Average Retirement Savings in the U.S.: $65,000

The COVID-19 pandemic has created a huge amount of economic uncertainty. Many people are unsure of their financial future -- so much so that 40% of Americans are afraid they won't be able to retire because of financial setbacks related to the pandemic.

Of course, retirement planning is a very personal journey. The amount you need to save depends on your age, income, desired retirement income, inflation, and more.

So what's the average retirement savings in the United States? We dug into the most recent data to find out.

Key findings

• In 2019, the average retirement account savings for American households was $65,000. 
• The average American under 35 has $13,000 saved for retirement.
• 62% of Americans aged 18 to 29 have some retirement savings, but only 30% percent feel on track for retirement.
• 55% of non-retirees have a 401(k) or 403(b) while 25% have no retirement savings.
• Americans with a high school degree have an average retirement savings account value of $20,000, while those with a college degree have an average account value of $119,000.
• The average retirement savings of white Americans was roughly $45,000 more than that of Black and Hispanic Americans. 
• Retirement savings for households in the bottom 25% of net worth grew by $2,710 from 1989 to 2019. Savings for the top 10% of net worth grew by over $600,000 during that same time period.
• 51% of Americans retire at 61 or earlier, and 23% retire between 62 and 64, before Medicare coverage kicks in at 65. White Americans tend to retire later than Black or Hispanic Americans, despite having more savings. 

Average retirement savings of American households in 2019: $65,000

The median retirement savings for American households have grown every three years since 1989 with few exceptions.

The figures below are presented in 2019 dollars, meaning Americans are saving more for retirement than they did 30 years ago. This is especially good considering that life expectancy has consistently gone up over the decades.

Data source: Board of Governors of the Federal Reserve System (2020).

The mean retirement savings among Americans is significantly higher than the median savings, indicating some large outliers. We'll see a bit later that high earners have over $600,000 more in retirement savings than lower earners, likely accounting for some of this discrepancy.

Data source: Board of Governors of the Federal Reserve System (2020).

Average retirement savings of Americans under 35: $13,000

Most retirement savings are accrued after the age of 35. Median retirement savings grow $30,000 or more every 10 years for Americans over 35 until they reach 75 years of age.

A few factors may be at play in this sharp increase: the power of compounding interest leading to snowballing returns in 401(k)s and similar retirement investing accounts, employer matching plans kicking in, higher incomes resulting in more savings, or a combination of all three.

Data source: Board of Governors of the Federal Reserve System (2020).

Data source: Board of Governors of the Federal Reserve System (2020).

62% of Americans aged 18 to 29 have retirement savings, but only 28% feel on track

Data source: Board of Governors of the Federal Reserve System (2022).

Despite being the youngest age group in the Federal Reserve's dataset, 62% of Americans aged 18 to 29 had some retirement savings. Saving early is a surefire way to work towards a comfortable retirement. 

Despite that, only 30% of that age group felt as though their retirement savings were on track. This could reflect the relatively low amount of savings among Americans under 35 compared to older age groups. 

The older the age group, the more likely they are to have retirement savings and feel as though their savings are on track. 

Americans remained pessimistic about their preparedness for retirement. Just 45% of those aged 45 to 59 and only 52% of those 60 and over felt prepared. 

The Motley Fool recommends putting aside 15% of your annual income for retirement over the course of your career. That may sound like a lot at first, but it’s a goal to work towards. At a minimum, if you participate in a company-sponsored retirement plan, you should try to take full advantage of the company’s matching contributions. 

55% of non-retirees have a 401(k) or 403(b), 25% have no retirement savings

That only 55% of non-retirees have a 401(k) or 403(b) and 25% don't have any retirement savings at all is troublesome.

While Social Security is an important social program, it's designed to replace only 40% of the average salary after retirement. Unfortunately, one in five married retired couples and 45% of single retirees depend on Social Security benefits for more than 90% of their income in retirement.

To continue living a lifestyle consistent with the one they had before retirement, retirees need to rely on their own savings as well as Social Security benefits.

The most common form of retirement savings are defined contribution pensions, like 401(k)s and 403(b)s. Over half of Americans have an account like this. And 36% have an individual retirement account (IRA), a similar type of retirement investment account.

Data source: Board of Governors of the Federal Reserve System (2022).

This dataset doesn't differentiate between traditional IRAs, Roth IRAs, and other options – it's good to know the different types of IRAs and which is best for your situation.

Average retirement savings of Americans with a college degree: $119,000

Educational attainment has a dramatic impact on retirement savings. 

The median retirement account value for someone with no high school diploma was $20,000, nearly $100,000 less than someone with a college degree. And Americans with a high school diploma had median retirement savings of $40,000, double those who had no high school diploma. 

The impact of educational attainment on retirement savings has become more pronounced over the past 30 years. 

