Do most people retire with enough money?
According a 2023 Fidelity report, Americans on average have saved only 78% of the amount they'll need in retirement, and 52% of U.S. households may not be able to pay for essential expenses in retirement. Fidelity Investments. Retirement Savings Assessment 2023 . Accessed Jun 23, 2023.
The Federal Reserve's most recent data reveals that the average American has $65,000 in retirement savings. By their retirement age, the average is estimated to be $255,200.
How much do people save for retirement? In 2022, about 46% of households reported any savings in retirement accounts. Twenty-six percent had saved more than $100,000, and 9% had more than $500,000. These percentages were only somewhat higher for older people.
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved. If you're looking to be in the minority but aren't sure how to get started on that savings goal, consider working with a financial advisor.
The median household income for Americans aged 65 and over was $50,290 in 2022, according to the most recent Census Bureau data. That breaks down to an average of $4,190.83 a month. In 2024, the social security benefit will increase by 3.2% — matching the rate of inflation in October.
The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances. Taken on their own, those numbers aren't incredibly helpful. There are a variety of decent retirement savings benchmarks out there, but how much money other people have isn't one of them.
Approximately 28% of women have nothing saved for retirement, compared to 20% of men. To retire comfortably, experts estimate that retirees need a little over $1 million saved, but the exact number depends on how the retiree wants to live and where.
Key Takeaways
Retiring with little to no money saved is not impossible, but it can present some challenges to your financial plan. Depending on where you're starting from, you may need to delay Social Security benefits, work longer, or drastically reduce expenses to retire with no money saved.
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
About 65% of working Americans say they frequently live paycheck to paycheck, according to a recent survey of 2,105 U.S. adults conducted by The Harris Poll, asking questions supplied by Barron's.
What net worth is considered rich?
According to Schwab's 2023 Modern Wealth Survey, Americans perceive an average net worth of $2.2 million as wealthy. Knight Frank's research indicates that a net worth of $4.4 million is required to be in the top 1% in America, a figure much higher than in countries like Japan, the U.K. and Australia.
If you do not have retirement savings, you may be forced to rely solely on your Social Security benefits, which are designed to replace only about 40% of pre-retirement income. Taking a 60% pay cut is most likely going to be a huge problem for most seniors.
We find that about half of the population aged 65 or older live in households that receive at least 50 percent of their family income from Social Security benefits and about 25 percent of aged households rely on Social Security benefits for at least 90 percent of their family income.
According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month.
Based on data from the SSA's Office of the Actuary, nearly 566,000 aged 62 retired-worker beneficiaries were receiving $1,274.87 as of Dec. 2022. Meanwhile, the average Social Security check for the 2.27 million retired workers at age 66 is $1,719.85.
The average monthly retirement income adjusted for inflation in 2023 is $4,381.25, according to a 2022 U.S. Census Bureau report. The average annual income for adults 65 and older in 2023 is $75,254 – or $83,085 when adjusted for inflation.
As of May 2023, more than 1 in 5 Americans have no emergency savings. Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022.
After this age group, 401(k) balances can begin to fall, or at least grow at a slower pace, as even more people start tapping their accounts. The average balance for those 65 and older is $232,710; the median falls to $70,620.
21 percent of Americans said not saving early enough for retirement was their biggest financial regret, according to a Bankrate survey.
58 million Americans have no retirement savings: How employers can help.
Why do some people never retire?
Some people decide to continue working because they need the money, while others love what they do and can't imagine not doing it anymore or just need to stay busy. With continued improvements in health care and life expectancy, people can spend as long in retirement as they spent working.
It is never too late to start saving money you will use in retirement. However, the older you get, the more constraints, like wanting to retire, or required minimum distributions (RMDs), will limit your options. The good news is, many people have much more time than they think.
Some experts say to have at least eight to 10 times your annual salary available to you once you enter retirement. Others say you need at least 65% to 80% of your pre-retirement income available to you each year. There are also general savings recommendations by age, and, finally, there's the 4% rule, too.
The traditional retirement age in the U.S. is typically considered 65 (67 for younger generations), but many people choose to retire before or after this age.
The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2024, your maximum benefit would be $3,822. However, if you retire at age 62 in 2024, your maximum benefit would be $2,710. If you retire at age 70 in 2024, your maximum benefit would be $4,873.
