How do you stack up against the insanely low median retirement savings?
Americans can be struggling when it comes to retirement savings. The median retirement account balance is very low, putting workers at risk of having too little money in their later years.
Are you in danger of not living up to your retirement nest egg? It’s worth comparing your investment account balance to the median to see where you stand.
Here’s what the typical American saved for retirement
According to a recent report from the TransAmerica Center for Retirement Research, the median amount workers have saved for retirement is only $ 93,000. But even this insanely low number doesn’t tell the whole story. TransAmerica has found that:
- The median among full-time workers is $ 104,000.
- The median among part-time workers is $ 48,000.
- Eighteen percent of workers have less than $ 10,000 saved in retirement accounts.
- Seven percent of workers have nothing saved for their retirement, including 6% of full-time employees and 12% of those working part-time.
A retirement savings account balance of $ 93,000 would produce about $ 3,720 in annual income if you maintained a safe withdrawal rate by withdrawing 4% of your money in your first year of retirement and then increasing the amount. of your withdrawal each year to account for inflation.
This is far below what most people will need to supplement their Social Security retirement benefits and maintain their quality of life after leaving the workforce.
Why is the median retirement account balance so low?
The median account balance is low for many reasons.
Obviously, some young people have not had the time to save a lot for their retirement. They have very little money in their accounts and their low balances affect the median. But the sad reality is that this factor alone does not explain the shockingly low balance.
The simple fact is, millions of Americans just aren’t saving enough to meet their needs. Pressing financial obligations often get in the way of many, while others assume that Social Security will be enough to cover their costs so they don’t prioritize saving for retirement. This is a serious mistake because retirement benefits are not designed to provide sufficient funds for basic living necessities without other income.
How do your savings compare?
If your savings are below or near the median, that may not be a problem if you are very young and have many years left to work and invest. But it could put you in financial jeopardy if you’re in your sixties and don’t have a lot of time before you have to rely on your savings.
The bottom line is that virtually everyone needs a lot more than the $ 93,000 saved at the time of retirement – although the specific amount you should have will be determined by your pre-retirement income and whether you have other sources. funds in addition to savings and social security. (like a pension).
To see how much you should invest for your future, try one of the simple techniques for setting savings goals, such as multiplying your expected final salary by 10. The calculators on Investor.gov can then help you assess whether you are investing enough. . It is best to do these calculations as soon as possible, because the sooner you set savings goals and start hitting them, the more likely you are to beat the median account balance and end up with enough money to your last years.