Advertiser Disclosure

News

How Much Does the Average American Have in Savings?

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

  • The average American household has $175,510 worth of savings in bank accounts and retirement savings accounts as of June 2018.
  • The median American household currently holds about $11,700 across these same types of accounts.
  • The top 1% of households (as measured by income) have an average of $2,495,930 in these various saving accounts. The bottom 20% have an average of $8,720.
  • Roughly 83% of savings are in located in retirement accounts like IRAs and workplace-sponsored retirement savings plans like 401(k)s.
  • Millennials, who have just started their savings journey, have currently socked away an average of $24,820. Gen Xers have $125,560 in retirement savings. Baby boomers and those born before 1946 have an average of $274,910.
  • 29% of households have less than $1,000 in savings.

You often read or hear stories about how Americans aren’t saving enough for college, for retirement, for a rainy day — for anything, really. But how much do they currently have in their bank, credit union or online brokerage?

MagnifyMoney used data from the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) to estimate the average and median household balances in various types of banking and retirement savings accounts. 2016 household data from the Fed’s Survey of Consumer Finances was adjusted to 2018 levels by using June, 2018 market values and fund flows.
 

Of course, these are very broad numbers, and very few of the 126 million U.S. households will be average. As of 2016, about 78% of households had at least one of the following: a savings account, a retirement savings account, a money market deposit account or certificates of deposit.

Average account balances

As of June 2018, among all households (including those with no account):

  • The average American household savings account balance is $16,420
  • The average American household has $5,170 in certificates of deposits (CDs)
  • The average American household has $9,370 in money market deposit accounts
  • The average American household has $9,750 in checking accounts
  • The average American household has $144,560 in one or more retirement savings accounts, including individual retirement accounts (IRAs), 401(k)s and other types of retirement accounts

 

Note that all households won’t necessarily own each type of savings account. For example, only about 7% of households currently have savings in some type of CD, meaning that the 93% without one will necessarily drive down the average.

Here are the average balances among savers, regardless of the kinds of savings vehicles they use. The averages below only exclude the 22% of households without any of these savings accounts. Households that have some savings vehicles but not necessarily all of the savings vehicles below were factored into each average.

Across all “saver” households:

  • The average savings account balance is $22,469
  • The average money market deposit account balance is $12,823
  • The average amount held in one or more CDs is $7,074
  • The average balance of all retirement accounts is $197,849
  • The average checking account balance is $7,680

 

When you look at the average balances of those who own the particular account, the averages are even higher:

  • 51% of American households have a savings account, and the average balance among them is $32,130
  • 18% have money market deposit accounts, and the average balance is $74,470
  • 7% have one or more CDs and hold a total average $79,240
  • 52% have one or more retirement accounts, and the total average balance is $277,670
  • 83% have checking accounts and the average balance is $11,260

 

Median account balances

Median balances are considerably lower than the averages. For example, the median savings account balance is $4,830, significantly lower than the $32,130 average American savings account balance. Fifty percent of households have more than $4,830 in those types of accounts, while 50% have less. (The median figures below only include households that have that type of account.)

  • The median American household savings account balance is $4,830
  • The median American household money market deposit account balance is $12,600
  • The median American household amount in one or more CDs is $21,000
  • The median retirement account size in American households is $72,840
  • The median American household checking account balance is $2,330

 

Demographics and savings

  •  Who are the above-average saving households? Wealthier households comprise most of them, but less-well heeled households can have healthy levels of savings as well. When you look at households who have saved more than the national average of $175,410, 59 percent of them are top income earners– those households in the top 20 percent of annual income. But 41 percent of above average savers are in the bottom 80% of income.

  • Millennial households have saved an average of less than $25,000, Gen Xers have about $125,000 saved, while baby boomers have saved nearly $275,000.

  • Regardless of income or age, 29% of households have less than $1,000 saved.

When savings is viewed through certain demographic prisms, like age, income and education, the average and median savings account balances start making more sense. For instance, it won’t surprise anyone that households with higher incomes save more than those of more modest means.

