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Updated on Friday, October 11, 2019
The average American household has $183,200 tucked away in savings, with about 83% of that in retirement accounts. That leaves an average of about $31,000 for emergencies and non-retirement savings goals, such as buying a house or car, going on vacation or putting money away for college tuition.
To know if you’re on track to meet your savings and retirement goals, it helps to compare your progress with the average savings by age.
The average savings account balance by age
As your age increases, so should your bank balance (until a certain age). Let’s break down the findings by age group.
Average savings: Younger than 35
The average non-retirement savings for someone younger than 35 is $8,362, according to calculations by ValuePenguin, which, like MagnifyMoney, is owned by LendingTree.
While this number is low, money may be tight at this stage of life. People in this age group could be just over a decade into their careers, which can put them on the lower end of salary ranges.
The median earnings for Americans ages 25 to 34 are $837 a week, or $43,524 a year, according to the Bureau of Labor Statistics (BLS). Expenses such as housing, transportation and student loans can consume a good amount of income.
Keep in mind that the average age of a millennial homebuyer is 30.5, so mortgage down payments could be lowering the average savings.
Average savings: Ages 35-44
Between the ages of 35 and 44, the average non-retirement savings balance is $20,839.
During this decade, earnings grow. The median earnings are $1,022 a week, or $53,144 a year.
At this stage, more people are homeowners and parents of young children. The average cost of raising a child to the age of 18 is $233,610, or about $14,000 a year.
Average savings: Ages 45-54
Once you’re between the ages of 45 and 54, the average non-retirement balance is $30,441.
Retirement could be coming closer into view. And since more couples are delaying parenthood until their 30s, college tuition bills could be looming. Tuition and fees at a four-year public school average about $10,000 a year, but that doesn’t include room and board.
Fortunately, this decade is where Americans average the most earnings. The median earnings are $1,025 a week — or $53,300 per year — giving you a greater ability to save for emergencies, goals and retirement.
Average savings: Ages 55-64
Between the ages of 55 and 64, the average non-retirement savings account is $45,133. This could be a time when you start winding down your career and make your last push for retirement savings.
The median earnings in this age group fall slightly to $1,009 a week, or $52,468 a year. You should max out your retirement contributions and meet with a professional to see if you’re on track.
Of note, 47% of people opt to start taking Social Security benefits between the ages of 62 and 64. If you purchased a home at the average age of 30.5 on a 30-year mortgage, this is when you could pay off your mortgage if you didn’t refinance or sell the home. This helps to reduce your expenses and free up available funds for saving.
Average savings: Ages 65-74
Between the ages of 65 and 74, the average non-retirement savings balance is $54,089. More than 1 in 6 seniors work past age 65, according to ValuePenguin.
The median earnings for Americans older than 65 are $949 a week, or $49,348 a year. (Note that the BLS doesn’t track specific earning data between the ages of 65 and 74. Median earnings are estimated for those age 65 and older.)
Expenses should fall during this decade with child rearing most likely done.
Average savings: Age 75 and older
Once you reach age 75, the average non-retirement savings balance is $42,291.
The amount declines for the first time because you’re likely withdrawing some of your money for living expenses. And your ability to add to your savings also declines as many Americans have left the workforce by this age, even though the labor force participation rate for the 75-plus age group has nearly doubled in the past 20 years.
As we noted in the ages 65 to 74 section, the BLS doesn’t break down earnings’ estimates beyond 65 and older, so we’re looking at the same figures: $949 a week, or $49,348 a year.
How much you should have saved at each age
Your savings will likely have a purpose, such as emergencies, goals or retirement. To know if you are putting enough money away, it helps to follow these rules of thumb.
An emergency fund should contain three to six months’ worth of expenses, which will vary depending on your lifestyle and expenses.
Based on 2018 average annual expenditures from the BLS, we’ll provide emergency fund savings goals by age group. The low end includes three months’ worth of expenses, while the high end includes six months.
