What are Average Retirement Savings for Different Age Groups?

piggy-bank-in-waterMany people wonder how their 401k and other retirement savings compare to others. Age is an important consideration in making such comparisons. The more time that a person has until reaching retirement (i.e. the younger), the greater the opportunity to make additional contributions and for investment earnings to build up his or her retirement account balance.

Unfortunately, the best retirement savings by age data available predates the 2008-09 financial meltdown. The following table shows average and median retirement account balances for 2001 and 2004 as reported in the Survey of Consumer Finances (SCF). 1 Note that the figures are adjusted and shown in 2007 dollars to allow meaningful comparisons across years.

Average and Median Retirement Account Balances by Householder Age

Age of householder
2001
Average
Value, all
Accounts
2004
Average
Value, all
Accounts
2007
Average
Value, all
Accounts
2001
Median
Value, all
Accounts
2004
Median
Value, all
Accounts
2007
Median
Value, all
Accounts
Under 35 years old
$22,262
$29,786
$25,279
$ 8,180
$11,000
$9,600
35 to 44
76,573
78,008
81,308
33,890
30,000
37,000
45 to 54
152,290
163,656
156,124
56,090
60,000
63,000
55 to 64
230,540
253,048
271,920
64,270
88,000
100,000
65 or older
178,180
188,822
207,321
64,270
55,000
60,800
All households
122,227
140,350
148,579
35,060
36,000
45,000

Source: Congressional Research Service (CRS), Retirement Savings and Household Wealth in 2007

It is important to note the significant differences between the “average” and “median” figures. The averages in all age groupings are much higher than the medians indicating that the averages are skewed by some households having exceptionally large retirement savings. The median amounts (median represents the midpoint – 50% having more; 50% having less) is likely the more representative state of affairs for most households.



Another source of data for retirement savings by age is the the Employee Benefit Research Institute (EBRI). EBRI released a report in December 2008 on average 401k balances reported during 2007 by participants in its Participant-Directed Retirement Plan Data Collection Project.2

Average 401k Account Balances by Age Group and Job Tenure

Age Group
Tenure w/Employer
0-2 Years
Tenure w/Employer
>2-5 Years
Tenure w/Employer
>5-10 Years
Tenure w/Employer
>10-20 Years
Tenure w/Employer
>20-30 Years
Tenure w/Employer
>30 Years
20s
$4,491
$10,748
$18,564
$ –
$ –
$ –
30s
11,502
23,024
42,861
62,207
40s
16,672
31,055
58,262
100,856
151,193
50s
20,603
34,882
63,783
111,840
194,385
191,225
60s
24,544
35,399
60,525
105,504
172,584
210,457

Source: Employee Benefit Research Institute, 401(k) Plan Asset Allocation, Account Balances, and
Loan Activity in 2007

Note that the EBRI data includes only 401k plan balances, the primary retirement accounts for most people. Certain other retirement account types (IRA, 457, 403b, etc.) are not included in the EBRI data base.



A March 2009 study of 401k borrowing from the Federal reserve Board included this additional piece of information:

Median 401k Balances for Househods With and Without 401k Loan Balances

All
Without 401k Loan
With 401k Loan
Mean Age
41.9
41.7
42.6
Median 401k Balance
$23,000
$21,000
$33,000

Source: Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board,New Evidence on 401(k) Borrowing and Household Balance Sheets. Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C.




Finally, the Center for Retirement Research at Boston College includes the following telling graphic in its March 2009 Update on 401k Plans. This underscores the most important fact about retirement account balances – regardless of how American’s compare against each other, for all age groups, we are woefully short of where we should be.

Actual Retirement Balances Fall Far Short of Expectations

Actual Retirement Balances Fall Far Short of Expectations




While comparisons of 401k information between households is useful and informative, the most meaningful comparison is how your retirement account balances stack up against your future retirement nestegg goal. For this you should try our easy-to-use basic retirement calculator or this simple retirement calculator that takes into account the fact that most retirees experience declining expenses as they age.


Notes:
  1. Data for this table comes from the Congressional Research Service report Retirement Savings and Household Wealth:
    Trends from 2001 to 2004
    []
  2. According to EBRI, their database covers 45 percent of the universe of 401(k) plan participants, 12 percent of plans, and 47 percent of 401(k) plan assets. []