Vanguard Says Most People Have THIS MUCH Saved for Retirement… And They’re Still Behind
Vanguard, one of the world’s largest investment management companies, recently released its “How America Saves 2024” report, offering a glimpse into the retirement savings habits of millions of Americans. While the report reveals some progress, it also highlights a sobering reality: many people are significantly behind where they need to be to secure a comfortable retirement.
So, How Much Do Most People Actually Have Saved?
According to the Vanguard report, the median retirement account balance across all age groups was around $35,345. This includes 401(k)s, IRAs, and other retirement savings vehicles held at Vanguard. While this figure is up from previous years, it’s crucial to consider that this is a median, meaning half of savers have less than this amount.
The Reality Bites: Why $35,345 Isn’t Enough
While any savings is better than none, $35,345 falls drastically short of what most financial experts recommend for a secure retirement. Consider these factors:
- Longevity: People are living longer, requiring more savings to cover expenses throughout their retirement years.
- Inflation: The rising cost of goods and services erodes the purchasing power of savings, making it harder to maintain a comfortable lifestyle.
- Healthcare Costs: Healthcare expenses tend to increase with age, potentially draining retirement funds.
- Social Security Uncertainty: The future of Social Security remains uncertain, making it unreliable as a primary source of retirement income.
Age Matters: Savings Vary Across Generations
The Vanguard report also breaks down savings by age group, offering a more nuanced perspective:
- Younger Savers (25-34): This group typically has lower balances due to shorter working careers and lower earning potential. However, they have the longest time horizon to catch up.
- Mid-Career Savers (35-54): This group is often juggling competing financial priorities like raising children and paying off mortgages. They need to aggressively increase their savings to avoid falling behind.
- Pre-Retirees (55-64): This group has the least amount of time to save and needs to maximize their contributions to close the savings gap.
Why Are People Behind? Common Obstacles to Saving
Several factors contribute to the insufficient retirement savings highlighted in the Vanguard report:
- Lack of Awareness: Many people lack a clear understanding of how much they need to save and how to invest effectively.
- Competing Financial Priorities: Debt, housing costs, and other expenses often take precedence over retirement savings.
- Insufficient Income: Low wages make it difficult to save consistently.
- Procrastination: Putting off saving for retirement until later in life can make it harder to catch up.
- Market Volatility: Fluctuations in the stock market can deter people from investing or lead them to withdraw funds prematurely.
What Can You Do to Catch Up?
Despite the daunting statistics, there are steps you can take to improve your retirement outlook:
- Start Saving Now: The power of compounding means that starting early, even with small amounts, can significantly impact your long-term savings.
- Increase Your Contributions: Gradually increase your contributions to your 401(k) or IRA, even by just 1% at a time.
- Take Advantage of Employer Matching: Maximize employer matching contributions, which is essentially free money towards your retirement.
- Create a Budget: Track your income and expenses to identify areas where you can cut back and save more.
- Seek Professional Advice: Consult with a financial advisor to develop a personalized retirement savings plan.
- Stay Invested for the Long Term: Avoid making emotional investment decisions based on short-term market fluctuations.
- Automate Your Savings: Set up automatic transfers from your checking account to your retirement accounts to make saving a habit.
The Takeaway:
The Vanguard report serves as a wake-up call for many Americans. While the median retirement savings of around $35,345 might seem encouraging, it’s crucial to acknowledge that it’s often insufficient for a comfortable retirement. By understanding the obstacles and taking proactive steps to increase savings, individuals can improve their chances of achieving their financial goals and securing a brighter future. Don’t let the statistics discourage you; start today and take control of your retirement planning.
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Anastasia, you are very intelligent and extremely pretty, it was a pleasure to watch the video
A person's income has nothing to do with what they have saved!
The only important item is the amount which you have saved!
Yeah, not sure I'm going to take financial advice from someone who uses a calculator to multiply 70,000 by 4.
Ummmm, not everyone has a job with a 401k where the employer contributes. Gove me a break with the assumptions.
Do the expected balances vs. annual income at each age group consider what the annual salary actually is?
I calculated that I needed to save twenty percent of my salary in order to retire. There were no IRA, Roth IRA, deferred compensation plans, but many companies had retirement plans. I was surprised that many companies got rid of retirement plans because the plans were too expensive. I also knew that most jobs are not for a lifetime except government jobs, but most government jobs paid low salaries. I worked for a government utility which had a good retirement plan, but you had to work thirty years for good retirement income and medical plan benefits. I told all of my friends to work for this utility, but no one was interested. I know that you cannot retire on SSI and probably have to work part time or move to another country.
