How Much do 2016 Retirees Have Saved Up?March 30th, 2016
According to the United States Department of Labor, less than half of the American population has calculated how much they need to save for retirement.
How much money you have saved up going into your golden years will depend on when you started saving, and the type of savings account you have. For this reason, each baby boomer retiring this year will have a different amount of money saved up.
We’ll show you how much the average person retiring this year has saved up, as well as what to do if you’re below where you want to be in terms of your retirement savings.
Average Savings of Retirees
Although individuals may contribute to a 401k, an Individual Retirement Account (IRA), or a Social Security fund, many fall short of their investment goals by the time they reach 65. Much of this has to do with retirees not saving enough in their youth.
In 2015 the Government Accountability Office found that on average people between the ages of 55 and 64, have only accumulated around $104,000 in retirement savings. This would equate to only a few hundred dollars per month in spending money.
And this is only the average American. Many will live on less than this—if they are even able to retire at all. In fact—according to the Government Accountability Office, over 40 percent of adult Americans don’t have any retirement savings.
Experts suggest that in order to live comfortably in retirement, you’ll want to accrue at least six times your annual salary. If you make 40,000 dollars a year, you want to accumulate 240,000 dollars by the time of retirement.
Now this might seem difficult to do, but it’s actually quite feasible, as long as you start investing early.
How to Save For Retirement
Financial advisors suggest starting in your early 20s or when you get your first full time job. You’ll want to either choose an employer funded retirement plan such as a 401k, or an individual one such as an IRA. The earlier you start, the more money you’ll accrue throughout your life.
Also try not to borrow against your retirement funds. In fact, financial advisors suggest taking out less than 4 percent a year, and only withdrawing money if you absolutely have to, since you’ll have to pay an early withdrawal penalty.
If you’re worried that you haven’t saved enough, or at all, there are alternatives. It’s never too late to start saving. Even if you’re over the age of 50, you can open up an IRA or a 401k plan.
You also don’t want to forget about Social Security Benefits. If you’ve been working and paying into the system, you’ll be eligible for benefits once you reach retirement age.
However, keep in mind that your social security benefits can only match up to about 40 percent of your pre-retirement income. This is why it’s a good idea to also have a 401k and or IRA plan too.