There are endless reasons why a person may want to save money. Be it for a trip they’ve been dreaming of, a home repair project that’s long overdue, a new car, college, or just for the general “future,” it’s a good idea to start putting away a few more nickels and dimes, if possible.
Those already doing so can give themselves a pat on the back as it’s a harder task than one may think. According to a 2019 survey by Bankrate , just 40% of the more than 1,000 survey respondents said they would be able to cover an unexpected $1,000 expense, such as a car breaking down or a flooded home, with the money currently sitting in their savings.
Instead of being able to pay for the emergency with cash on hand, over one-third of the respondents said they would have to put the expense on a credit card or take out a loan. (Hey, it’s not called emergency savings for anything.)
But emergencies can happen to anyone at any time. And so can good things, like a new baby, a wedding, a new home, or job opportunity that means moving across town, the country, or the world (which can get really expensive, fast).
So yes, there are lots of reasons to save, and lots of ways to save too, (which we’ve outlined below). However, for those looking for a benchmark of just how much they should’ve saved by a specific age, things get tricky.
Average savings by age is a tough metric because there are so many variables that go into a number like that. We get it, though, everyone wants a guidepost.
So to help set some loose goals, we’ve outlined a few groups and the average American savings by age, to assist everyone in figuring out just how far their saving needs to go.
(Note: Like with all financial issues, your situation—and mileage—may vary.)
Why Everyone Should Be Saving for the Future
As we mentioned above, life can happen fast. For example, the average cost of just having a new baby can run anywhere from $5,000 to $14,500, let alone the cost of raising your kid for the rest of their life.
And, if that baby wants to get a college degree, you’re looking at a whole new ballpark of savings, as the cost of a college education can run from about $40,000 to well past $100,000.
There’s one other big reason to save for the future: People are living longer. However, people’s nest eggs appear to be losing feathers faster than they thought.
According to a 2019 survey by Aegon Center for Longevity, Transamerica Center for Retirement Studies and Instituto de Longevidade Mongeral Aegon in Brazil, just 36% of American workers are “very confident they will be able to retire comfortably.” Globally, that number is just 29%.
Almost Half the Population Has No Savings
Again, like Bankrate’s 2019 survey shows, a mere 40% of the more than 1,000 survey respondents said they would be able to cover an unexpected $1,000 expense.
The Federal Reserve also notes that 39% of all Americans don’t have enough cash in savings to cover even a $400 emergency.
To make matters worse, according to a 2019 study by ING Group International Surveys , 27% of Americans have no money saved. Even a few dollars saved is something to be proud of—but you shouldn’t stop there.
A Snapshot of the Typical American Household’s Savings
According to another 2018 survey by Bankrate , the typical American household has $8,863 in a savings account at a bank or credit union. But, this number varies greatly by age and number of people in a household. Let’s break it down.
Average Savings for Those 35 and Younger
The 2016 Federal Reserve Survey of Consumer Finances found that those Americans under the age of 35 had an average savings account balance of $8,362 .
Because this is such a large age bracket that can skew from teenagers just graduating high school to recent college grads to young professionals well into a decade’s worth of work, it’s tough to nail down age-by-age where the average may be.
It is typically suggested to have three to six months of expenses in an emergency account. At the very least aim for having $1,000 handy in a savings account just in case.
After hitting a savings stride at a new job, people may want to consider looking into any employer-sponsored retirement funds such as an IRA or a 401(k).
Minimally, add in whatever amount the company will match to ensure potential future savings thanks to compound interest. For reference, the average 401k savings for someone between the ages of 20-29 in 2019 was $11,800.
Average Savings by Age 35-44
The 2016 Federal Reserve Survey of Consumer Finances also found that those Americans between the ages of 35-44 had an average savings account balance of $20,839. Since this age bracket is now well into adulthood, it’s prudent to save up that three- to six-month savings account, to cover the cost of everything from an accident to a lost job.
Now may also be the time to think about diversifying a financial portfolio and potentially investing in the stock market or in real estate.
Again, for reference on where a person may want to be at for retirement savings goals, the average 401k savings for someone between the ages of 30-39 in 2019 was $42,400.
Average Savings by Age 45-54
The 2016 Federal Reserve Survey of Consumer Finances found that those Americans between the ages of 45-54 had an average savings account balance of $30,441.
