Any mental health professional will tell you that comparing yourself to others isn’t good for peace of mind. However, when it comes to retirement savings, having an idea of what others do can be good information to know. It can be hard to determine how much you’ll need, exactly, for your own post-career days, but finding out how others are planning - or not - can offer a benchmark for setting goals and milestones.

The Goal

The good news is that Americans have been making an effort to save more. According to Fidelity, the investment firm/brokerage that administers more than $5 trillion in assets, the average 401(k) plan balance reached $102,900 in the first quarter of 2018 – up $7,400 from the first quarter of 2017.

What should you aim for, savings-wise? Fidelity has some pretty concrete ideas. By the time you’re 30, the company calculates you should have saved half of your annual salary. If you are earning $50,000 by age 30, you should have $25,000 banked for retirement. By age 40, you should have twice your annual salary. By age 50, four times your salary; by age 60, six times, and by age 67, eight times. If you reach 67 years old and are earning $75,000 per year, you should have $600,000 saved. 

There’s also the tried-and-true, what some might call old-school, 80% rule. Save as much as you would need to get paid 80% of your salary for about 20 years. That would require about $1.2 million for that same person making $75,000, if you don’t factor inflation into the mix. That number goes up to between $1.5 million and $1.8 million depending on how you do try to factor it in. However you choose to calculate it, everyone agrees it's A LOT of money.

Not Measuring Up

That being said, most people are behind in saving for retirement.

A 2018 Government Accountability Office study found that nearly one-third of Americans age 55 and older don’t have any retirement nest egg or even a traditional pension plan. Those who do have retirement funds don't have enough money: 56 to 61-year-olds have an average of $163,577 and those 65 to 74 have even less in savings. If that money were turned into a lifetime annuity, it would only amount to a few hundred dollars a month. Any and every financial planning expert would agree that it’s not nearly enough.

The Transamerica Center for Retirement Studies found that "millennials" - those in their 20s - had average retirement savings of approximately $31,000. As workers enter their 30s and 40s, the Economic Policy Institute estimates that those age 32 to 37 have saved around $31,644, but then that figure rises substantially to around $67,720 for those age 38 to 43. For those age 44 to 48, their average retirement savings are $81,349. Finally, those age 50 to 55 have saved an average of $124,831. While these may all seem like healthy amounts, all of these savings are well below even the most conservative goals.

Part of the problem, according to TransAmerica, might be lack of financial understanding and education. Two-thirds of workers believe they don’t know as much about retirement as they should. In fact, 30% of workers say they don’t know anything about asset allocation and around 20% of workers admit to not knowing how their retirement money is invested – and that’s true of all workers, from the twenty-somethings to the sixty-somethings. For that matter, only 29% of Americans aged 60 and over say they know "a great deal" about Social Security, even though nearly 90% expect it to be a significant source of income when they stop working. 

The Bottom Line

Sad but true: Most Americans don’t have nearly enough savings to sustain them through retirement.

How do you avoid that fate? First, become a student of the retirement savings process. Learn how Social Security and Medicare work, and what you might expect from them. Then, figure out a savings goal and develop a plan to get to the sum you need, by the time you need it.

Start as early as possible. Retirement may seem a long way away, but when it comes to saving for it, the days dwindle down to a precious few – because any delay in retirement savings costs more in the long run.