 

So although the average American household has saved roughly $175,000 in various types of savings accounts, only the top 10%-20% of earners will likely have savings levels approaching or exceeding that amount. Indeed, and as the chart shows, the bottom 40% of American households are more likely than not to have any savings whatsoever. Conversely, the top 10% of the population by income is likely to have many times the national household savings average.

Similarly, millennials will have saved less than boomers, as the latter has had a 35-year head start, among other factors. Currently, the average boomer has roughly 11 times the amount saved as the average millennial.

 

How much does the average American have in savings for retirement?

Of course, many American households store much of their savings in retirement accounts, like 401(k) plans from their employers and IRAs, both of which are tax-advantaged accounts that can hold not only “liquid” savings but also investments like financial securities and, in some cases, other types of assets like real estate. Fifty-two percent of households have some sort of retirement account, according to a 2016 survey by the Federal Reserve.

Among all households (including those with no account), the average retirement savings account balance as of June 2018 is $144,556.

But among households with an account (about 52% of all households):

  • American households with a retirement account (accounts like employer-sponsored 401(k) plans and IRAs) have an average of $277,670 in such accounts.
  • The median household balance as of June 2018 is $72,840 among those with retirement accounts.

For those households with retirement accounts, here’s how retirement savings break out among the different generations:

  • Millennials have saved an average of $34,030
  • Gen Xers have an average of $165,860 in retirement savings.
  • Baby boomers and those born before 1946 have an average of $380,100 in retirement accounts.

Recent trends in deposit accounts

Here’s a closer look at how customers of banks and credit unions are allocating their deposits:

CDs are losing shares to traditional and money market accounts

The amount of savings in FDIC-insured banks have grown by nearly $4 trillion since the recession.

 

But that growth isn’t going into CDs. There’s nearly $1 trillion less in CDs in 2018 than 10 years ago, while the amount of savings in both traditional and money market deposit accounts has increased by more than $2 trillion in each category.

 

CD yields

As you may suspect, the primary culprit behind declining CD deposits are the accounts’ low yields. As illustrated in the chart below, the popularity of CDs has waned as banks paid relatively little interest for all CDs, even those with longer maturities. For much of the past decade, the average yield for locking up savings in 1-year CD barely exceeded the average yield on a money market account, which is more liquid than a CD.

 

Longer-term CDs haven’t been yielding much more, until recently. Although the Federal Reserve began its most recent series of short-term rate hikes in early 2017, CD yields only started to climb from rock bottom in spring 2018.

 

Credit unions: A smaller pool with slightly better yields

While savings have also increased in the much smaller credit union universe, CD deposits have remained steady.

 

While there are multiple explanations for the steady share of CDs at credit unions, such as the institutions’ not-for-profit status (members are the shareholders), one obvious reason is the competitive rates they offer customers relative to banks. According to the National Credit Union Administration (NCUA) quarterly survey, credit unions offer consistently higher rates on savings than commercial banks.

 

Fortunately, savers (or would-be savers) are not consigned to improving-but-still-meager average savings yields. The best yields for savings accounts, CDs and money market accounts well exceed the average APY by at least one percentage point and often more.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Chris Horymski
Chris Horymski |

Chris Horymski is a writer at MagnifyMoney. You can email Chris at chris.horymski@magnifymoney.com

TAGS: , ,

Advertiser Disclosure

Earning Interest

The Most Convenient Credit Unions of 2018 Ranked

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Credit unions have historically had a special place in the U.S. economy. These community-based banks are, in effect, not-for-profit financial institutions owned by their depositors. That means by design credit unions have a vested interest in keeping the cost of services like loans and banking fees low for their customers, while offering competitive rates.

On the other hand, credit unions don’t enjoy the same economies of scale of larger banks, which means they struggle to afford higher costs of adopting the latest mobile banking technology or toll-free telephone banking services. So it may be fair to ask if, by joining a credit union, you may be trading lower fees for some inconveniences, such as likely incurring more out-of-network ATM fees and shorter banking hours.