At this point, common financial advice dictates that a 50 year old should have at least six times their annual salary if their intention is to retire at 67.
And, by the age of 40-49, a person may want to hit the average retirement savings, which sits at $102,700.
Average Savings by Age 55-64
The 2016 Federal Reserve Survey of Consumer Finances found that those Americans between the ages of 55-64 had an average savings account balance of $45,133.
As this is the time when most Americans are staring down retirement in a few years it’s a good idea to kick up savings, specifically retirement savings into high gear.
That’s because while younger people are capped at contributing $18,500 a year to a 401(k) account, those over the age of 50 are allowed to contribute an additional $6,000.
This is known as a catch-up contribution. The average retirement savings account for a person between the ages of 50-59 in 2019 was $174,100. It’s important to note that taking out cash before the age of 59 ½ could mean tax penalties.
Average Savings by Age 65+
This is when savings really peaks for the average American. The 2016 Federal Reserve Survey of Consumer Finances found that those Americans between the ages of 65-74 had an average savings account balance of $54,089.
However, that savings number does drop over time. According to the survey, Americans above the age of 75 had an average savings account balance of $42,391.
This drop means it’s all the more important to create a retirement budget and stick to it to ensure enough savings for as long as a person needs it.
But, before retirement, try to hit the average retirement savings number of 2019 for those aged 60-69, which was $195,500.
Saving a Little Bit More
Reaching specific savings goals doesn’t have to be complicated. It just means doing a bit of homework, strategizing, and staying diligent about personal finances.
The first step in saving more is to analyze current expenses to see what can be cut back on or cut out altogether to make more room for saving. This means creating a monthly personal budget and tracking current personal spending.
To track spending, a person could create an excel spreadsheet and list out all expenditures by categories like groceries, phone bill, car expenses, housing, medical, entertainment, etc, over the course of a month. Then, make sure to fill it in with every single dollar spent to see where every cent of money is going.
To make this process a little easier, SoFi offers SoFi Relay, which allows users to connect all their accounts to one mobile dashboard and track spending habits in real time.
After the month is up, the next step is to look back on the expenditures list. Was there anything that surprised you? Going to coffee shops more often than needed? How about that gym membership, did it actually get used? This is the time to get a little ruthless.
After figuring out what’s left, try implementing a general financial outline like the 50/30/20 rule. This means typically 50% of after-tax income goes toward essential expenses like food and rent, while 30% goes toward discretionary expenses like nights out at the movies or concerts. The last 20% belongs to savings and retirement account goals.
Now, it’s time to get creative about saving even more for the future. This can be done by simply direct depositing more cash into a savings or retirement account right from a paycheck. That way, it’s like the cash never existed in the first place.
Those looking to save a few more bucks every month could also do so by getting rid of a bunch of unnecessary expenses like recurring payments on apps they may not even use anymore. But, instead of pocketing that cash for fun, they can go ahead and reroute all that cash right to their savings.
Still feeling the pinch and don’t really have room to save more from a budget? Living paycheck to paycheck (which upward of 74% of Americans are) isn’t anything to be ashamed of, however it may be time to consider taking in a little more work via the gig economy.
Working part-time via an app like Uber, Lyft, or Taskrabbit allows people to set their own hours and make as much cash as they need depending on how much time they can dedicate.
However, those aren’t the only gig economy jobs available. Those with a talent for photography, writing, or creative arts could try freelancing with publications or individual businesses.
And hey, if you’ve got a spare bedroom, try listing it on room rental websites. Users of the most popular rental service earned an average of $924 per month renting out rooms in their home or other properties, according to 2019 data.
Making Your Savings Work Even Harder
There’s one more way to start making more money for your savings account and future, and it takes barely any work at all: Signing up for online investing with SoFi Invest®.
With the account, users can trade stocks and ETFs, buy crypto, or even start an automated investing program to make things quicker and easier than going it alone.
And, for those feeling a bit squeamish about diving headfirst into investing that’s okay too as SoFi Invest gives users the option to invest in smaller amounts like buying fractional shares with SoFi Stock Bits.
The new offering from SoFi gives users the ability to buy and sell fractional shares in mega-brands like Apple, Amazon, and Tesla. And investing a little now can go a long way in saving for tomorrow, next year, and your happy retirement to come.
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