So how many Americans in the age group 55 – 64 have a Salary of USD$100,000 pa. I know they exist but really? Median salary for that age group in the USA is about $67k
I got $200,000 in my IRAs. My friends act like I’m some old Mizer at 33. But I make 100k a year, so in reality I’m just “on track”
Topic suggestion. Strategy when inheriting a sizable IRA or (trad) 401k.
For example, switch any work Roth withholding to pre-tax withholding; increase withholding to finish year at max contribution allowed by IRS. You can 'backfill' the reduced taxable income with distributions or conversions from the inherited IRA. Also take any additional IRA contribution outside work allowed by IRS, probably $7,000. Also spousal IRA. All helps increase distribution or conversion possible from the inherited IRA while keeping to whatever tax bracket you find comfortable.
Question is: How many people are actually making deposits every month? Distractions like hospital care, bankruptcy , failure to make monthly payments for mortgage, overhead cost to protect "home"? Investing is a luxury for those whose salaries are near $80K?
Thank you!
only max retirement account contributions to the employer match. Everything else goes to taxable accounts. The problem with IRA is that you can’t access your money without penalty till you are 60 years old.
Imagine having millions in your Ira at age of 50 and won’t be able to afford to retire
10:41 these people have pensions that prolly why they don’t contribute as much ❤❤❤
A quick google search or chat GPT ask will give you a whole separate and much more accurate set of numbers.
Median numbers aren’t anywhere close to these make believe fantasy numbers.
I no hard working people from entrepreneurs to techies to high paid skilled workers. None have 7 x’s their salaries saved at 55. lol none
I am 57 and I started saving late in my career, so I could really use some advice. I have $1.7m in a post-tax investment portfolio, most stock, and $1.0m in pre-tax investment portfolio, mostly stock. About $30k in cash. Our house is paid off and well as our 3 cars, so zero debt. I make around $600k/yr but only spend around $150k per year and still contribute max to my IRA. My business is worth about $2.5m if I sold today. I am in line to inherit about $2m in the next 5 years. What do you think I should do to be ready to retire in the next few years?
The problem with these charts like this one with Vanguard, is that it assumes that the 401(k) is the only retirement account for each individual, whereas folks may have multiple 401(k)'s from different employers where older ones were not rolled over, or they may have other retirement vehicles (IRA's, 453's, 457's, brokerages, HSA's, etc…) across other firms. So averages and medians are indicated as deceptively lower than actual investment account amounts. As well, 401(k)'s from older employers have zero contribution rates, which pulls down the averages on these charts, whereas the average contribution rates to current retirement accounts are likely higher.
If you are smart you will be putting part of your savings in Bitcoin. For those people who don't know you can buy "sats". You don't have to buy an entire Bitcoin which is now at $121,000 at the time I posted this. It was selling for $99,000 when I bought my first Bitcoin in December 2024.
Retired at 66 and change. 4.5 million. Only crossed into 100K on the job over the last few years of working. Got in early, maxed my yearly contribution and the company did matching. Went pretty aggressive with my choices. I recently moved from the 401K to a traditional IRA. With the same financial outfit and guy that handled the company 401K. I can thank my mom who never finished high school for saying I'd be stupid to not max out if I could. One thing, a million today doesn't buy what a million could just a few years ago.
Got a question ? I went to an investor meeting in the main bank off a guy whom said it was better to tell his clients he don’t have to tell him that they lost balance it a minuscule amount like $4,000?
More than a few of us in the older age groups find ourselves in a perpetual consultant/contractor employment situation, as employers prefer not to hire permanent employees in the older age groups (e.g., age discrimination). We're more expensive to hire as perm employees – health premiums, salaries, etc. So the retirement savings go to IRAs, Taxable, and SEP/Solo 401k if a person is made aware of these instruments, how to use them, and importantly, how to avoid running afoul of the many byzantine IRS rules. This kind of thing should really be taught to every student before they get a HS Diploma.
The report only considers 401k / 403b type retirement accounts. Many savers have multiple accounts. A much better yardstick would be individual or household liquid net worth..
10:17 the 2mil pri, 5k month withdraw, with 5% growth. No tax so 5k or 60k withdraw does give a balance of 6m at the end of year 36. BUT, if we take inflation as 4%, you are now withdrawing 19,730 not 5,000 a month, and your principle is down to 1.5 million, running out in year 43, when your monthly withdraws are now *25,964$ a month*. So inflation i think is often missed or under estimated in these calculations.
Hey Anastasia, nice video!
YouTube suggested it to me 🙂
Some feedback: could you add background music to your next video?
Looking at these retirement numbers… how does it make you feel?