How do you compare to other savers your age? | Smart Change: Personal Finances


(Kailey Hagen)

One of the hardest things about saving for retirement is that there are no clear benchmarks to follow. No one can look at your retirement balance and tell you it’s enough for a comfortable future. It all depends on your age, the amount of your contributions, what you invest in and your expectations for retirement.

That said, it can still be helpful to know how you stack up against other savers your age. Below, we’ll look at what a recent survey has to say about it, along with some tips on how you can boost your retirement savings.

Image source: Getty Images.

Here’s how much the average saver has for retirement

A recent survey conducted by a financial services company black rock (NYSE:BLK) broke down the average retirement balance by age and whether or not participants had access to a workplace retirement account. Here are the results:

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age range

Average balance with a retirement account at work

Average balance without a retirement account at work

21 to 30

$72,475

$64,212

31 to 40

$131,066

$89,468

41 to 50

$232,783

$96,514

51 to 60

$443,778

$204,311

61+

$449,228

$258,094

Data source: The 2022 BlackRock Read about retirement investigation.

A big caveat here is that all participants surveyed reported at least $5,000 in retirement savings. Those with no money set aside for their retirement were left out, which skews the results upwards.

If you’re way off the average for your age right now, that doesn’t mean you should panic. And if you’re ahead of those numbers, that doesn’t mean you can kick back and relax. Everyone has personal retirement goals and timelines. You need to know how much you need to save to reach your retirement goals and then develop a plan to help you get there.

How to start saving more for retirement

You should take steps to increase your retirement savings as soon as possible if you know you are not saving enough. The longer your money stays invested before you have to withdraw it, the more likely it will be worth when you do. And when you can count on higher incomes, you can reduce the amount you set aside each month for retirement.

If you have access to a workplace retirement plan, putting money aside is a good start. These plans often have high annual contribution limits. You can set aside up to $20,500 in a 401(k) this year, or $27,000 if you’re 50 or older. Most workplace retirement accounts will also give you tax relief this year for your contributions.

Some employers also offer a 401(k) match, where they’ll give you extra money for your retirement if you contribute first. It’s best to claim this full match every year whenever possible, as it’s free money.

Those who don’t have access to a 401(k) or other workplace retirement plan should open an IRA. These accounts have lower contribution limits: just $6,000 in 2022 ($7,000 if you’re 50 or older). But they give you the flexibility to choose when you want to pay taxes on your money – the year you contribute or the year you withdraw your funds – and you have a wider variety of investment options. .

If you’re maximizing your IRA, you can put some extra money into a Health Savings Account (HSA). Although intended for medical savings, these tax-advantaged accounts also work well for retirement funds. Individuals can contribute up to $3,650 in 2022, while families can contribute up to $7,300 as long as they have a health insurance plan with a deductible of $1,400 for individuals or 2,800 $ for families. The money you put into an HSA reduces your taxable income for the year, and if you use it for medical expenses at any age, it’s tax-free.

If you are interested in these accounts, you can open one with many banks and brokers. It’s best to choose a provider that lets you invest your HSA funds rather than leaving them in cash if you’re using them for retirement savings.

Once you’ve chosen your retirement accounts, you need to establish a regular contribution schedule, ideally every month or every pay period. If you are unable to contribute as much as you would like, start with what you can. Aim to increase your contributions by 1% of your income each year and be on the lookout for opportunities to cut costs to free up more money for retirement savings.

When nothing else works, it’s time to rethink your plan. Delaying retirement may not appeal to you, but it can do wonders for your finances. This gives you more time to save and allows your current investments to grow longer while reducing the cost of your retirement. Even a delay of a few months can make a significant difference.

You can use other people’s savings balances as a benchmark, but they serve different purposes. Ultimately, you have to follow your own plan.

The $18,984 Social Security premium that most retirees completely overlook

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Kailey Hagen has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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