Are Your Retirement Savings on Track? Average Retirement Savings by Age

THE MAG POST
8 hours ago
7 min read

As we navigate the complexities of financial planning, understanding where we stand relative to our peers can be incredibly insightful. Today, let’s dissect the data on "average retirement savings by age" to help you benchmark your progress and identify potential gaps in your strategy. Vanguard’s annual “How America Saves” report offers a treasure trove of information, providing a detailed snapshot of how nearly 5 million defined contribution (DC) plan participants are faring in their retirement preparations.

The report reveals significant disparities across different age groups, highlighting that many Americans are not saving enough for a comfortable retirement. Younger individuals often grapple with student loan debt and the high cost of living, while those nearing retirement may worry about outliving their savings. By examining these trends, we can gain a clearer perspective on the challenges and opportunities that lie ahead. We’ll explore practical strategies for boosting your retirement savings, from diversifying your investment portfolio to seeking professional financial advice. Ultimately, the goal is to equip you with the knowledge and tools to take control of your financial future and ensure a secure retirement.

Are you on track for a comfortable retirement? Many Americans find themselves wondering the same thing as they navigate the complexities of saving for their future. Investment giant Vanguard’s annual “How America Saves” report offers a detailed look at the retirement savings of nearly 5 million defined contribution (DC) plan participants in 2024, revealing some eye-opening trends and disparities.

Understanding Average Retirement Savings by Age

Retirement planning often feels like navigating uncharted waters, but having benchmarks can make the journey less daunting. Let's dive into what Vanguard's report reveals about how Americans are saving across different age groups. This "average retirement savings by age" data can help you gauge where you stand and identify areas for improvement.

Savings for Younger Americans (25-44)

For those in their 20s and 30s, the task of accumulating substantial retirement savings can seem overwhelming. According to Vanguard, participants aged 25 to 34 have an average balance of around $42,640, while those aged 35 to 44 have an average of approximately $103,552. It’s important to remember that these are average figures, and the median balances—$16,255 and $39,958, respectively—paint a more conservative picture.

These numbers underscore the reality that younger individuals are often just starting their careers, facing student loan debts, and dealing with the high costs of early family life. While these savings may seem modest compared to the ultimate goal, it’s crucial to recognize that time is on their side. The power of compounding interest over several decades can significantly amplify even modest savings, making early contributions incredibly valuable.

Strategies for Boosting Early Retirement Savings

Even small changes in your financial habits can make a big difference over time. Consider automating your savings by setting up regular contributions to your 401(k) or IRA. Many employers offer matching contributions, which is essentially free money that can significantly boost your retirement fund. Additionally, explore options like Acorns, which invests your spare change from everyday purchases, turning small amounts into potential long-term gains.

Beyond these strategies, educating yourself about personal finance and investment options is crucial. Understanding the different types of investment accounts, risk tolerance, and the benefits of diversification can help you make informed decisions that align with your long-term financial goals. By starting early and staying informed, younger Americans can lay a solid foundation for a secure retirement.

Middle-Aged Americans: Maximizing Retirement Contributions

For those in their 40s and 50s, the focus shifts towards maximizing contributions and potentially catching up on missed opportunities. This is often a period of peak earning potential, making it an ideal time to aggressively boost retirement savings. But what do the numbers say about how well this age group is doing with their "average retirement savings by age"?

Assessing Retirement Savings for Those Aged 45-64

The Vanguard report indicates that Americans aged 45 to 54 have an average retirement balance of about $188,643, with a median of $67,796. For those aged 55 to 64, the average rises to around $271,320, while the median is $95,642. While the averages suggest substantial savings, the median figures reveal that many middle-aged Americans are still behind on their retirement goals.

It is also essential to consider the impact of the 4% rule, which suggests that you can safely withdraw 4% of your retirement savings each year without depleting the fund. For example, a $300,000 nest egg would only provide an annual income of $12,000, which is insufficient for a comfortable retirement. According to a Northwestern Mutual study, the "magic number" for a comfortable retirement is approximately $1.26 million as of 2025, highlighting the significant gap that many still need to close.

Diversifying Investments Beyond Traditional Retirement Accounts

Relying solely on traditional 401(k)s or IRAs may not be enough to reach your retirement goals. Diversifying your investment portfolio is essential to maximize growth potential and mitigate risk. Alternative assets, such as real estate, can provide additional income streams and long-term appreciation. First National Realty Partners (FNRP) offers accredited investors access to institutional-quality commercial real estate investments, while Homeshares allows investment in owner-occupied homes.

