Piggy Bank

Source: SeniorLiving.org via Flickr.

This article was updated on October 24, 2016.

Americans' balance sheets are improving as the Great Recession slips further into the past, but most Americans are still coming up short in terms of retirement savings. Millions of Americans haven't saved any money for their golden years, and millions of others haven't saved nearly enough. That paints a pretty grim picture of retirement in the U.S., but before we get too nervous, let's take a look at how you stack up against your peers.

How do you compare?

Because so many people have saved zero money for retirement, it's not too helpful to compare your own retirement savings to those of the average American. Instead, it's more helpful to compare how your retirement savings stack up against others who are also saving. 

According to the Federal Reserve, the median balance of retirement accounts held by Americans who are saving for retirement totals less than $60,000. But don't take that to mean that if you're beating that number, then you're in the clear.

After all, comparing yourself to all savers may not make sense. People who are younger and just starting to save will have far less put away for retirement than people who are older and have been saving for decades. Therefore, it probably makes the most sense to compare your retirement savings to Americans who are around the same age as you.

Although the Federal Reserve doesn't provide data for each specific age, it does break out retirement savings for various age ranges. For example, the median account value for Americans aged 35 to 44 is $42,700 and the median value for Americans aged 55 to 64 years old is $103,000. If you're within one of those age groups and you're outsaving your peers, then congratulations.

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However, don't throw yourself a parade yet, because you may still be at risk of having insufficient enough money in retirement to live as comfortably as you'd like.

Many experts recommend that retirees live by the "4% rule," whereby they withdraw 4% of their savings in their fist year of retirement and then adjust that percentage upward with inflation in following years. Based on that calculation, the average person retiring at age 65 with $103,000 in retirement savings would withdraw just $4,120 in their first year of retirement, or $343 per month. That's hardly enough to live on. 

As a result, most Americans will rely heavily on Social Security; but Social Security alone isn't going to allow you to live a life of luxury. According to the Social Security Administration, the average retired worker collects $1,345 per month in Social Security income in 2016. Add that $1,345 in Social Security payments to the $343 in income from retirement savings, and the typical retiree is looking at a monthly income of just $1,688, or only $20,256 per year.

Making changes

Given those numbers, it's not surprising that the Employee Benefit Research Institute reports that only 21% of U.S. workers are very confident that they'll be financially secure during their golden years. If you're one of the 79% that isn't that confident, then there's no time like the present to begin making changes that could have a big impact on your retirement nest egg.

For example, increasing the percentage of income that is being set aside in your 401(k) or 403(b) account can have a dramatic impact on retirement savings over the long haul. Small increases to those accounts every month can mean tens of thousands of additional dollars in savings. For instance, if an investor has $12,000 in retirement savings, contributes $100 per month, and earns an average annual return 6.5%, then they'll have a portfolio worth $88,874 in 20 years. Increase that $100 monthly investment to $200, and the portfolio balance could grow to $135,464 -- that's an additional $46,590. That extra money may not get the average Joe a summer estate in the Virgin Islands, but it could certainly go a long way toward keeping average investors ahead of their peers.

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