In a new study, MagnifyMoney figured out which credit unions are the true standouts when it comes to offering consumers the same conveniences of a big bank.

We collected information on the 50 largest credit unions (by assets) in the U.S., and ranked their relative convenience in five separate categories:

  • Teller hours. Average hours each local branch is open per week.
  • ATM availability. Participation in both nationwide and regional surcharge-free ATM networks.
  • Telephone hours. Number of hours per week personalized teller service via phone is offered.
  • Mobile app. The user satisfaction of the credit union’s mobile app, as determined by Apple Pay and Android smartphone users.
  • Portable transaction data. The ability to download credit union transactions to personal finance applications like Quicken and Mint.com.

We found many credit unions have also used technology to their advantage, by creating services that are nearly as good as those provided at larger banks. Some credit unions even share their branches with one another, allowing, for example, a credit union member on the East Coast to use branches and ATMs from a different credit union in California.

The 15 most convenient credit unions overall

These credit unions excelled in many, if not all, of the five criteria we used to measure relative convenience. In general, they all offer longer-than-average branch hours; extended personalized telephone service (many open 24 hours); surcharge-free ATM networks; decent smartphone apps; and the ability to track your credit union transactions from applications outside of the website.

  1. Alliant
  2. Hudson Valley
  3. Wright-Patt
  4. Alaska USA
  5. BECU
  6. Redstone
  7. Delta Community
  8. PenFed
  9. Navy
  10. Wings Financial
  11. Security Service Federal Credit Union
  12. Police and Fire Federal Credit Union
  13. Suncoast Credit Union
  14. OnPoint Community Credit Union
  15. DCU

Credit unions with the longest hours

  1. Hudson Valley Federal Credit Union
  2. Police and Fire Federal Credit Union
  3. Alaska USA Federal Credit Union
  4. America First
  5. Wescom (tie) and Logix (tie)
  6. Wright-Patt
  7. Veridian
  8. Desert Schools
  9. DCU (tie) and Redwood (tie)

Traditional bank branches have been closing in droves. There are nearly 5,000 fewer bank branches today than five years ago, according to Federal Deposit Insurance Corporation data. Meanwhile, credit unions have grown their modest footprint, with the average credit union having more branches than three years ago.

One aspect that allows credit unions to artificially expand their branch reach even further is by belonging to a cooperative that offers the same services you might receive in your hometown credit union branch. The Co-op network, one of the largest, allows its member credit union to share activities like teller deposits and withdrawals at over 5,600 credit union branches nationwide.

But locally, extended hours still count, so we checked the working hours of credit union branches of the 50 largest credit unions. All but two credit unions had branches that were open on average of more than 40 hours per week.

Credit unions with 24-hour telephone service

  • Alaska USA Federal Credit Union
  • Alliant Credit Union
  • BECU
  • Delta Community Credit Union
  • First Technology Federal Credit Union
  • Navy Federal Credit Union
  • Redwood Credit Union
  • Security Service Federal Credit Union

Even 40- to 60-hour branch hours aren’t always convenient if you have, for instance, a long commute or unusual working hours yourself. So we also wanted to see how personalized phone services were at these credit unions.

We were surprised when early one New York morning we decided to call Alaska USA Federal Credit Union, where it was really early (4:30 a.m.). Nonetheless, the representative indeed answered, and confirmed that banking assistance was available 24 hours a day. (To be fair, Alaska USA also has branches on the West Coast of the continental U.S.).

But seven other credit unions also offer round-the-clock telephone assistance, which may come in handy for procrastinators, or simply those who like to bank in the dead of night.

Best credit union smartphone apps

  • Eastman Credit Union
  • ESL Federal Credit Union
  • Redstone Federal Credit Union
  • SEFCU
  • Wright-Patt Credit Union
  • Visions Federal Credit Union
  • Delta Community Credit Union
  • Wings Financial Credit Union
  • Hudson Valley Federal Credit Union
  • Kinecta Federal Credit Union

If you can live without features like sending money on a separate mobile app like Venmo, credit union apps can be just as effective as those provided by the big banks, just with a little less bling and pizazz.

