The average for retirement savings is less than it should be.
What do you think of when you hear the word retirement?
Do you think of sleeping in?
Do you think of travel?
Do you think of time with family?
Whatever you envision, one thing is certain: it will take money.
A recent Investopedia article asks “What Is the Size of the Average Retirement Nest Egg?”
According to the article, few people consider the financial aspect of retirement savings.
Their retirement savings suffer.
A recent Fidelity Investment analysis of more than 30 million accounts found that a meager $95,600 was the average amount in an employee sponsored 401(k) at the end of 2018.
The average amount in Roth, traditional, and rollover IRAs was $98,400.
In the non-profit world of 403(b) accounts and other defined-contribution plan, the average retirement savings amounts were even lower at $78,700.
These averages have dropped about 7.8 percent to 7 percent from the previous year.
Obviously, averages do not tell the whole story.
Some people have more retirement savings than others.
With an average of $164,000, Baby Boomers tend to have more saved than Gen Xers, according to a 2018 Transamerica Center For Retirement Studies report.
At $72,000, Gen Xers in turn tend to have more saved for retirement than the mere $37,000 for Millennials.
In addition to the generation gap, there is also a difference based on income.
Those with greater incomes have more saved than those with lower incomes.
Retirement savings for those with incomes below $50,000 have $11,000 in retirement accounts.
Those between $50,000 and $99,000 have a median of $61,000 saved.
Finally, those who make $100,000 or more a year have a median of $215,000 set aside, with those having higher educations also having more in retirement savings.
In the end, comparing yourself to the average of your demographic group does little good.
Even if you have more saved than the average of your counterparts, you may still fall short in your retirement savings.
How can you determine whether you are on track?
Work with an experienced financial planner to discuss your retirement savings goals, your projected future expenses, and what you will need to meet your goals for retirement savings.
Reference: Investopedia (Sep. 24, 2019) “What Is the Size of the Average Retirement Nest Egg?”