Please ensure Javascript is enabled for purposes of website accessibility

Here’s How Much the Typical American Saved Last Year -- How Do You Compare?

By Brian Stoffel - Updated Oct 9, 2018 at 5:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Believe it or not, these numbers are much better than they were a decade ago.

Read the financial news with any regularity and you know we Americans could probably do a better job of saving money. But most people don't know that we're actually living within our means far better than we did just a decade ago.

According to Moody's Analytics, in 2006, the median American below the age of 54 -- which most of us are -- actually had a negative savings rate. Even worse, those age 44 and under averaged a savings rate worse than negative 10%!

Apparently, many folks have learned since the financial crisis that we don't need to finance our future to afford a house we don't need.

piggy bank and coins

Image source: Getty Images.

So how much does the average American now save? Instead of giving you just one number, we'll break out the data a bit more. The first two variables we need are the typical savings rate by age (provided by Moody's Analytics) and the median household income by age (courtesy of the U.S. Census Bureau).

Here's what we get:

Typical Savings Rate & Household Income, by Age | Create infographics

As you can see, individuals under the age of 35, commonly referred to as millennials, presently have a negative savings rate. This wasn't always the case, as this age group was able to sock away as much as 5.2% of income in 2009. Since then, however, there's been a steady shift downward -- with some pointing the finger at heavy debt burdens from student loans.

That has led the typical American under the age of 34 to lose money annually for the past couple of years. So if you're young and putting away money right now, you're doing better than most.

The important thing to recognize here is that any money saved this year and invested in the stock market could return about 6.9% after adjusting for inflation, using historical returns as the benchmark.

Even investing small amounts of money can make a big difference, particularly for the younger generations. Consider: If a 35-year-old saved the average amount ($1,690) last year and invested it in the stock market for 30 years, it would be worth $12,500 in today's dollars by the time he or she retired.

There are lots of ways to boost your savings beyond the averages for your age. The lowest hanging fruit is to be very conscious about major purchases: things like your college education, a car, and a home. Our own Morgan Housel has detailed a way to make it through college without copious debt levels. He's also demonstrated -- convincingly -- that owning a home should be about the social/emotional benefits, not the financial ones.

Beyond these big ticket items, I'm a big proponent of finding your "Enough" level -- the baseline of what you need to live a happy, healthy, balanced life. Once you find that level, any increases in salary can go immediately into savings and investments.

If you can start these processes today and slowly increase the amount you're saving, it can go a long way in helping you reach financial independence. Of course, there are other, lesser-known ways of helping you retire comfortably, as highlighted below.

The $60K Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could ensure a boost in your retirement income of as much as $60,000. In fact, one MarketWatch reporter argues that if more Americans used them, the government would have to shell out an extra $10 billion… every year! And once you learn how to take advantage of these loopholes, you could retire confidently with the peace of mind we're all after. Simply click here to receive your free copy of our new report that details how you can take advantage of these strategies.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.