Many Americans feel unsure whether they’re saving enough for their future, and wonder what the average retirement savings are by age. A 2024 Federal Reserve report showed that while 67% of Americans have a retirement account, only 35% feel like they are saving enough and are on track to meet their goals.

In this article, we’ll examine several important retirement savings statistics. Using that information, we’ll infer how much you should save for retirement, point out the key factors that may influence your actions, and give you advice on how to increase your savings. Finally, we’ll uncover the most common myths that surround savings.

What Is the Average Retirement Savings by Age?

The average retirement savings by age usually increases with older age groups. These savings typically encompass funds across different accounts, including 401(k)s, IRAs, and various other investment and savings accounts designated for retirement.

Before explaining the numbers, it’s important to make a distinction between average and median retirement savings by age.

The average is calculated by adding up the values of all savings and dividing them by the number of people. As a result, these retirement savings benchmarks can get skewed toward the high end due to a small percentage of extremely high earners.

On the other hand, the median represents the exact middle of all values. That’s why it provides a much more realistic picture for the majority of Americans whose earnings are in a typical range.

With that being said, let’s take a look at a table that displays both average and median retirement savings by age, based on the information provided by the Federal Reserve:

As you can see, the average retirement savings by age are heavily skewed by outliers, with median values often being around three times smaller.

However, not everyone has a retirement account. Moreover, as mentioned in the intro, only 35% of people believe they have their savings on track. Here’s a table that details what percentage of individuals in a specific age group have a savings account and are on track with their savings:

Average Retirement Savings by Generation

Analyzing average retirement savings by generation can give us insight into how different age groups approach their retirement.

Baby Boomers

Baby Boomers are individuals born between 1946 and 1964, and most of them are retired or close to it. According to Fidelity, the average 401(k) balance for Baby Boomers is $249,300, while the average IRA balance is $257,002.

However, median retirement savings for this generation are only around $194,000. Some of the most significant factors that influence Baby Boomers’ retirement savings include the shift away from pensions and the extremely negative impact of the 2008 financial crisis.

Gen X

Gen X are people born between 1965 and 1980. They are often referred to as the “sandwich generation,” since they had to balance the costs of raising children while supporting their aging parents.

The average reported 401(k) balance for these Americans is $192,300, with the average IRA balance being $103,952. However, a typical Gen X household has only $40,000 in savings. This is far less than $1M, which is a figure that many in this generation believe they need to retire comfortably.

Millennials

Millennials are individuals born between 1981 and 1996. Their generation is known to face unique financial challenges, such as high student loan debt and housing costs. These can make saving difficult, which is why a significant portion of millennials have nothing saved for retirement at the moment.

Those who are saving have, on average, $67,300 in their 401(k) and $25,109 in their IRA. One of the biggest choices that many millennials have to make is between buying a home and saving for retirement.

Gen Z

Gen Z was born between 1997 and 2012. This is the youngest generation to start saving for retirement in the present day, and the one that’s only recently entered the workforce. A typical Gen Z investor has an average 401(k) balance of $13,500 and an average IRA balance of $6,672.

However, since Gen Z is at the beginning of their financial journey, they have the longest runway for retirement savings. As a result, they can get a head start and take advantage of compound interest.

How Much Should You Save For Retirement?

How much you should save for retirement depends on your personal needs and goals. Still, financial experts have developed several benchmarks that you can use as a rough estimate and a general starting point.

One common benchmark revolves around an annual salary. The main idea is to save up 10 times your annual salary by year 67, which would allow you to retire comfortably and enjoy the lifestyle that you’re used to.

Here is a scale that you can follow on your journey to retirement:

• By the age of 30, aim to have 1x your annual salary saved.
• By the age of 40, aim to have 3x your annual salary saved.
• By the age of 50, aim to have 6x your annual salary saved.
• By the age of 60, aim to have 8x your annual salary saved.
• By the age of 67, aim to have 10x your annual salary saved.

This escalating scale encompasses both your retirement savings and investment growth.

Another common guideline is to save 15% of your pre-tax income each year. This will encompass both your contributions and anything that your employer matches in plans like 401(k). This can also be a gradual process, as not everyone may be able to save that much in their first few years.

Factors That Influence Retirement Savings

The main reason why there is no one-size-fits-all plan or figure for retirement savings is that they depend on many factors, so let’s explore those that are most influential.

#1. Income Level and Employment Type

The primary factor that influences how much you can save is, unsurprisingly, your income. A higher salary and stable employment give you more funds to spend each month, allowing you to allocate a bigger portion toward retirement savings. However, it’s important to avoid the “lifestyle creep” trap, where spending increases with income.

Moreover, a traditional job, with an employer-sponsored retirement plan, makes it easier to achieve a monthly target compared to being a freelancer or an independent contractor. Contractors are solely responsible for setting up and funding their own self-employed retirement plans.

#2. Debt

Significant debt with high interest is one of the biggest obstacles to savings. Monthly payments to various debts, like student, personal, and other types of loans, as well as credit cards, directly compete with contributions you can make to your retirement savings accounts.

