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The average American couple has saved that much money for retirement – how does it compare?

Posted on by L. Dreeye
The average American couple has saved that much money for retirement – how does it compare?

Retirement, ideally a period of relaxation and enjoyment after years of hard work, is often seen as a time to pursue hobbies, travel or simply relax.

But for many, this phase of life is marred by financial worries, turning what should have been a golden era into a source of fear. A national LiveCareer survey found that 61% of working Americans fear retirement more than death, primarily due to financial instability.

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This fear is more acute among married couples, who face the added complexity of planning for two people with different financial needs. A NerdWallet study using the 2022 Survey of Consumer Finances highlights this problem, indicating that 60% of Americans do not have a retirement account. The disproportion in average household pension savings by age group further illustrates this problem:

Up to 35: US$49,130 ​​(average: US$18,880)

Age from 35 to 44 years: US$141,520 (average: US$45,000)

Age from 45 to 54 years: US$313,220 (average: US$115,000)

Ages from 55 to 64 years: US$537,560 (average US$185,000)

Ages 65 to 74: US$609,230 (average US$200,000)

These figures show a significant gap between average and median savings, indicating a wide range of financial readiness across different age groups.

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T. Rowe Price provides detailed retirement savings benchmarks to help individuals and couples at various income levels and life stages plan for retirement. These benchmarks vary by household income, age, and whether the household has a single or dual income.

For example, a dual-income couple earning $75,000 a year should have savings equal to five times their income by age 55, increasing to eight times by age 65. In contrast, a single earner at the same income level should aim for 4.5 times their income at age 55 and seven times their income at age 65. These benchmarks scale for higher income levels, recommending higher multiples as income increases.

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A dual-income couple earning $80,000 a year should aim for the following savings at different ages:

  • By age 55: $400,000.

  • By age 65: $640,000.

T. Rowe Price also suggests that investors should aim to save at least 15% of their income, including employer contributions, to meet these retirement goals. The required savings percentage may increase as you age, especially if your income is higher.

For those concerned about their pension funds, there are several practical solutions:

  • Increase in savings rate: Even a small increase in savings can yield significant long-term benefits.

  • Maximizing Retirement Accounts: Take full advantage of employer-sponsored plans and individual retirement accounts (IRAs).

  • Reduce debt: Reducing high-interest debt frees up resources for retirement savings.

  • Social Security Delay: Deferring payments may result in higher monthly payments.

  • Diversify your investments: A balanced mix of assets can optimize returns and reduce risk.

  • Create a budget: Tracking your expenses helps you identify savings opportunities.

  • Consider working longer: Additional work years can increase retirement income and savings.

  • Check and adjust regularly: Keeping your pension plans up to date ensures they remain relevant to changing financial circumstances.

Financial advisors play a key role in solving retirement problems. They offer personalized guidance to help couples create comprehensive retirement plans based on their unique financial situation and goals.

Some elements of this story were previously reported by Benzinga and have been updated.

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This article The Average American Couple Saved That Much Money for Retirement—How Do You Compare? originally appeared on Benzinga.com

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