Average American Household Savings Near Retirement

Average American Household Savings Near Retirement

Proactive planning is a critical step for a secure retirement. But just how prepared are American households for their retirement years? Of course it’s important to recognize all households will have different retirement needs. People vary in their life circumstances and objectives, and as a result, their financial circumstances and requirements will also vary.

Some couples may require a seven-figure nest egg to feel secure. Others are confident their Social Security benefits will be suitable for their future needs. Given how Americans have such a wide-ranging outlook on finances in retirement, how people interpret statistics such as average American household retirement savings will vary. What may be the start of a looming crisis for some may be a minor challenge for others.

With that said, you should develop an informed mindset toward your own finances. Then use this data to help judge your progress in retirement preparation. Let’s cover some important details regarding the current American retirement landscape below.

What Does the Average Household Have in Savings?

In June 2015, the U.S. Government Accountability Office released a report detailing the current financial status of households aged 55-64, among other factors. The findings were insightful:

• The average American household nest egg near retirement is $106,000
• The median American household near retirement has $10,000-20,000 in savings
• 41% of the households didn’t have any retirement savings at all

What about These Households Which Didn’t Save?

The picture may seem grim among the 41% of households with no retirement savings. However, there’s more than meets the eye. Consider the following data:

• In the 41% of households subset, 56% are homeowners, with 22% having their home fully paid for
• Having no mortgage eliminates a long-term debt holding which would put pressure on income in retirement
• Again in this subset, 32% of households have a defined-benefit plan (or pension)
• Report doesn’t account for how much these households will be receiving in future Social Security benefits
• Given the yearly income for this subset is $26,000, average Social Security benefits may replace over half of a household’s income in future
• If a household has two workers retiring or someone receiving spousal benefit, benefits can be even higher

What About Those Who Saved?

Among the 59% of households with savings:

• 7% have less than $10,000 saved
• 9% have over $500,000
• Median net-worth per household is $337,000
• 87% are homeowners, but just 27% have their home fully paid off
• 45% have a defined benefit plan, or a pension

What Does This Mean for Me?

As the statistics show, having no retirement savings by itself is hardly a comprehensive variable for judging a household’s preparation. This reality applies to each person’s finances as well. Some people will expect a higher standard of living than others. Some households will have elevated living costs compared to others located in different parts of the United States.

In the end, there’s no better method than to sit down and judge your financial picture in relation to your own future goals and needs. If you have a partner, it’s advisable to plan ahead together. Determine a target goal for what you need in retirement, how well you’re working towards that goal, and what future income sources will be available. And see if there are any other steps you can take -- a financial professional can help bring clarity to this step.

Still Don’t Have a Plan? Take Action Now!

If you're ready for personal attention with your retirement future, can help you. Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

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