Average Retirement Savings in the United States

I’ve got some good news and some bad news for you about average retirement savings in the U.S. Let’s start with the bad news.

In the coming years, our country will face a retirement crisis. Nearly half of Americans aren’t saving at all for retirement, and those who do save aren’t saving enough.1 Instead of packing their bags for their dream vacation in their 60s and 70s, millions of Americans will be packing their lunch for another day at the office.  

The good news is, it’s never too late to improve your situation. You don’t need anyone’s permission to start making your dreams a reality. Mama Hogan always used to say, “If it’s meant to be, it’s up to me.” We all need to adopt that attitude when it comes to preparing for our financial future.

And let me be clear: Retirement has nothing to do with your age. It’s all about your number—how much you have saved. But let’s take a look at what average Americans have saved for retirement by the decade. Then we’ll talk strategy . . . where you need to be with your number.

Average Retirement Savings by Age

So, how do Americans shape up? Let’s take a look at the average 401(k) balances (plus any IRAs) that Americans have earmarked for retirement, according to data from Fidelity.2 And remember: You can find ways to improve your retirement savings in every decade of life. As we look at these numbers, I’m sure you’ll be surprised, and I hope you’ll come away committed to being above average in your retirement savings.

Americans in Their 20s

  • Average balance: $10,500
  • Contribution rate: 7%

That puny 7% just won’t get the job done, people! Develop your investing muscles early on because time plus compound growth are the two most powerful forces in wealth building. The reality is, the earlier you start investing, the better! Even just five years can make a huge difference in when you hit your nest egg number—and that determines when you can or should retire.

So, in your 20s, even if you’re not earning much yet, you should focus on staying allergic to debt and building your emergency fund. As soon as you’ve done that, start investing 15% of your income in retirement.

Americans in Their 30s

  • Average balance: $38,400
  • Contribution rate: 8%

As we can see here, the average American still isn’t contributing enough to their retirement. This is likely because a lot of people in their 30s are balancing big financial goals like a mortgage and starting a family. You might not even be thinking about retirement yet, telling yourself, I’ll worry about that later. Don’t fall for it! The important thing is to have a plan and take the right steps in order. Don’t let any setback distract you from chasing down progress!  

Americans in Their 40s

  • Average balance: $93,400 
  • Contribution rate: 8%

In your 40s, you’re probably making more money than you ever have before, so watch out for the temptation to keep up with the Joneses by buying cars or going on vacations you can’t afford.

Let’s say you started investing 15% of a $50,000 salary at age 25 and did that every year until you retired. If you received a 10% rate of return on that plan, you should hit your million-dollar year at age 52. Whoa! That gives me goose bumps! Sadly, when we compare that number to the average 401(k) savings above, it’s clear that many Americans are in for a rude awakening when it comes to their retirement savings.

Americans in Their 50s

  • Average balance: $160,000
  • Contribution rate: 10%

You might find yourself in one of two places in your 50s. Either you’re getting close to your number, feeling confident, like you can almost reach out and touch your retirement dreams . . . or you’re feeling way behind, which could send you into a full-on panic. If you’re in that second group, here are a few things you can do to catch up:

  • Cut all unnecessary spending so you can increase contributions.
  • Put each pay raise or bonus toward your investments.
  • Downsize your home if your mortgage is a heavy burden.
  • Take advantage of the “catchup contributions” in your retirement account (an additional $6,500 for a 401(k) and $1,000 for an IRA).

It’ll take some hard work and sacrifice, but you can do this! Also, it’s a good idea to talk with an investment professional to make sure your plan will get you where you need to be.

Americans in Their 60s

  • Average balance: $182,100
  • Contribution rate: 11%

This is the home stretch—the 9th inning—for most Americans. Retirement isn’t an age: It’s a financial number. However, most people would like to step away from their career at some point in their 60s so they can focus on time with family or time to pursue other passions.

Looking at the average numbers, though, we see a different story. Lots of Americans will keep working well into their 60s. Now, you might be okay with that. In fact, a recent survey found that 30% of American workers say that their retirement dream involves some sort of work.3 That’s great! But I want you to work in your later years not because you have to, but because you want to.

Americans in Their 70s

  • Average balance: $171,400
  • Contribution rate: 12%

This last number breaks my heart. It’s clear that many Americans simply aren’t prepared for retirement—$171,400 is barely enough to cover health care expenses in the later years of your life!4

But keep in mind that this number is an average. There are also plenty of millionaires with a high net worth who are comfortably living out their dream retirement. They’ve used common sense, worked hard, and built wealth that will keep them from being a burden to their loved ones. They’ve actually built enough wealth to spread it around and bless others! Being generous with your money is fun! But if you haven’t even saved up enough to take care of yourself, then you don’t have the option of being a blessing to others.

How Much Should You Save for Retirement?

Here’s the reality: If you’re out of debt and you’ve saved up three to six months of emergency expenses, you should be investing 15% of your income in diverse growth stock mutual funds for retirement. If you’re getting started later in life, you might need to play catch-up and contribute more than 15%.

Retirement isn’t an age. It’s a financial number. I do a deep dive of that concept in my book Retire Inspired. You need to have a crystal-clear vision for your life in retirement, figure out how much that will cost, and use that number as a goal. Basically, start with the end in mind.

Since the 15% rule applies to all sorts of people with different salaries and standards of living, it makes sense that everyone will be aiming for a slightly different target. You can find your personalized number by using my R:IQ retirement calculator. Stop and get your number before you continue reading!

Let’s look at an example using an income of $50,000 and apply the 15% rule to understand what milestones this person should be hitting along the way. (If you make less than $50,000, that’s okay. You can still save for your dream retirement on a small salary.)

So, 15% of $50,000 is $7,500 a year, or $625 a month. If you invested at this rate for 40 years (from age 25–65) at a 10% average annual return, you would end up with just under $4 million! That’s a solid nest egg, if you ask me! You can use our investment calculator to plug in your own numbers.

An image of an investment growth chart.

The reason why your money skyrockets is because of the basic recipe for investing success: time plus compound growth. It’s not enough to just save plain cash for retirement and bury your money in the backyard like a pirate. You need to invest your money so that it grows over time! That way, inflation won’t eat up all your savings and you’ll be able to live comfortably in your retirement years—which could be decades of your life!

Stay Focused on Your Retirement Dreams

I want you to get to the last few decades of your life well prepared to enjoy your time—whether it’s traveling around the globe, serving your community, or spending time with your children and grandchildren.

And hear me on this: It’s never too late to improve! Get in touch with your dream and commit to a plan of action that will get you there.

This journey is a marathon, not a sprint. You’ve got to keep a long-term mindset and recognize that you’ll have to make some sacrifices along the way. It’s possible. Even if you’ve done some stupid (I know I have!), the goal is to focus on what you can control and keep moving forward.

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