As a result, debt can delay your timeline and prevent you from hitting certain milestones as planned, like home ownership. Individuals who are paying off debt may often find themselves on the lower end of the national averages of net worth by age.

#3. Lifestyle Choices

Both everyday life choices and long-term plans you have influence your savings rate. Major expenses like rent, food, and transportation typically consume a large portion of an individual’s budget, leaving little left for the future.

The remainder must be used carefully, as overspending on discretionary expenses is a poor financial strategy. That’s why it’s important to do regular income tracking and be disciplined about your budget. An occasional splurge is a normal part of life, but you should always set aside some funds for savings.

#4. Economic Factors

Economic factors play a big role in how you can approach your retirement savings, since your personal finances don’t exist in a bubble. One of the biggest and most direct factors is inflation. It erodes the purchasing power of money, lowering the value of what you save over time.

Market volatility is another factor that causes investments to fluctuate. This can raise concerns in investors, especially if they are nearing retirement. That’s why it’s recommended to diversify your investment to make your portfolio more resilient to these changes.

#5. Employer-Sponsored Plans

Access to an employer-sponsored retirement plan, like a 401(k), has a big influence on your saving capability and retirement outcome. There are numerous advantages to these plans, including automated contributions through payroll, tax benefits, and employer matching.

Traditional employees who take full advantage of employer-sponsored plans often have a much easier time hitting their milestones and building substantial savings compared to those who don’t have access to them or fail to participate.

How to Increase Your Retirement Savings

Now, let’s take a look at some retirement planning tips that can help you maximize your savings:

• Start early and remain consistent. One of the most powerful concepts in finance is compound interest. It’s the process of receiving returns on your returns, which can grow significantly over time. That’s why you should start as soon as possible and consistently contribute to your accounts, even if you don’t feel that the sum you’re adding is big.

• Automate your contributions. The easiest way to ensure consistency is by automating your contributions so that you don’t even think about them. This ensures you’ll always add to your account. You won’t forget to do so or spend the money before you’ve had the chance to save it.

• Escalate your contributions. As you progress in your professional career and your income increases, so too should your contributions to your retirement savings. For example, if you’re using the 50/30/20 rule, 20% of your after-tax income should go to savings, regardless of how much it is.

• Pay off your debt aggressively. Any amount of funds that you spend on interest for debt is money you won’t be able to put toward savings. The faster you pay off debt, the sooner you’ll be able to start saving and take advantage of compound interest.

• Leverage a full employer match. If you’re an employee and your employer offers to match your 401(k) contributions, you should contribute enough to receive the full amount. There is a limit to how much an employer has to contribute to match you, and using this aspect to its full extent is the closest thing to free money in finance.

3 Retirement Savings Myths

Before we wrap up, let’s dispel the three biggest myths associated with retirement savings.

#1. “I can’t start saving until I earn more.”

One of the biggest traps that people fall into is thinking they need to have a substantial salary to start saving. In reality, due to compound interest, the most valuable asset you have is time. For instance, investing $100 a month starting at the age of 25 will likely outperform investing $200 per month starting at the age of 35.

Unless you’re genuinely living paycheck to paycheck, you will usually have some money to set aside for a savings account. The best time to start investing was yesterday. The second-best time is today.

#2. “It’s too late to start saving.”

On the other hand, just because you didn’t start early doesn’t mean it’s too late to start. Based on the income percentile by age, the older you are, the higher your earnings. As a result, you can start saving more aggressively.

Moreover, limits for contributing to your 401(k) and IRA increase beyond the age of 50. This allows you to “catch up” and accelerate your savings before retirement.

#3. “I can live on Social Security.”

Social Security benefits are modest and only meant to replace a portion of your past earnings. Based on the Social Security Administration’s Replacement Rates for Hypothetical Retired Workers, a 65-year-old worker with average earnings who retired in 2024 will only be able to replace around 39% of their earnings with Social Security.

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Final Thoughts

When looking at the average retirement savings by age, you can get a solid idea of your current situation and make plans for the future. Keep in mind that everyone’s circumstances are different, and there are various aspects (many of which are external) that may influence your ability to contribute to your retirement fund.

Ultimately, you should start as soon as possible and remain consistent. That way, you’ll leverage the power of compound interest, and it won’t be long before your money starts working for you. Make saving a habit and try to take full advantage of employer matching and tax-advantaged accounts.

Average Retirement Savings by Age FAQ

#1. How many people have $1,000,000 in retirement savings?

A very small percentage of the population has $1,000,000 in retirement savings. In the U.S., out of 54,3% of households that have funds in retirement accounts, only about 5% have $1,000,000 or more.

#2. What is a good 401(k) balance at age 65?

A good 401(k) balance at age 65 depends on the individual's needs and circumstances. One widely used benchmark suggests it’s good to have 10 times the annual salary saved; so if your annual salary were $80,000, a good balance would be $800,000.

#3. How can contractors or freelancers save for retirement?

Contractors and freelancers have several strong options to save for retirement, even without access to a traditional 401(k). Notable examples include a SEP IRA account, a Solo 401(k), and a SIMPLE IRA. These plans are similar to employer-sponsored ones, as they offer tax advantages and high contribution limits.