We annually rank the best smartphone apps of both banks and credit unions at MagnifyMoney, but have never looked at credit union apps separately.

As it turns out, most have relatively good ratings (as defined by iPhone and Android smartphone users). Of the 10 best-scoring credit unions, all but one ranked as high or higher than apps of the three largest brick-and-mortar banks (Bank of America, JPMorgan Chase and Wells Fargo). The credit union apps have all the features of those of larger banks, like deposit-by-photo and ability to check balances without logging into the app.

In addition, all of these credit unions allow you to download your transaction history to budget apps like Quicken and Mint.com.

Best surcharge-free ATM network coverage

  • Alliant Federal Credit Union
  • Hudson Valley Federal Credit Union
  • Northwest Federal Credit Union
  • OnPoint Community Credit Union
  • Suncoast Federal Credit Union
  • Wings Financial Credit Union
  • Wright-Patt Credit Union

Banks typically charge around $3.00 for a using a non-network ATM for cash withdrawals. Often, you get dinged for fees both coming and going by using the “wrong” ATM — once by the bank that owns the machine you use, and again by your own bank. By participating in surcharge-free ATM networks like CO-OP and Allpoint, credit union members can avoid these fees.

And with these ATMs available in many drug stores and other nationwide retail chains, you can be reasonably certain you won’t incur surcharge fees on your next out-of-town trip.

Pros and cons of credit unions

Pros:

  • Lower costs, better rates. Credit unions, on average, have more favorable rates on auto loans and credit card APRs than banks overall, and offer higher yields on savings products like CDs. And fees for checking accounts and overdraft fees are lower than those of banks.
  • More willing to work with you on providing credit. Many credit unions will allow their members to appeal credit decisions if they are initially turned down for credit. They may ask you to supply additional documentation, and a committee will review your appeal.
  • Same levels of insurance as FDIC-insured banks. Credit unions have their own insurance fund, run by the National Credit Union Administration, that insures accounts at the same $250,000 levels as the FDIC. This is important because credit unions can fail just like banks. Our sister site, Deposit Accounts, notes that five Credit Unions were liquidated last year.

Cons:

  • You may not be eligible to join. Historically, to join a credit union, one had to share a “common bond” with other members of the credit union — for example, by working for the same employer, or by some other shared affiliation. While some credit unions make this requirement easy to meet by offering multiple membership paths, others still require specific employment or residency requirements.
  • A credit union mortgage may sometimes be harder to come by than one offered by a bank. Although credit unions may have more flexibility to make loans with some products, that may not always extend to home mortgages. A recent report from the Federal Reserve Bank of Philadelphia notes that credit unions turn down mortgage applications more often than small banks. (They also note that credit unions have lower charge-off rates than banks, which is good news for its members).
  • Don’t expect an instant response. While nearly all banks can immediately offer you a credit decision on loans and credit card applications, don’t expect the same sort of instant gratification with a credit union. Depending on the size of the credit union, it could take a number of business days before you hear back about a credit decision.

Methodology

MagnifyMoney collected information on the 50 largest credit unions (by assets) in the U.S., and ranked their relative convenience in five separate categories:

  • Teller Hours. Average hours each local branch is open per week.
  • ATM Availability. Participation in both nationwide and regional surcharge-free ATM networks.
  • Telephone Hours. Number of hours per week personalized teller service via phone is offered.
  • Mobile App. The user satisfaction of the credit union’s mobile app, as determined by Apple Pay and Android smartphone users.
  • Portable Transaction data. The ability to download credit union transactions to personal finance applications like Quicken and Mint.com.

Each category represented 20% of the credit union’s overall score. The highest score was 90.0 (out of 100) and the lowest score was 46.6. Credit union data was collected in November 2017 for mobile app ratings, and in February 2018 for all other categories.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Chris Horymski
Chris Horymski |

Chris Horymski is a writer at MagnifyMoney. You can email Chris at chris.horymski@magnifymoney.com

TAGS: