Average Retirement Savings vs. 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 will follow a steady upward trajectory over time. But just how much do Americans have tucked away for their later years and for an emergency?

Whether you're in your twenties or in your forties, saving for both retirement and for a crisis like job loss should be a top priority. Having benchmarks for tracking your progress as you save can be helpful and important.

Retirement Savings

  • Knowing how much you'll need for retirement is something of an educated guess, particularly when you're younger, because you can't yet know how long you'll be living off these savings.

  • You must also forecast your financial needs, estimating what your budget will be years in the future.

  • Experts recommend that you have at least one year's current salary saved by your thirties.

  • You should have three times your current annual salary saved in your forties.

Emergency Savings

  • Experts suggest that you should have at least three months but preferably six months of living expenses saved in an emergency fund, and calculating this amount is far easier because it's just a matter of multiplying your budget by the appropriate number of months.

  • You can shave some luxuries off your monthly budget to arrive at this number, whittling it down to just must-pay bills.

  • Earners in their thirties spend on average $3,400 a month on living expenses.

  • Earners in their forties devote approximately $4,300 a month to their budgets.

Retirement vs. Emergency—Which Comes First?

Experts advise that you should sock away at least three months' worth of living expenses 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 number by three to six, depending on your goals.

Set this money aside so it's there for you in the event something catastrophic occurs that prevents you from earning income for an extended period of time. Consider keeping your funds in an easily accessible, interest-bearing account, like a high-yield savings account or money market account.

Average Savings for 20-Somethings

Between stagnating wages and heavy student loan debt, millennials face some of the biggest challenges when saving for retirement. But a Bankrate survey indicates that they're actually taking the lead when it comes to proactively contributing to their 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, so a 20-something with a median of $31,000 in savings could reasonably be on the right track to having 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 like getting married or having children will probably 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 at least $20,400 for six months' living expenses, or $10,200 for three months.

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 by the time you reach your forties, but the prospect of paying for your children's college educations 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.

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. But the EPI data suggest that 50- and 60-somethings still have a long way to go.

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

According to the research, the average retirement savings for people in their 50s is $124,831 in 2018. It's $163,577 for the people ages 56 to 61.

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 might not be enough to fill the gap. 

The almost-good news is that although monthly living expenses don't decline for this demographic, they at least hold steady at about $4,300 a month.

Average Savings for 60-Somethings

Now you're inching up on retirement. Individuals in this age group earned about $80,500 annually as of 2018. Their retirement savings should be roughly eight times that amount by this point, or about $644,000.

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 pension on the horizon 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. This will presumably happen at a point in time when you'll fall into a lower tax bracket.

Some experts advise setting up automatic deposits to savings to help set money aside consistently. The theory is 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 determine 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 for 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.