It’s taboo to ask someone how much money they have, but we all want to know where we stand. Here are some of the latest data.
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If you’re trying to save enough money for retirement, it’s important to have some benchmarks to track your progress. Money is often a subject of debate, so your best option is to get your statistics from sources that have access to a wealth of anonymous information, such as the federal government or Fidelity Investments, a large discount broker.
Here are key metrics and better rules of thumb to help you determine if your retirement savings are below average for your age.
First, the big picture
Saving for retirement is only one part of your financial picture. These are important parts, but there are other reasons to focus on them. For example, if you have a family, buying a home may be a priority over building a 401(k). It’s not a waste of money. You are building your home equity while paying off your mortgage.
In fact, some people consider buying a home a form of forced savings. Every time you pay your mortgage, you basically increase your net worth, which is all your assets minus all your debts. Because homes usually come with large mortgages, factors such as home purchases can cause your net worth to become negative early in life. Still, when assessing your financial situation, it’s important to start with your net worth.
The U.S. government is compiling a report called the Consumer Finance Survey.. The most recent data is from 2022, which is a few years old, but still worth considering.
Data source: US Federal Reserve System.
Two different averages are displayed: the mean and the median. Note that there is a big difference between the two numbers. This is because the mean is a simple average, whereas the median is the midpoint of a data set. The average value can be greatly skewed by a small number of wealthy people. Most people should aim for the median.
What about saving for retirement?
Net worth is everything you own, including your home, cars, collectibles, and more. It’s a complete picture of where you stand financially.
To help you focus on saving for retirement, Fidelity reviewed your 401(k) and Individual Retirement Accounts (IRAs) at the end of 2024 to create an average value for your retirement savings. The breakdown by generation is as follows.
Data source: Fidelity Investments.
Fidelity specifies that these are averages, which suggests that the numbers are likely highly skewed (recall the mean-median problem in government data). But even if it is expensive, it provides a target for investors to aim for. There’s nothing wrong with setting high goals when preparing for retirement.
That being said, the more interesting information Fidelity provides are the savings targets provided along with the data above.
Data source: Fidelity Investments.
This rough goal table is more useful because it takes into account differences in income. It’s simple. If you’re 45 years old, your goal is to have four times your annual income saved for retirement. If you are 30 years old, that goal is only a multiple of 1.
Choose your targets wisely
Because everyone is different, it is difficult to accurately assess your financial situation based on amounts alone. Factors such as adverse life events or a mentally rewarding but financially unprofitable job can change your situation dramatically. Be kind to yourself by discounting the above averages.
Perhaps even more helpful are Fidelity’s salary targets, which give people more room to be individual without the stigma of money. Although broad goals are less precise, they can reduce the emotional burden of comparing yourself to others and help you achieve your goals.
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