Americans aren't saving enough for retirement. And that's true for people of all ages, according to a recent report from The Transamerica Center for Retirement Studies

A close look at median retirement account balances across generations reveals that even baby boomers are likely to have a serious income shortfall in their retirement years. And the problem could be even worse for younger generations.

Piggy bank with colorful letters spelling out 401(k) next to it.

Image source: Getty Images.

Here's how much income median savings would produce for retirees

According to the Transamerica research, baby boomers have median retirement account balances of just $144,000. Assuming these current and near-retirees follow the 4% rule, their accounts would produce around $5,760 in income a year.

Although most baby boomers will also have Social Security to supplement that, the average Social Security benefit provides only $18,036 in annual income as of 2020. That means the typical baby boomer with the median retirement account and an average benefit would have a total annual income of around $23,796. And that's a problem because average retirees aged 65 to 74 spend around $50,400 per year

And this is actually an optimistic estimate, as experts caution that following the 4% rule may no longer be a good way to determine a safe withdrawal rate. If you need to keep your account distributions smaller, you'd be left with even more of a shortfall. 

How do younger workers fare?

Younger workers naturally have smaller retirement account balances than baby boomers since they have a longer time left until retirement and have generally had fewer years to save. But the Transamerica data shows their nest eggs may still produce too little for them when the time comes to retire.  

Members of Generation X currently have about $64,000 saved while millennials have a median retirement account balance of just $23,000. A $64,000 retirement account would produce only about $2,560 per year in income for Gen Xers, while millennials with the typical nest egg would get around $920 in annual income from their savings so far.

And although Gen Xers and millennials do have years left to improve their situation, those with the median account balance have likely already fallen behind. 

In fact, most experts recommend saving 1.5 times your income by 30 and twice your salary by 35. With a median salary of $45,344 in 2020 for workers between the ages of 25 to 34, the typical millennial hasn't even saved one year's worth of income yet.

Meanwhile, median salaries for those between 45 and 54 come in at $57,252, so a typical Gen Xer with a balance hovering around the median may have just over a year's worth of income saved. And some members of Generation X are already in their 50s, and are getting close to the time they'll need to start depending on their savings. For the older members of this generation, an account balance of $64,000 would be woefully insufficient to see them through. 

How to save more for retirement

As you set your savings goals, it's important to consider how much income your investment accounts will produce for you as a retiree. If you find you'll likely fall short of what you need, it's best to up your savings rate sooner rather than later.

By cutting your budget, automating contributions to your retirement account, and making smart choices about what you're investing in, you can hopefully turn things around so your savings will be sufficient to take care of you in your later years.