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Plenty of people feel like they are behind on their retirement savings. But what exactly does "behind" mean?
More than half, 56%, of American adults in the workforce say they are behind where they should be when it comes to saving for their retirement, including 37% who reported feeling "significantly behind," according to a new Bankrate survey. Nearly a third say they would need $1 million or more to retire comfortably.
Here's how experts say you can figure out if you're actually behind — and what you can do to catch up.
Online tools can provide points of comparison
Adults may feel behind because they haven't reached "these goals in their minds as either rules of thumbs or points of comparison" that they've set for themselves based on what they read online, said certified financial planner Lazetta Rainey Braxton, co-founder and co-CEO of virtual advisory firm 2050 Wealth Partners.
Braxton, a member of the CNBC Financial Advisor Council, pointed to the "numerous calculators" available online to help investors gauge how much they might need, factoring in both ongoing lifestyle expenses and those that may increase in retirement, such as medical costs. The latter can be significant: According to Fidelity, the average retired couple age 65 this year may need around $315,000 saved to cover health-care expenses in retirement.
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Brokerage firms such as Fidelity and T. Rowe provide benchmarks to help clarify the path to retirement. The benchmarks provide different age milestones and a target for how much to save.
For example, according to Fidelity's guide, you should aim to have twice your starting salary saved by the age of 35, and 10 times your starting salary by the age of 67. According to T. Rowe, you should have 1 to 1.5 times your current annual salary saved by age 35, and anywhere from 7 to 13.5 times your salary by age 65.
'Specific information is better than no information'
Based on such measures, it's no wonder people feel behind. People between 25 and 34 years old have an average 401(k) balance of $30,017, or a median $11,357, according to Vanguard's How America Saves Report 2023. Even in the 55- to 64-year-old age group, the average and median balances are $207,874 and $71,168, respectively.
Comparing yourself against benchmarks might make adults near or in retirement stressed if they are told that they need an additional six-figure sum to retire, Christine Benz, director of personal finance and retirement planning at Morningstar, told CNBC.
"But I do think specific information is better than no information," Benz said, of benchmarks.
Generation Xers and baby boomers reported feeling more behind on their retirement than anyone else in the Bankrate survey, with 51% of Gen Xers and 40% of boomers thinking they are "significantly behind."
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Bankrate senior industry analyst Ted Rossman said older adults feel more behind because if they have not yet retired, it is getting closer, and these workers are realizing "that they don't have as much saved as they would like."
People are also living longer on average, which means many workers are now needing to finance what could be a 30-year retirement. In that case, Rossman said a 4% withdrawal rate was a "safe bet." If people believe they need between $1 million and $2 million to retire — as 13% said in the Bankrate survey — then a 4% withdrawal rate would equate to approximately $40,000 per year, he said.
"It doesn't start to sound like quite as much and then it's like, 'Oh, wow, I might need more than $40,000 a year to live on,'" Rossman said. "So now that's why you're feeling behind."
How to catch up on retirement savings
Oftentimes, looking at so many different places for savings guidance may only cause more anxiety, said CFP Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.
Cheng — who is also a member of CNBC'sFinancial Advisor Council — said that if your employer retirement plan sponsor's website and multiple other tools indicate you are behind, the next best thing to do is to look at your contribution rates.
When people say they are maxing out on their retirement plan, they often mean they are maxing out in terms of their employer's match, which usually hovers between 5% and 6%, Cheng noted.
However, you may be able to contribute more to your 401(k) to meet the annual maximum, she said. Workers can contribute up to $22,500 this year under the IRS' 2023 limit. Those age 50 and older — who reported the most stress about their retirement — are eligible to contribute an additional $7,500.
While Bankrate found that this age group is also the least likely to know how much they need to retire, Rossman said people who don't have quite as much time left should not be discouraged from getting started on or adding to their retirement savings.
For younger workers, early moves to start investing and boost contributions can help them stay on track. Gen Zers and millennials reported feeling the most ahead on their retirement savings, Bankrate found.
