Average Retirement savings – are you saving enough to retire?

Every household has their own goals for retirement, but as I am on a quest to retire early, I discover every day that not everybody is preparing for their retirement, far from it. Average retirement savings in developed countries such as the US are unrealistically low compared to the actual amount of money one would need to retire comfortably. Where do you stand on the scale?

Average Retirement savings in the US

I’ve discussed before that it seems reasonable today to retire with 1 million dollars, assuming you own your house in addition to the million. It’s not me saying that, but statistics. 1 million dollars in savings lets you generate $40’000 a year, which is fairly close to the average household income in the US ($46’000).

But realistically, how many people have 1 million dollars saved for retirement?

According to the statistics, not so many, at least in the US. Average retirement savings in the US reach a peak of about $100’000 by the age they retire (65). That’s $900’000 short of the million. Worse, this is only counting households that actually save money, which is not the majority!

In general, it does not make much sense to compare yourself to that Age range though. Just because you don’t have $100’000 yet is no reason to freak out. The following chart (Source motley fool) gives the average retirement savings per age range, and you should compare your savings to your age range in that graph.


If you’re reading this blog, hopefully you’re beating the US average by a significant margin. The numbers above will *not* let you retire peacefully, let alone retire early.

An example of how much you need to retire early? Mr Money Mustache retired in his early thirties with $600’000 in assets.

Average retirement savings will not let you retire comfortably

Someone retiring at 65 with $100’000 could securely withdraw $4’000 a year (4% rule). That’s $333 a month… can you live on that? Even if your house is fully paid by then, it’s going to be tough. Yes, social security can help, but I’ve made the choice a while ago to not rely on any sort of social security. I’m an expat and there is no guarantee that any country will grant us anything by the time I’m old enough. Not relying on social security is also something that everyone should take into account, it is a healthy way of preparing for the future. Countries where the population is aging will face issues to fulfill all the social security needs. So even if you’re not an expact, there is no guarantee that what you expect to happen in 40 years will actually come.

Bottom line is, even if you are saving “above” the average mentioned in the graph, you’re not necessarily in the clear. In general, a nest of $500’000 to 1 million (+ a fully paid house) would be much more preferable. If you’re curious: you’d need to save (and invest!) about $450 a month for 40 years to reach a million in savings, or about $220 a month for 40 years to reach $500’000. A number that doesn’t feel so high to me: the average household income is $46’000 per year in the US, so this means saving 5% of one’s income.

If you’re above the numbers in the graph above for your age range, give yourself a pat in the back, then strive to save more. Becoming a millionaire is actually a possibility if you start early and save reasonably, without being overly aggressive in your saving rates. And reaching the million will give you the financial independence you need to live comfortably without relying on external help, or even a job.

I’m way above the averages here, but still not close to my financial independence goals. How about you?

  1. DivHut
    • StockBeard
  2. Bryan @ Just One More Year