Have you ever wondered at what the average retirement savings age is? Have you ever wondered how much money most people have for retirement at different ages?
What retirement vehicles or savings plans do most people take advantage of, if any? What are the best savings plans for retirement?
Are there retirement savings plans that are available that don’t require hiring a retirement planner? Are there retirement plans that can be started with very little or even zero money?
I will answer all of these questions for you, and provide information on retirement savings that may surprise you.
Average Retirement Savings Age
I have often wondered what the average retirement savings age is. Should I have started saving for retirement in my 20’s in order to ensure a comfortable retirement? Would starting in my 30’s be soon enough? How about 40’s? 50’s? Later?
You may be surprised to learn that one third of Americans never save for retirement. That is 33 1/3% of Americans never start to save for retirement, and have zero money saved for retirement once they reach retirement age, around age 65.
Broken down by gender, 30% of men have no retirement savings, and 38% of women have no retirement savings.
56% of Americans have less than $10,000 saved for retirement. That is more than half of the population of the USA have less than $10 grand saved for retirement.
However, the news is somewhat better for those that do save for retirement, although perhaps still not enough to ensure a long, comfortable retirement.
Average, and median retirement savings by age:
20’s: The average retirement savings numbers for those in their twenties is $31,000 according to retirement research, and financial investment companies. This number is skewed high due to some that have significant savings.
The median or the most common middle amount of retirement savings for twenty somethings is about $500. The goal is to have one year’s salary saved by the time age 30 is reached.
The average salary for a 20 something is approximately $40,000 per year. Again, this number is skewed higher. The median income is in the $20,000 area.
30’s: The average retirement savings numbers for those in their thirties is approximately $42,000 with a dramatic increase with those in their later 30’s. The median or the most common middle amount of retirement savings for thirty somethings is about $4,200.
Investment companies recommend that by the time age 40 is reached, you should have three times your salary in retirement savings in order to stay on track for a sufficient retirement.
40’s: The average retirement savings numbers for those in their forties is approximately $75,000 with less for the early 40’s and more for the later 40’s. The median or the most common middle amount of retirement savings for forty somethings is about $6,200.
The financial industry advises that once you hit the mid century mark of 50, you should have 4 to 5 times your salary saved for retirement, so that you are on pace for a reasonably cozy retirement.
50’s: The average retirement savings numbers for those in their fifties is approximately $140,000, again with more for those in their later 50’s, and less for those in their early 50’s.
The median or the most common middle amount of retirement savings for fifty somethings is about $11,000.
The retirement planning experts profess that by the time you hit your sixties, you should have accumulated some 6 times your wages, so that you can have a stress free retirement.
60’s: The average retirement savings numbers for those in their sixties (60-65) is approximately $175,000 The median or the most common middle amount of retirement savings for sixty to sixty-five somethings is in the $,19,000 range.
The ideal recommended amount for retirement is $1 Million Dollars which the vast majority of Americans fall woefully short of.
Best Age to Start Saving for Retirement
The best age to start saving for retirement is the day that you start working and start making making money. Possibly this is better stated as, as soon as you possibly can.
For most people this is around sixteen years old. You may be thinking that at 16 you are not making enough money to put any away for retirement. Besides, at sixteen you still have a long time before you retire.
The good news is, there are painless ways to save for retirement even at the beginning of your work life. Time is your greatest ally when it comes to saving, and planning for retirement. The sooner you get started, the easier it can be.
But what if you are older, I can hear you saying? What if you are 50, and you haven’t saved much money, if any?
The best age for you is whatever age you are. Just get started. As long as you have some source of income, you can get started saving for your retirement right away.
Even if you are 60 years young or a bit older, you can still accumulate some significant retirement funds within 6 or 8 years if you take action now, and are consistent.
This is especially important if your occupation does not provide a retirement plan that you can take advantage of. However, even if you do have a retirement plan at work, you can do a lot to supplement it with your own efforts.
How to Free Up Money for Investing for Your Retirement
The best way to free up money for investing for your retirement is to make more money. If your prospects for that promotion and raise at work are non existent, and you don’t think you can make more money elsewhere, there is always the possibility of taking a part-time job.
There are part-time jobs that are available both online, and offline. You may not even have to leave home to supplement your income, if you can work online.
