement savings by age, you may want to consider opening or contributing to an IRA. This type of retirement plan has tax advantages and allows you to set aside funds in a separate place from your regular savings or emergency funds. The two main types of IRAs are traditional and Roth IRAs:

  • Traditional IRA: Contributions to traditional IRAs may be tax-deductible and can be made up to age 70½. Note that you may be penalized and taxed if you withdraw from a traditional IRA before age 59½. At age 70½, you are required to start making taxable withdrawals.
  • Roth IRA: People choose to open Roth IRAs because contributions are made post-tax and can be made at any age. You may withdraw earnings without taxes or penalties if the funds have been in the Roth IRA for at least 5 years and you are at least age 59½.

For the year 2018, your IRA contributions can’t exceed $5,500 (under age 50), $6,500 (over age 50) or your taxable compensation for the year, if your compensation is less than this limit.

For example, let’s say you are age 54 and make $58,000 a year. You can contribute up to $6,500 in the year 2018. If you are age 29 and make $4,000 at a part-time job, you can contribute up to $4,000.

When Can I Open an IRA?

It’s never too soon to start saving for retirement. You can open your own traditional or Roth IRA as soon as you are no longer a minor (usually age 18). Some parents or guardians choose to open an IRA for their child before this age. This is usually to kickstart savings and establish healthy financial habits at an early age. The IRA is opened in the child’s name, and the child can make contributions as long as they have some source of income.

Synchrony Bank does not provide financial advice, so be sure to consult your tax or financial advisor before opening or contributing to an IRA.

Build a Nest Egg 

No matter your age, contributing to your employer's 401(k) plan or an IRA can turn your savings into a reliable source of retirement income. Many retirement savings plans also reduce your taxable income, so you'll keep more of what you earn today.

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