SHORT ANSWER: Nearly half of all Americans lack a retirement account because of fewer employers providing this crucial benefit. But recommendations are that you should have 1x your salary by age 30; 3x by age 40; 6x by age 50; 8x by age 60; and 10x by age 67.
Americans are facing a retirement crisis because of increasing expenses and less emphasis on retirement savings plans and pensions as an employment benefit. As such, the average retirement savings by age are far less than they were for previous generations. Experts are now working to encourage better savings rates and educate working professionals about the importance of saving and preparing for transitioning to retirement later in life. See how your savings compare by learning more about how your peers are saving for retirement.
Average Retirement Savings by Age
As of January, Empower, which manages 401(k) plans, reported the following average 401(k) balance by age.
| Account Holder Age | Average 401(k) Balance |
| 20s | $74,460 |
| 30s | $160,517 |
| 40s | $344,182 |
| 50s | $558,740 |
| 60s | $555,621 |
| 70s | $417,379 |
| 80s | $385,783 |
Median Retirement Savings by Age
Empower also found the following median retirement savings by age.
| Account Holder Age | Median 401(k) Balance |
| 20s | $29,753 |
| 30s | $69,718 |
| 40s | $151,274 |
| 50s | $247,338 |
| 60s | $209,382 |
| 70s | $103,219 |
| 80s | $78,534 |
What Is the Recommended Retirement Savings By Age?
How much should you save for retirement? The dollar amount will vary based on your current lifestyle and how you hope for that to carry over into your retirement lifestyle. Estimates for how much to save are based on your current salary and are broken down into the following calculations:
- 30s: 1 times your current salary
- 40s: 3 times your current salary
- 50s: 6 times your current salary
- 60s: 8 times your current salary
- Age 67: 10 times your salary at the date of retirement
Those figures are from Fidelity Investments. Other retirement savings investors or experts provide a broader range of how much of your current salary you should have saved. T. Rowe Price offers these average retirement savings benchmarks broken down in five-year increments which could help you see whether you’re on track.
- Age 30: 0.5 times salary
- Age 35 1-1.5 times salary
- Age 40: 1.5-2.5 times salary
- Age 45: 2.5-4 times salary
- Age 50: 3.5-6 times salary
- Age 55: 4.5-8 times salary
- Age 60: 6-11 times salary
- Age 65: 7.5-13.5 times salary
One thing to note about those calculations is that your salary will likely continue to grow over the decades. Your retirement savings calculations should be off of your salary as of that date not the salary you started the calculations with when you were in your 30s.
How Much Will You Spend in Retirement?
Research and financial analysis show that you’ll spend 55% to 80% of your annual employment income annually during retirement. Some reasons you won’t need your full salary each year anymore include the fact that you won’t be paying into Social Security, putting money in your 401(k) or experiencing expenses related to going to work every day, like commuting or purchasing professional attire.
- The 80% rule: Take your salary as of retirement and calculate how much 80% of that is. Then add up your retirement income from all sources, including your 401(k), Social Security and pensions. If you are short of the 80% per year, review ways you can increase your savings to achieve your goals.
- The 25x spending rule: instead of looking at annual needs, the 25x spending rule looks at your entire retirement to say you’ll need 25 times your estimated annual expenses before leaving the workforce. This estimates a 30-year retirement as well as the fact that you’ll be investing all money so that it grows throughout your retired years. However, this calculation does not include considerations for pensions, part-time work and Social Security benefits.
Best Retirement Advisors
You might need more than the average 401(k) balance at retirement based on your unique financial situation. If you aren’t sure how you’re doing saving for retirement or whether you’re ready to leave the workforce, seek counsel from one of these leading financial advisors.
Tips to Save for Retirement at Any Age
The Department of Labor provides these ideas for saving for retirement with adequate ongoing savings.
1. Start Saving and Stick to Your Goals
Don’t let anything deter you from putting money in your 401(k). When you start a new job, try to keep or increase your contribution percentage. Don’t just match the value you always were contributing — try to contribute more so that your savings will grow.
2. Know What You’ll Need to Retire
It’s easier to stay on task when you know what you’ll need to retire. Keep your target in mind as your income grows and adapts to ensure you have what you need to leave the workforce.
3. Maximize Your Employer’s Retirement Benefits
Learn about your employer’s retirement savings plan and sign up once you are eligible. Then max out any employer matching and contributions to make the most of your savings. If your company has a pension plan, learn how it works and request an individual benefit statement to see what your benefit will be in retirement.
4. Make Good Investment Choices
Spend some time learning some general investment principles to put your account on a good track. Diversify your investments to ensure no downturns in the stock market can wipe out your savings. Maximize returns on your account. Or meet with a financial advisor who can help you manage your retirement savings.
5. Avoid Early Withdrawals
When you withdraw your retirement savings before you are eligible, you’ll pay penalties on those withdrawals and lose the tax benefits these accounts provide. Leave your savings in your account until you reach retirement age.
6. Put Savings in an Individual Retirement Account
Putting money in an individual retirement account (IRA) can help you contribute additional savings over what you’re currently contributing via your employer’s accounts. You can open a traditional IRA or a Roth IRA. Each has tax advantages.
7. Monitor Your Social Security Benefits
Learn what your Social Security benefits will likely be upon retirement. This will help you calculate your total income at retirement so you can make informed decisions about catchup contributions or ways to maximize your savings to help you prepare.
The Bottom Line
Whether you have more or less than the average retirement savings based on your age, you should regularly review how you’re doing and whether additional contributions could help you achieve your goals based on when you hope to retire and the lifestyle you want at that time. Meet with a financial advisor every few years to ensure you stay on track based on your goals.
About Rebekah Brately
Rebekah Brately is an investment writer passionate about helping people learn more about how to grow their wealth. She has more than 12 years of writing experience, focused on technology, travel, family and finance. Her work has been published in Benzinga, Hearst Bay Area, FreightWaves and Dallas Observer publications.