How Your Retirement Account Balance Stacks Up With Your Peers | Retirement
Your age often dictates your retirement savings priorities. In your 20s and 30s, you need to put money into a retirement account so that it can start growing on your behalf. Once you’ve built up a big nest egg, it becomes more and more important to protect what you have. And after you retire, you need to reduce your assets wisely so that your nest egg lasts the rest of your life. Here are some strategies to help boost your retirement finances at every stage of your life.
20s. People in their twenties are in the best position of their lives to prepare for retirement, as even a small amount of savings will take decades to accumulate. People under 25 have a median IRA balance of just $ 3,708, according to an Employee Benefit Research Institute analysis of 25.8 million IRA accounts containing $ 2,460 billion. Those over the age of 20 have accumulated a median of $ 5,000. The average ARI balance is $ 13,103 for people in their twenties and $ 12,537 for people in their late twenties. âThe best thing to do when you get your first job is to put money into the 401 (k) or an IRA, even if it’s just a little bit,â says Ann Terranova, certified financial planner for Union Financial Partners in San Francisco. . “It creates a saving habit that someone is going to have the rest of their life.”
30s. While you may have a higher income in your 30s, you might also have some major new expenses like kids and a house that will need to be factored into your savings plan. “Life gets a little more complicated. Your goals compete for your resources and you must not lose sight of the long term,” explains Terranova. “If you started saving in your twenties, you have an account that is starting to create value and you really want to continue on that path.” Investors saved an average of $ 7,661 in their early 30s, but that jumps to $ 12,325 among people aged 35 to 39, EBRI found. Investors in their thirties have an average of $ 20,456 in their early thirties and $ 33,784 in their late thirties.
40s. Starting to make more specific retirement plans can help keep you motivated to save in your 40s. âIf you start thinking about what your retirement will look like at 40 or 45, you can make a lot more changes depending on how much time you have to do it,â says Terranova. “If you wait too long, you really compress the time you have to get there.” The median IRA balance is $ 17,745 for people aged 40 to 44, while those in their late 40s have a median of $ 24,264 saved for retirement. The average IRA balance is $ 49,948 in the early 1940s and $ 68,683 between the ages of 45 and 49.
the 50’s. Your 50s is the perfect time to become a Super Saver. People aged 50 and over become eligible to make catch-up contributions of an additional $ 6,000 to 401 (k) and an additional $ 1,000 to IRAs. The median balance of all IRAs is $ 31,692 in the early 1950s and $ 41,149 in the late 1950s, according to the EBRI. The average balance is $ 91,976 between ages 50 and 54 and $ 122,957 for people aged 55 to 59. If you have managed to build up a large retirement account balance, you may want to transfer some of it to more conservative investments to avoid large losses in the years leading up to retirement. âYour ability to manage risk will decrease as you get older and get closer to that retirement period,â says Craig Ritter, Certified Financial Planner for Continuum Wealth Management in Scottsdale, Arizona. âObviously as you get older you reduce the risk a bit, but the reality is that in retirement you will have to use your wallet to support your standard of living for probably the same number of years that you have worked, and there must still be some room for growth in the portfolio. “
60s. Turning 60 is an extremely important decade for retirement planning, as it is often your last chance to put money into retirement accounts before you retire. You also need to decide when you are financially ready to quit your job. âMaybe you’re starting to look for consulting opportunities with your vast network and you’re having more of a phased retirement,â says Audry Batiste, a certified financial planner for Precise Financial Planning in Las Vegas. Those approaching the traditional retirement age have a median of $ 55,807 in their early sixties and $ 75,277 in their late sixties. The average IRA account balance is $ 165,139 for people aged 60 to 64 and $ 212,812 for investors aged 65 to 69, according to the EBRI. You also become eligible for Medicare health insurance at age 65 and must decide on the ideal age to enroll in Social Security between 62 and 70.
70s. The median IRA balance remains at $ 75,627 for people in their 60s, likely since they stopped reassessing and started making withdrawals, but continue to enjoy growth in investments. The average account balance is $ 219,790 at age 70 or older. âYou’ve been accumulating for so long that it can be a difficult transition for some people to take money out of the wallet,â Ritter said. People aged 70 Â½ and over can no longer claim a tax deduction on traditional IRA contributions, and annual distributions from traditional IRAs are required after age 70 Â½.