Even Americans with only modest retirement money might be shocked to learn how many people are in desperate distress: As in, they have no nest egg at all.
New research by the Federal Reserve shows that a staggering one in four Americans (including 27% who consider themselves retired) have no savings at all.
And even if you have something hidden, it may not be enough – although you can change this thing even late in the game.
Americans are trailing $3.68 trillion in retirement savings, according to the Employee Benefit Research Institute. While this includes all 35-64 year olds, people in their 60s still don’t do well.
Here’s how to stack your savings — and what you can do if you’re left behind.
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What is the average?
A study by Vanguard found that those between the ages of 55 and 64 made an average of about $256,000. But this includes those with high incomes; Breaking down the numbers, it shrinks down to an average of about $90,000.
Interestingly, much has changed even in the short period since 2021, the source of the numbers for the Vanguard study. Last year, Vanguard noted that retirement savings had already increased, thanks to strong performance in the stock market.
But of course since then, Wall Street’s troubles have persisted for most of this year, with even strong stocks punished hard.
Which means the 2023 numbers could drop significantly – despite the average dollar cost, people who stick with it and keep investing will be rewarded if the market returns to full strength.
Is there a magic retirement number?
So, how much should You have it by the time you turn 60?
Retirement calculators like these can help you get some answers. But the best Americans can do is turn to a financial advisor who can help them achieve their goals.
If you’d like to take a broader approach, Fidelity has ways to determine which numbers are right for you. In general, Americans should aim for the equivalent of their salary by age 30, three times at 40, six times at 50, and eight times at 60.
Read more: A ‘notable reversal’: President Biden has (quietly) scaled back student loan forgiveness — the change could affect up to 1.5 million borrowers. Are you one of them?
So if you’re 60 and earn $50,000 a year, that means you should have $400,000 saved in your retirement account. As you can see, not average Nor Approximate average retirement amount.
However, the amount “should” does not represent a set of variables. Consider, for example, how much you will be able to cut expenses in retirement, money you might get through Social Security, or assets you can offload or sell a home.
How do you balance the numbers?
First and foremost, talk to a financial advisor. If you don’t have one, talk to friends who have done well with their counselor or ask for referrals from someone you trust.
The advisor will need to assess your entire financial picture. Do you have children that you need their support when it comes to education or a wedding? What is the value of your home and are you planning to move in? What asset sources might you have overlooked?
Remember, it’s never too late to start putting cash aside. Up to 5% of each salary adds an additional $96 every two weeks, or $2,500 at the end of the year, which can then accrue.
And that’s much better than the zero mark that applies to 25% of Americans: they all deserve better than to retire their savings efforts before they even begin.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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