If you are already worked to a frazzle, and cherish every moment of your time off, your best bet is to tighten your belt. Look for things that you are spending money on that you don’t need, or are more than your need that you can do without.
If possible, you may be able to sell your existing home, and downsize to a less expensive home, condo, or apartment to free up some proceeds. Or, consider refinancing your current mortgage to lower your monthly payments.
Maybe you can get by with one car instead of two. Or sell the big family gas guzzler, and buy a fuel efficient economy car.
Perhaps form a carpool group to commute to work instead of driving and burning gas everyday. Shop at discount stores instead of paying full retail for groceries, clothes, and other items.
Do without that $6 cup of latte at the corner coffee shop in the morning. Make coffee at home instead.
Do you really need cable tv with it’s 200+ channels? Save money by getting by with basic cable, or eliminate it altogether. You can get your news, weather, sports, and even movies right online.
Try to focus on things that you need versus things that you want. With a little discipline, you might be surprised how much extra money you can release for retirement savings, and other things.
Painless Ways to Build Retirement Funds
There are many great ways to plan for retirement. Unfortunately, most of these ways require at least some money in order to get started with them. You can also take advantage of retirement plans at work if you are lucky enough to have a job that offers one.
But what if you have little or no money? What if you have a job that doesn’t offer a retirement program for it’s employees? Is there anything I can do to get started saving for retirement that doesn’t cost a lot to get started, is simple, and easy to understand, and that is not bothersome to set up?
The answer is a resounding yes. There are some simple, easy, trouble free things you can do right away to get started on your way to helping your finances for your later years even if you don’t make a lot of money, and are on a very tight budget.
The least painful way to begin is with microsavings investing programs like Acorns. The way Acorns works is by linking to your credit card and bank account, and rounding up what your purchase amount is (spare change) to the nearest whole number, and investing the difference in a professionally managed retirement account that Acorns has set up for you.
Acorns charges a reasonable $1 a month flat fee for account balances up to $5000. For accounts larger than $5000, a yearly fee of 0.25% is added.
Still very reasonable. Your Acorns account is insured by the Securities Investor Protection Corporation (SIPC) for $500,000
Acorns also offers you a free $5 to get started, and you can earn a $5 referral bonus every time you tell others about Acorns and they join from your referral link. Your referral will also get a free $5 to sign up.
It is not required to tell others about Acorns. If you choose, you can simply join, and take advantage of it’s great features.
You can also add to your Acorns account at anytime, and you can also set up a monthly withdrawal through your bank account or debit/credit card to automatically add to your Acorns holdings.
Acorns also provides other managed accounts once your balance reaches certain levels. These accounts are optional.
If you think that investing such small amounts of money will never add up to anything substantial, think again.
These micro savings accounts are very popular, especially among millenials. Over 2 million millenials are members of Acorns. You need not be a millenial though to take advantage of this brilliant program.
The sooner you get started the better, and like with any retirement program, the more time you have until retirement, the better opportunity you will have to generate large sums of funds.
The beauty of this plan is that you will never miss the money that you automatically invest in Acorns. You will also be able to benefit from the investment strategies of the professional management they provide.
Some of the investments that Acorns uses pay dividends. These dividends are reinvested for you to help your balances to grow even faster.
Acorns can be taken advantage of no matter what other investments you may have. The way I look at it is, the more you can save for retirement, especially if you won’t miss the money, the better.
My Favorite Retirement Investment
If you have a little money that you can use for a retirement investment, I highly recommend No Fee DRIPs. No Fee DRIPs are dividend reinvestment plans or programs.
The No Fee DRIPs charge no fees to get started or for subsequent investments within the DRIP. The only fees are charged if you choose to sell the investment.
You can choose to reinvest some of the dividend in more stock, and take a partial dividend payout. Or, you can choose to take the entire dividend payout. Or, you can choose to have the entire dividend reinvested in more stock for you.
This works on the principle of compound interest, which is a very powerful wealth building concept.
Learn more about DRIPs here.
Think about how quickly the last year, two years, five years went by. It won’t be long before you are nearing your retirement age. What you do today can have a profound effect on your later life.
You don’t ever want to have to say, “I didn’t plan to fail, I just failed to plan. “