The average retired worker on Social Security today collects about $23,000 per year. That's not a bad amount of supplemental income, but it's not a lot to live on by itself.
That's why it's so important to save for retirement consistently throughout your career. If you manage to bring a decent-sized nest egg with you into retirement, you stand to enjoy a more comfortable, stress-free lifestyle (at least from a financial perspective).
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You may be curious to know what the typical American your age has saved for retirement already. To this end, Vanguard has shared retirement plan data for 2023 in its most recent "How America Saves" report. And the numbers may surprise you.
What retirement savings balances look like today
Not surprisingly, the average amount of retirement savings for Americans today tends to increase with age. Here's a summary of Vanguard's findings.
|
Age Group |
Average Balance |
|---|---|
|
Under 25 |
$7,351 |
|
25 to 34 |
$37,557 |
|
35 to 44 |
$91,281 |
|
45 to 54 |
$168,646 |
|
55 to 64 |
$244,750 |
|
65 and over |
$272,588 |
Data source: Vanguard.
If your savings seem well-aligned in your age group, you may be feeling pretty good about your IRA or 401(k) right about now. But don't panic if you're behind the average saver your age. A few key moves on your part could help you catch up nicely.
How to boost your retirement savings
Let's be clear about one thing: While the above numbers represent averages reported by Vanguard, they're not meant to cause you stress. And they're also not automatically representative of the savings you should have.
But if you're worried that you're behind on retirement savings, in general, the first thing to do is examine your spending. Are you contributing as much money to your IRA or 401(k) as you could be each month? Or are you spending $300 to $400 a month on leisure and other conveniences you could potentially do without? Cutting that sum in half could free up serious money for your long-term savings.
Another key move that could help you boost your IRA or 401(k) contributions is joining the gig economy. Working a side job could make it possible to ramp up your savings without giving up some of the extra spending that makes your life better. And in some cases, the skills you develop in the course of working a side hustle could be instrumental to growing at your main job. That could lead to a promotion, more money, and larger retirement plan contributions each month.
Finally, make sure your retirement plan is invested appropriately for your age. If you're decades away from retirement, don't shy away from stocks. You need a stock-focused portfolio to help your money grow.
You also don't want to dump your stocks entirely, even if you're inching toward retirement and expect to stop working within a few years. At that point, you'll want to scale back so that stocks are perhaps limited to 50% of your portfolio (maybe less if you're very risk-averse). But eliminating stocks completely could stunt your savings' growth during that home stretch.
It's interesting to see what the average American has saved for retirement by age. But rather than aim for these numbers, try to calculate your own numbers, based on your income, expenses, and long-term goals.
It could also be a wise idea to sit down with a financial advisor to run some of these numbers. An advisor can help you establish realistic savings goals and offer additional tips on how to meet them.