Rossman stressed that "every dollar" you save in your 20s or 30s counts since "time is on your side." If young people start early and see gains compound by around 10% per year, their money could "double five times over 35 years," he said.
"That's a big difference."
FAQs
Simply, consider your household income or your own salary and your age. The chart suggests an estimate of the multiple of your current salary or annual income you need at each age. Another “rule of thumb” for retirement planning is to replace 80% of your current annual income in retirement.
What does the average 70 year old have saved for retirement? ›
How Much Does the Average 70-Year-Old Have in Savings? According to data from the Federal Reserve's most recent Survey of Consumer Finances, the average 65 to 74-year-old has a little over $426,000 saved. That's money that's specifically set aside in retirement accounts, including 401(k) plans and IRAs.
How much does the average 55 year old have saved for retirement? ›
The above chart shows that U.S. residents 35 and under have an average of $30,170 in retirement savings; those 35 to 44 have an average $131,950; those 45 to 54 have an average $254,720; those 55 to 64 have an average $408,420; those 65 to 74 have an average $426,070; and those over 70 have an average $357,920.
How much money do you need to retire with $100,000 a year income? ›
So, if you're aiming for $100,000 a year in retirement and also receiving Social Security checks, you'd need to have this amount in your portfolio: age 62: $2.1 million. age 67: $1.9 million. age 70: $1.8 million.
Can I retire at 62 with $400,000 in 401k? ›
If you have $400,000 in the bank you can retire early at age 62, but it will be tight. The good news is that if you can keep working for just five more years, you are on track for a potentially quite comfortable retirement by full retirement age.
How many people have $1,000,000 in retirement savings? ›
However, not a huge percentage of retirees end up having that much money. In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
What percentage of retirees have $500,000 in savings? ›
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.
What percentage of American retirees have a million dollars? ›
According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.
What is considered a good monthly retirement income? ›
As a result, an oft-stated rule of thumb suggests workers can base their retirement on a percentage of their current income. “Seventy to 80% of pre-retirement income is good to shoot for,” said Ben Bakkum, senior investment strategist with New York City financial firm Betterment, in an email.
Can I retire at 60 with 300k? ›
Yes, you can.
Let's say, for example, you have £300k in a pension after taking your tax-free cash, you have no outstanding debts or mortgage to pay off, and you're entitled to the full state pension at age 67 (or 68 from 2044). For this example, let's say you take £1,500 from your pension per month.
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.
How much money do most people retire with? ›
The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances.
How long will 100k last in retirement? ›
Bottom Line. With $100,000 you should budget for a retirement income of around $5,000 to $8,000 on top of Social Security, depending on how you have invested your money. Much more than this will likely cause you to run out of money within 25 – 30 years, which is potentially within the lifespan of the average retiree.
How long will $400,000 last in retirement? ›
Safe Withdrawal Rate
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.
What to do if I'm behind on retirement? ›
Create a savings plan
- Keep your retirement savings goals achievable. ...
- Build a more frugal budget. ...
- Eliminate your high-interest debt. ...
- Maximize employer-sponsored plans. ...
- Invest in additional retirement accounts. ...
- Explore catch-up contributions. ...
- Consider tax-advantaged accounts.
Sign in to your my Social Security account to check your application status. Already have a my Social Security Account? Sign in to your account, scroll down to the “Your Benefit Application” section and select “View Details” to see your application status.
What happens when you run out of retirement savings? ›
The potential consequences of running out of money in retirement can be severe. Retirees who run out of money may be forced to rely on family members for financial assistance or government programs like Medicaid or Supplemental Security Income (SSI).
What happens if I retire with no savings? ›
Many retirees with little to no savings rely solely on Social Security as their main source of income. You can claim Social Security benefits as early as age 62, but your benefit amount will depend on when you start filing for the benefit. You get less than your full benefit if you file before your full retirement age.
