Retirement is a significant milestone, representing the culmination of decades of hard work and planning. But a key question remains: Have you saved enough to retire comfortably? Understanding where you stand compared to others in your age group can offer valuable insights and help guide your financial planning.
Median Retirement Savings: A Reality Check
The median retirement savings figures reveal a sobering reality. The median, or the middle value, gives us a clearer picture of what most people have saved, as it isn’t skewed by the very wealthy. According to data from the Federal Reserve, here’s how the median retirement savings stack up across different age groups:
-Under 35: $18,880
– 35-44 $45,000
– 45-54: $115,000
– 55-64: $185,000
– 65-74 $200,000
– 75 or older: $130,000
These numbers suggest that many Americans are entering their later years with retirement savings that may fall short of what’s needed to maintain their standard of living. Given that people are living longer and healthcare costs are rising, these savings might not stretch as far as one would hope.
Average Retirement Savings
The average retirement savings figures tell a different story, one that highlights the disparities in wealth. The average is higher than the median because it includes the savings of the wealthiest households, which can dramatically skew the data. Here’s how the average retirement savings look across the same age groups:
– Under 35 :$49,130
– 35-44: $141,520
– 45-54: $313,220
– 55-64: $537,560
– 65-74: $609,230
– 75 or older: $462,410
The contrast between median and average savings is stark, particularly in older age groups. This discrepancy underscores the importance of not solely relying on average figures when assessing your own retirement preparedness.
What These Numbers Mean for You
The difference between the median and average savings highlights a significant challenge: many people are far from being on track for a comfortable retirement. If your retirement savings are closer to the median, it might be time to reassess your retirement strategy.
Here are some steps you can take:
1. Increase Your Savings Rate: If you’re not saving at least 15% of your income for retirement, now might be the time to start. The earlier you begin, the more you can take advantage of compound growth. Discuss your personal situation with your financial advisor.
2. Consider Catch-Up Contributions: If you’re 50 or older, take advantage of catch-up contributions to your retirement accounts, which allow you to save more than the standard contribution limits.
3. Diversify Your Investments: Ensure your retirement portfolio is diversified to spread risk and optimize growth potential. Consider consulting a financial advisor to tailor your strategy to your risk tolerance and goals. Consider alternative assets (assets not tied to Wall Street). A self-directed retirement account allows these types of non-correlated assets.
4. Delay Retirement if Possible: Delaying retirement even by a few years can significantly boost your savings, especially if you continue to contribute to your retirement accounts and allow your investments more time to grow.
5. Plan for Healthcare Costs: Healthcare is one of the largest expenses in retirement. Consider opening a Health Savings Account (HSA) if you’re eligible, which can be a tax-advantaged way to save for medical expenses. An HSA can be self-directed. To learn more, read our article HERE.
Final Thoughts
Retirement is a significant milestone, representing the culmination of decades of hard work and planning. While the median and average savings figures paint a broad picture, your individual needs and goals are what ultimately matter.
Take the time to review your retirement plan, adjust your savings strategy if needed, and ensure that you’re setting yourself up for the comfortable, secure retirement you deserve.
uDirect IRA Services, LLC is here to help you~! We are not a fiduciary and we do not offer tax or legal advice. We do not recommend specific investments, rather we guide you through the process to self-direct your retirement savings into assets you choose. To get started, we offer a free consultation. Schedule yours HERE – To open an account, click HERE.