Emergency fund savings goal by age group
|Age 75 and older||$10,795-$21,591|
Source: MagnifyMoney via Bureau of Labor Statistics data
Let’s switch the focus to retirement savings. The average millennial has $24,570 in retirement savings, while the average baby boomer has $279,250.
Your target retirement balance can be calculated based on your income. By age 30, per Fidelity, you should have saved one times your income. By 50, that number grows to six times. And by 67, you should have saved 10 times your income.
According to the Census Bureau, the median household income in 2018 was $61,937. Based on these figures, here is a good general goal.
Tips for saving more money
While the average American household has a savings balance of $30,600, the median balance is $7,000. The average is the sum of all savings accounts divided by the number of account holders, while the median is the middle point in a number set.
The median amount offers a better representation of what most Americans have saved, since averages can be greatly impacted by outliers, such as high-income individuals with large deposit account balances.
If you are closer to the median than the average, It’s a good idea to address the gaps that exist by putting some savings strategies in place.
Follow the 50/30/20 budgeting rule
With the 50/30/20 rule, half of your income goes toward essential expenses (“needs”), such as housing, transportation, groceries and utilities. Thirty percent goes toward non-essential expenses (“wants”), such as dining out, clothes or cable TV. The remaining 20% of your income can go toward savings. Following this rule can help you avoid living paycheck to paycheck, as 78% of Americans do.
Pay down debt
One of the best ways to save money is to reduce expenses, such as high-interest credit card debt. The fewer bills you have, the more income you have available to sock away. You could use the debt snowball method, which pays off the lowest balance first to build motivation and momentum. Or consider the debt avalanche, which pays off the loans with the highest interest first. Whichever method you use, make it a priority to meet your savings goals. MagnifyMoney has a calculator than can help you decide between the two methods.
Save your tax refund
It can be tempting to spend a tax refund on something fun, such as a vacation, because it feels like a windfall. However, take advantage of the lump sum and put it toward your savings goals. The average tax refund for Americans in 2019 was $2,868, and saving it can put you well on your way to a higher bank balance.
Automate monthly savings
If you have to physically transfer money into savings, you’ll be less likely to do it. Instead, sign up for automatic savings deposits each pay period. You can divide it into non-retirement and retirement accounts. Chime Bank, for example, found that its members who signed up for automatic savings were able to put away more than three times as much money as members who didn’t.
Maximize interest rates
While it’s convenient to have your savings in the bank where you do your checking, the interest rates are often negligible, with the average savings account paying 0.09% APY, according to ValuePenguin. It’s possible to earn a much higher rate, so let your money work harder for you by choosing accounts that pay higher rates, such as high-interest savings accounts, certificates of deposit (CDs) or money market accounts.
Where you should keep your savings
The type of account you choose for your savings will depend on how you plan to use the money. Are you saving for a long-term or short-term goal? For some purposes, you’ll want an account that is more liquid than others.
For day-to-day expenses, you’ll want to use a checking account that allows you to make unlimited withdrawals each month. You can get an interest checking account, which pays an average of 0.06% APY.
For short-term goals, consider savings and money market accounts. Although, it’s important to know that most have restrictions on your number of withdrawals per month. The average savings account pays 0.09% APY, while the average money market account pays 0.16% APY.
You could place your emergency fund in a high-yield savings account, which keeps your money safe and pays a decent interest rate — often 2% or more.
If you don’t need your funds soon, you can choose an investment product such as a CD, which requires that you keep your money in place for a set period. Rates vary depending on the length of your CD term.
For retirement savings, you’ll need to put your money into an account designated for retirement savings, such as an individual retirement account (IRA), Roth IRA or a 401(k) plan offered by your employer.
To break it down, more than half of Americans have a savings account, 18% have money market deposit accounts, 7% have one or more CDs and 52% have at least one retirement account, according to MagnifyMoney research.