Average Retirement and Emergency Savings by Age Group

Don't Overlook the Importance of Emergency Savings, Too

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Saving for retirement is an important financial goal, and ideally your nest egg should follow a steady upward trajectory over time. Having benchmarks for tracking your progress as you save can be helpful and important.

As a benchmark, you might compare your savings against the average retirement savings for your age group to see if you're falling behind or if you're getting ahead of the curve. But just how much do Americans of all ages have tucked away for their later years and for an emergency? It might be less than you think. 

Retirement Savings vs. Emergency Savings

Experts advise that you should sock away at least three months' worth of living expenses even before you begin saving for retirement; six months is even better. Tally up what you spend on rent or mortgage payments, utilities, transportation, insurance premiums, uninsured health care costs, food, and debt service. Now multiply that by three to six, depending on your goals.

Set this money aside so that it's there for you in the event something catastrophic happens that prevents you from earning income for an extended period.

Average Savings for 20-Somethings

Between stagnating wages and heavy student loan debt burdens, millennials face some of the biggest challenges when saving for retirement. But a 2017 Bankrate survey indicates that they're actually taking the lead when it comes to proactively contributing to retirement plans. 

The Transamerica Center for Retirement Studies estimates that the median retirement savings for millennials is about $31,000. According to Fidelity, the typical saver should aim to have one year's worth of salary saved by age 30. A 25-year-old should expect to have 25 to 50 percent of that number. 

Data from the Bureau of Labor Statistics (BLS) shows that the average 25-year-old earns a median annual salary of $40,352. A 20-something with a median of $31,000 in savings could reasonably be on the right track to reaching a year's worth of salary saved by age 30. 

Average Savings for 30-Somethings

Your financial picture might begin to shift a bit when you reach your 30s. You might be earning more, but life changes, such as getting married or having children, will increase your expenses. Higher expenses could make saving for retirement more difficult—and there are still those emergency savings to consider.

Individuals in this demographic had average monthly expenses just north of $3,400 as of 2018. That works out to more than $20,700 for six months' living expenses.

According to the Economic Policy Institute ​300, the average retirement savings of Americans ages 32 to 37 is $31,644. It should ideally be closer to $67,000.

This figure increases dramatically for savers in their late 30s and early 40s. At this point, the average retirement savings grows to $67,270 among Americans ages 38 to 43. 

That's a significant jump, but are older 30-somethings keeping the pace? The median annual salary for 35- to 39-year-olds is $50,752, according to the BLS. Fidelity recommends that the average 35-year-old have twice her annual salary saved for retirement, raising that to three times her salary by age 40. Thirty-somethings are missing the mark based on the EPI's numbers.

Average Savings for 40-Somethings

You might be heading into your peak earning years and carrying less debt in your forties, but the prospect of paying for your children's college education in a few years can put pressure on your ability to save for retirement.

Americans in their early 40s have a median income of just over $67,000, according to the EPI. The average savings checks in at $81,349 for 44- to 49-year-olds. Money is beginning to add up, but savers in their 40s still have their work cut out for them overall.

Individuals over age 40 spend an average of $4,300 a month on living expenses. Using that base, they should also have $12,900 to $25,800 set aside in an emergency fund.

Average Savings for 50-Somethings

You can probably anticipate having a sizable cushion of funds set aside for retirement and for emergency by the time you reach your 50s.

Turning 50 also allows supercharging your savings, since you can begin making catch-up contributions to your employer's 401(k) or your retirement account.

But the EPI data suggest that 50- and 60-somethings still have a long way to go. According to the research, the average retirement savings for the families of people in their 50s is $124,831 in 2018. For the families of people ages 56 to 61, it's $163,577.

These figures are far less than the $1 million that many experts recommend as a target for retirement savings. Social Security can supplement existing retirement savings, but the average monthly retirement benefit of $1,373 as of 2018 may not be enough to fill the gap. 

The good news is that monthly living expenses hold steady for this demographic at about $4,300 a month.

Average Savings for 60-Somethings

Now you're inching up on retirement. Individuals in this age group earn about $80,500 annually as of 2018. Their retirement savings should be roughly eight times that amount by this point.

Your costs of living should drop somewhat now, however, so you won't be laboring under quite as much of a burden to create an emergency account if you haven't already done so. This demographic lives on about $38,000 a year as of 2018.

According to the Government Accountability Office (GAO), the bad news is that most households with people over age 55 don't come even remotely close to these numbers. The GAO found that almost one-third had neither retirement savings nor a prospective pension as of 2018.

Some Savings Tips

These numbers might seem intimidating, but remember that contributions to most retirement savings aren't taxed until you take the money back out again, at a point when you'll presumably fall into a lower tax bracket.

To help set money aside consistently, some experts advise setting up automatic deposits to savings on the theory that you won't miss money you never see in the first place. Your savings will grow while you become accustomed on living on whatever money remains in your account.

Keeping Average Savings in Perspective

The average retirement savings is $95,766 across all age groups, according to the EPI. Overall, the data suggest that Americans are simply not saving enough for retirement, regardless of age. 

As you evaluate your own plan, don't let the average retirement savings by age distract you from your goals.

Comparing your savings to others in your age group can be instructive, but the more important issue is whether what you're saving now will allow you to have the kind of retirement you desire. 

If your savings are below the average for your age group, it's time to reconsider your plan and what you can do to get back on course. You might consider increasing your elective salary deferrals if you're not saving enough in your employer's plan to get the full matching contribution, or use an IRA to grow your savings if you don't have access to a 401(k). 

Being realistic about your retirement timeline is also necessary. You might have to consider staying in your full-time job longer or working part-time after you retire to make up any shortfall if you have less saved than you'd like. Calculating how much you need to retire, looking at what you already have saved, and determining how much you'll need to reach your goal can help you shape your plan more effectively.