Another avenue for diversification is investing in commodities like gold. Priority Gold offers physical delivery of precious metals and provides resources to understand this asset class better. Additionally, they offer options to convert existing IRAs into gold IRAs, providing a hedge against market volatility. By diversifying your investments, you can enhance your retirement savings and create a more secure financial future.

Savings Strategies for Those Approaching Retirement (65+)

As Americans approach or enter retirement, the focus shifts from accumulation to strategic withdrawal and preservation of assets. Understanding the financial landscape for this age group is essential. Let's explore what Vanguard's data and expert insights reveal about "average retirement savings by age" for those over 65.

Assessing Retirement Savings for Those Over 65

According to Vanguard, the average 401(k) balance for individuals over 65 is approximately $299,442, with a median of $95,425. These figures are only slightly higher than those in the 55-64 age group, indicating that many retirees may face financial challenges in their later years. While some retirees may have additional assets, such as real estate or other investments, many are concerned about outliving their savings.

It's worth noting that a significant percentage of baby boomers, around 40%, believe they could exhaust their savings during their retirement years, as highlighted by Northwestern Mutual. This concern underscores the importance of having a well-thought-out withdrawal strategy and a diversified investment mix to ensure long-term financial stability. Seeking guidance from a financial advisor can provide valuable insights and help navigate the complexities of retirement planning.

Strategies for Sustainable Retirement Income

Ensuring a sustainable retirement income requires careful planning and strategic decision-making. Consulting with a financial advisor can help you develop a personalized withdrawal strategy that aligns with your financial goals and risk tolerance. Advisor.com is an online platform that connects you with vetted financial advisors who can provide expert guidance and support.

In addition to professional advice, consider strategies such as delaying retirement to accumulate more savings, exploring side hustles or self-employment to boost income, and making catch-up contributions to your retirement plan. These measures can help bridge the gap between your current savings and your desired retirement lifestyle, ensuring a more secure and comfortable future.

How to Get Ahead of the Retirement Savings Curve

To truly excel in your retirement savings journey, it's essential to understand how much you should have saved by certain age milestones. T. Rowe Price provides useful benchmarks, suggesting that by age 50, you should have 4.5 to 8 times your current salary saved. However, it's crucial to remember that these are just guidelines, and many Americans may not meet these targets.

Alternative Investments to Boost Your Portfolio

Diversifying your portfolio beyond traditional stocks and bonds can provide additional growth opportunities. Alternative assets like fine art, traditionally out of reach for everyday investors, can now be accessed through platforms like Masterworks. Masterworks allows both accredited and non-accredited investors to purchase fractional shares of artwork by renowned artists, offering the potential for high returns.

Fine art has historically outperformed the stock market, with contemporary art showing a compound annual growth rate of 12.6% between 1995 and 2022, according to Fortune magazine. Investing in fine art can diversify your portfolio and potentially safeguard your investments. Masterworks investors have seen impressive annualized net returns, ranging from +17.6% to +21.5% for assets held longer than a year.

Tailoring Strategies to Your Life Stage

Your approach to retirement savings should evolve as you move through different life stages. When you're young, focus on investing in assets that appreciate over time and skills that boost your career earnings. If you're middle-aged, prioritize reducing expenses and maximizing savings. For those nearing retirement, consider delaying retirement to add more years of savings and explore side hustles to increase income.

Robert Kiyosaki, author of "Rich Dad Poor Dad," suggests that understanding and investing in assets that perform well during economic downturns is crucial. He highlights the importance of owning assets that generate cash flow and maintain their value, even in challenging times. By aligning your savings strategy with your life stage and economic outlook, you can better position yourself for a secure and prosperous retirement.

The Final Solution: Achieving a Secure Retirement

In conclusion, achieving a secure retirement requires a proactive and informed approach. Understanding "average retirement savings by age" is just the beginning. By diversifying your investments, tailoring your strategies to your life stage, and seeking professional guidance, you can increase your chances of a comfortable and financially stable retirement. Stay informed, stay proactive, and take control of your financial future.

Age Group	Average Retirement Balance	Median Retirement Balance
25-34	$42,640	$16,255
35-44	$103,552	$39,958
45-54	$188,643	$67,796
55-64	$271,320	$95,642
65+	$299,442	$95,425