Average US Retirement Savings by Age (And How to Catch Up)
When planning for the future, one of the most common questions Americans ask is: "How do my retirement savings compare to everyone else my age?"
In the United States, saving for retirement is largely driven by individual efforts through 401(k)s, IRAs, and personal investments. Because of this, the range of retirement savings can vary wildly.
Let's look at the average US retirement savings by age, and more importantly, how you can use the power of compound interest to catch up if you feel behind.
Average vs. Median Retirement Savings in the US
Before looking at the numbers, it's important to understand the difference between average (mean) and median. The average is often skewed higher by a small percentage of extremely wealthy individuals. The median—the middle point where half have more and half have less—is often a more accurate reflection of the typical American's savings.
According to recent Federal Reserve data, here is the breakdown by age group:
Ages 35 to 44
- Average Savings: $131,950
- Median Savings: $60,000
Ages 45 to 54
- Average Savings: $254,720
- Median Savings: $119,000
Ages 55 to 64
- Average Savings: $408,420
- Median Savings: $185,000
Ages 65 to 74
- Average Savings: $426,070
- Median Savings: $200,000
If your savings are closer to the median (or below it), you are not alone. However, many financial experts recommend having 1x your annual salary saved by age 30, 3x by age 40, and 10x by age 67.
How to Catch Up: The Magic of Compound Interest
If you feel behind, don't panic. The best tool you have to close the gap is compound interest.
Compound interest is the interest you earn on both your original money and on the interest you keep accumulating. It allows your money to grow exponentially.
For example, let's say you are 45 years old with $50,000 saved, and you want to retire at 65. If you contribute $500 a month to an investment account with an average annual return of 7%, you won't just have $170,000 (your total contributions). Thanks to compound interest, your account could grow to over $440,000.
Find Out Where You Stand
The math behind compound interest can be difficult to calculate manually, especially when factoring in monthly contributions and varying interest rates over decades.
That's why we built our Compound Interest Calculator.
Whether you are 25 and just starting out, or 55 and looking to accelerate your savings before retirement, you can use our free calculator to run the numbers. Simply plug in your current savings, your monthly contribution, and your expected interest rate to see exactly how your money will grow over time!