What Is the Average Net Worth at Retirement?
Written by
John Csiszar
Edited by
Rebekah Evans
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
In spite of all the recommendations from advisors that Americans should aim for at least $1 million in their retirement accounts, the reality is that most come up short. Part of the problem is that most Americans are living paycheck to paycheck, making it hard to set aside the recommended 10% to 20% of income for long-term savings.
But the earlier you can get in the habit of “paying yourself first” and setting aside money for savings ahead of even paying your bills, the more likely you are to build a sizable nest egg over time. Here’s a look at what the average net worth is for Americans aged 65 to 74, along with suggestions for how you can improve your chances to live a comfortable retirement.
Also here is how much you should save for retirement, according to experts.
What Is the Average Net Worth for Retirees?
According to the latest data from the Federal Reserve, the median net worth for Americans aged 65 to 74 was $409,900. For those 75 and older, it was $335,600. This makes sense, as older retirees generally spend more than they earn and draw down their retirement nest egg as they age.
When it comes to the average net worth for these age groups, the numbers are significantly larger. This is because a handful of uber-wealthy individuals skew the average much higher. For those aged 65 to 74, the average net worth was $1,794,600 or more than four times the median. The ratio was even higher for those aged 75 or older, where the average net worth was $1,624,100 or nearly five times the median.
Is That a Sufficient Amount?
While $409,900 might seem like a decent nest egg — and it may be, if you live a modest life and live in a low-cost area — for many Americans, it won’t provide the type of retirement income that you might be dreaming of. If you invest that $409,900 at a 5% interest rate, for example — which is approximately the rate you can currently earn on Treasury bills and high-yield savings accounts — it will only kick off $20,495 in income annually.
While Social Security can help, you’ll still likely come up short. Most advisors suggest that you’ll need at least 80% of your pre-retirement to live a comfortable retirement, meaning the average American will need at least $56,240, based on the Fed’s report that the median household income in America was $70,300.
How You Can Improve Your Chances for an Enjoyable Retirement
The first way to improve your chances for an enjoyable retirement is to view Social Security as a supplement, not your primary source of retirement income. This is because for most Americans, Social Security isn’t nearly enough to fund a satisfying lifestyle. As of May 2024, the average Social Security check for retired workers was just $1,915.26 per month or $22,983.12 per year. That’s just not enough to cut it for most Americans.
This is why investing is so important and the younger you can start, the better. For example, according to Dave Ramsey’s investment calculator tool, if you can manage to sock away just $190 per month starting at age 20, by the time you reach 65, you’ll have more than $1 million if you earn an average annual return of 8%.
It’s always a better idea to try to boost your income, savings and investments before you retire rather than trying to cut your expenses after. For that reason, it’s essential to save as much as you can and take advantage of retirement accounts like 401(k) plans, which offer tax benefits and the ability to earn “free money” in the form of employer matching contributions.
One trick that can help is automating your savings. Instead of having to remember to contribute to your savings and investment plans every month, that burden is taken off your hands. By investing consistently like this, not only will you likely build a bigger nest egg than you imagine, but you will also be able to take advantage of any market declines, as your automated contributions will pick up shares when they are less expensive.
Another way to boost your nest egg is to avoid being too conservative, particularly when you are younger. In your 20s, 30s and 40s, you still have enough time until retirement to ride out any market declines and adding more to your accounts during this time can generate additional gains over the long run. If your investments are too conservative, you may not even achieve a net positive return, after you subtract the effects of inflation and taxes.
Take the First Step
While it’s interesting to compare your own retirement savings with national averages and medians, what really matters at the end of the day is how your own personal finances are faring. Based on your lifestyle and expected longevity, $409,900 might be plenty of money to retire on or it might be nowhere close to what you need.
Sitting with a financial planner can be a great first step towards devising a plan that will meet your long-term needs while still matching your risk tolerance. But whether you work with a professional or figure it all out on your own, automating your investments, taking advantage of retirement plans and starting as early as you can are all helpful steps in your lifelong retirement planning journey.
More From GOBankingRates