In 1989, Americans with a college degree had saved about $4,000 more than those with no high school diploma, who had saved $19,890 on average. And Americans with a high school diploma had saved just $1,020 more than those without one. 

By 2019, the average retirement account value of Americans without a high school diploma hardly grew. Meanwhile, the average retirement savings of those with a high school diploma grew by about $24,000. 

The average savings of those with a college degree has grown by $85,010 since 1989, growing faster than those with no high school diploma and those with no college degree. 

Data source: Board of Governors of the Federal Reserve System (2020).

Data source: Board of Governors of the Federal Reserve System (2020).

Average retirement savings by race: white Americans saved $45,000 more than Black Americans

It’s well documented that race can play a decisive factor in income and other measures of financial wellbeing. That's true when it comes to retirement savings as well.

White Americans had a median average retirement account value of $80,000 -- $45,000 more than black Americans and $49,000 more than hispanic Americans. 

Similar to the impact educational attainment has on retirement savings, the median value of retirement savings for white Americans has grown faster than Black and Hispanic Americans since 1989. 

Data source: Board of Governors of the Federal Reserve System (2020).

Data source: Board of Governors of the Federal Reserve System (2020).

White Americans are also more likely to have retirement savings than Black and Hispanic Americans and were likewise more likely to feel as though their retirement savings are on track. 

Asian Americans were the most likely to have retirement savings and feel as though their savings are on track. 

Data source: Board of Governors of the Federal Reserve System (2022).

Average retirement savings for Americans with a top-ten percentile net worth have grown fastest over the last 30 years

It’s no surprise that higher net worth individuals have more retirement savings. What is notable is that the growth in retirement savings for the highest net worth individuals has significantly outpaced growth among lower net worth individuals over the last 30 years. 

Retirement savings among the top 10% of net worth individuals has grown by over 600% since 1989.

Meanwhile, individuals that fall into the bottom 25% in terms of net worth have seen just a 136% increase in their net worth, showing that growing income inequality has long-term effects even after Americans are done working. 

That gap is even more striking when you consider that the individuals in the bottom 25% of net worth had a median retirement account value of $1,990 in 1989, while those in the top 10% of net worth had a median retirement account value of $95,470. 

For the bottom 25%, a 136% change resulted in an increase of just $2,710 in retirement savings. For the top 10%, median retirement savings grew by over $600,000.

Data source: Board of Governors of the Federal Reserve System (2020).

Data source: Board of Governors of the Federal Reserve System (2020).

57% of all retirees use a pension or retirement plan as a source of income

Investment accounts can be a powerful tool in planning for retirement, especially if consumers start investing early and make use of employer matches, if available.

57% of retirees use some sort of pension plan (which, in this dataset, includes defined benefit pensions, 401(k)s, 403(b)s, and similar accounts) for retirement income.

It was not surprising that 78% of retirees used Social Security as a source of retirement income, and 92% of those over 65 did so. It's important to remember that Social Security benefits are meant to replace 40% of your annual salary in retirement, which is why preparing for retirement through saving and investing is so important. 

*The type of pension was not defined in this survey and could include plans that offer fixed monthly payments or defined contribution plans, such as a 401(k).
Data source: Board of Governors of the Federal Reserve System (2022).

Retirement age: 51% of Americans retire at 61 or younger

Data shows that, in 2019, 51% of Americans retired at 61 or earlier, and 23% retired between 62 and 64, before Medicare coverage kicks in at 65. 

And, despite white Americans having higher retirement savings on average, their average retirement age tends to be higher than Black and Hispanic Americans. 

Data source: Board of Governors of the Federal Reserve System (2021).

Make a retirement plan and stay the course

Attaining a comfortable retirement is generally a matter of planning ahead -- deciding how much to save and invest in a retirement fund each month -- and then sticking to that plan. 

The data reveals that the majority of American households follow that path and have a retirement fund available to them once they’ve hung up the boots and retired. 

But there’s room for improvement in retirement planning and saving. A quarter of non-retirees have no retirement savings. Thankfully, it’s never too late to start saving for retirement, and there are ways to catch up if you feel like you’ve fallen behind. 

Preparing for retirement is full of questions that don’t have simple answers. The Motley Fool has resources (including multiple retirement calculators) to help you take your first steps towards a comfortable retirement, but it’s always a good idea to consult a financial advisor to get personalized advice that fits your financial situation and goals. 

Sources

• Board of Governors of the Federal Reserve System (2022). “Report on the Economic Well-Being of U.S. Households in 2021 - May 2022.”
• Board of Governors of the Federal Reserve System (2021). “Report on the Economic Well-Being of U.S. Households in 2020.”
• Board of Governors of the Federal Reserve System (2020). “Report on the Economic Well-Being of U.S. Households in 2019.”
• Board of Governors of the Federal Reserve System (2020). “Survey of Consumer Finances.”