When it comes to saving for retirement, you’ve probably heard a million different opinions. From financial experts to your next-door neighbor to social media money gurus, everyone seems to have advice on how much you need to save. You might have even come across the figure from the Northwestern Mutual survey that says the average person thinks they need $1.46 million to retire comfortably.
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But what does reality look like? How much does the average American actually have saved up when they reach retirement age?
According to the most recent Federal Reserve Survey of Consumer Finances, here’s what the numbers tell us about Americans’ net worth at retirement age:
For those age 65-74:
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The median net worth is $409,900
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The average (mean) net worth is $1,794,600
For those 75 and older:
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The median net worth is $335,600
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The average (mean) net worth is $1,624,100
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Now, you might be wondering why there’s such a major between the median and average figures. The answer lies in the way these statistics work. The average is pulled up by high-net-worth individuals while the median gives us a better picture of the typical American’s financial situation.
Net worth tends to peak in the 65-74 age group, which aligns with early retirement years. This makes sense when you think about it – you’ve had a lifetime to accumulate assets and grow your investments, but you haven’t yet started to significantly draw down on your savings. Since people tend to retire at around 64, this is when they begin to draw for their various retirement buckets and spend down their accounts.
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Keep in mind – these figures represent total net worth, not just retirement savings. According to Vanguard’s “How America Saves 2023” report, the average 401(k) balance for those 65 and older is $232,710, while the median is $70,620. This suggests that a significant portion of retirees’ net worth is tied up in other assets, such as home equity.
The Federal Reserve data also shows that homeowners have a much higher average net worth ($1,530,900) compared to only $155,000 for renters. This highlight the importance of homeownership in building long-term wealth for many Americans.
These are just averages and medians. Your personal retirement needs will depend on a variety of factors, including your lifestyle, health, and location. Your ideal retirement lifestyle is completely up to you. To ensure you’re on track to achieve whatever goals you have in mind, consider talking to a financial advisor. They can provide customized guidance to help you plan for retirement and make the most of your hard-earned savings. After all, your golden years should be golden.
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This article Can You Guess The Average Net Worth At Retirement Age? Here’s A Hint – It’s Over $1 Million originally appeared on Benzinga.com
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Source: finance.yahoo.com