Average Retirement Savings By Age
The average retirement savings by age has declined in the last decade or so and there have been many reasons given for the decline. In the last decade consumer purchases and domestic spending have been down and that tells us that consumers are not confident about the financial state of affairs and are less likely to have additional money. High unemployment rates and market losses have caused the value of the average American retirement savings to drop significantly, with many retirement portfolios losing 25% or even more of their value in the last 5 years due to market fluctuations and a lack of confidence from investors. Some of these portfolios have gained back some of the losses but are still behind today because of the recent economic troubles.
When you compare the average retirement savings by age your can see exactly where your savings fit in the equation. When you are young and first going out into the world you typically have no retirement savings at all. In the early 20s many struggle financially and saving for your retirement 45 or 50 years from this point may not seem like a big priority but it should be. Retirement savings statistics show that by the time you reach 30 you should have saved at least $7,800 to keep up with the average individual. Most people in their 20s have an annual salary that is between $15,000 and $40,000 depending on education, experience, job position, and region. By the time you reach 40 this amount should climb to around $25,000.
The average retirement savings by age 50 is about $60,000 and if you are below this amount it could spell trouble for your retirement years. If your savings for retirement are lower than the average you are missing out on essential money from compounding interest. Over the years from the initial investment until you reach retirement age your money can grow significantly because the interest compounds. Once you reach 60 the average retirement savings plan balance is around $100,000. This amount is still considered less than what you will need to meet the typical retirement expenses. Some individuals will have much higher savings and others will have much less. Sound financial planning early in life is needed to ensure that the money you will need after you retire is available.
The average retirement savings by age shows that many individuals are relying on social security to partially fund retirement and this may be a big mistake. If you are younger there is no guarantee that your benefits upon retirement will be sufficient and there is constant talk of changing the program or decreasing benefits to retirees. In contrast your 401k benefits are protected except for any market losses. Conservative investing later in life is normal. If you start saving and investing for your retirement early you can afford to take a few risks though, and this can really pay off later on. Any losses can be made up in the future as well because you have more time to prepare for retirement.