There is a significant retirement savings gap going on in America. Where do you stand regarding retirement savings?
According to this survey by the Transamerica Center for Retirement Studies, the median retirement savings by age in the U.S. is:
- Americans in their 20s: $16,000
- Americans in their 30s: $45,000
- Americans in their 40s: $63,000
- Americans in their 50s: $117,000
- Americans in their 60s: $172,000
As you can plainly see, not even the median amount saved by those in their 60’s is enough to last through the years of retirement, based on increasing life expectancy. But, how much is enough?
Consider this “rule of thumb” given by some financial experts on how much individuals should be saving for a goal of retiring by age 67:
- Americans in their 30s: 1–2 times their annual salary
- Americans in their 40s: 3–4 times their annual salary
- Americans in their 50s: 6–7 times their annual salary
- Americans in their 60s: 8–10 times their annual salary
That means, for example, someone in their mid-forties making $75,000 a year should have up to $300,000 in retirement savings—over 4 1/2 times what most Americans have saved. You can find the details in this excellent article.
Although I can’t say I agree with all the details and recommendations in their entirety, the overall principle of saving more than you probably currently are is sound advice. The pressing questions you need to ask yourself is: “Where do I stand today relative to savings and what do I need to do to get where I need be?”
The answers to these questions involve financial planning that should address multiple areas of concern headed to and through the retirement years (for more on that, look here). Despite the “common rules” presented in the article, saving and planning for retirement is seldom a cookie-cutter approach. There’s just typically too many factors in play.
As a fiduciary with your best interest in mind, we’d be honored to help you in your journey toward your goals.