Retirement is inevitable assuming you live long enough to reach retirement age. Are you saving enough? Even if you are saving enough, are your peers? The sad answer is probably not. How bad is the average retirement savings? Let’s take a look at it by age group.
Let’s say that the results are, well, not pretty. We should all be striving to be well above average based on the latest results from the Retirement Confidence Survey done by the Employee Benefit Research Institute.
This is kind of unbelievable to me. Among all workers survey, regardless of age, 48% had less than $10,000 in savings for retirement. That is only two years worth of fully funding a Roth IRA.
How about above the $10,000 level? 60% of workers had less than $25,000 in savings. When a majority of people have less than $10,000, it isn’t surprising to see sparse results above that level.
Not surprisingly, workers at the beginning of their career (ages 25 to 34) had the least amount of savings. Where 48% of all workers had less than $10,000 in savings, 57% of this group had less than $10,000 and 88% of these workers had less than $50,000 set aside for retirement.
With many younger workers struggling in a poor economy, saddled with student loan debt, and likely underwater on a home mortgage, it is easy to see why many haven’t set aside funds for the future.
Workers aged 35 to 44 didn’t fare much better. 51% of these workers had less than $10,000, and still 72% had less than $50,000 set aside for retirement despite retirement being much closer. They improved over the younger workers a bit, but not nearly enough.
These workers aged 45 to 54 barely, just barely, got under the total average for all workers. Whereas 48% of all workers had less than $10,000 in savings, 46% of these workers had less than that amount set aside.
That’s not much of an improvement considering they are one to two decades closer to retirement.
The big difference in this age group is the number of workers with more than $250,000 in retirement savings. The early career only has 1% reporting that much saving, the middle career workers don’t do much better at 3%. But this group, at least a portion of them, seem to finally have received a wake up call. The number of workers with $250,000 or more set aside for retirement jumps to 17% here. Still a miserably low number at least than 1/5th of those workers, but a massive improvement over the previous sets of workers.
If I were in this group I would be terrified. Workers aged 55 or older simply don’t have enough savings for retirement on average. How would you like to know you were less than 10 years from retirement and had less than $10,000 set aside for that retirement? That’s where 38% of these workers found themselves.
Thankfully there is some improvement toward the higher retirement amounts: 22% have more than $250,000 and 40% had at least $100,000 in savings. But that leaves 60% below the $100,000 mark and well on their way to a miserable retirement based primarily on work and Social Security income.
Sometimes it can sound like personal finance writers are beating a dead horse, but the basics of improving your financial situation remain.
If you want to avoid being on the negative side of these averages, you have to do three basic things: