Saving for retirement is never easy, and it's only becoming more challenging. Many jobs no longer offer pensions or other defined benefit plans, and while Social Security can help, it may not be as reliable in the future as it is now. That means many workers are on their own to save for retirement.
While everyone will have different goals and needs, seeing how your savings stack up to the average can be helpful. If you find you're falling behind, it can provide some extra motivation to build a robust nest egg. And if you're ahead of the curve, it may help take some of the stress out of retirement planning.
Generation X generally includes those born between 1965 and 1980, or between ages 44 and 59. As this generation nears retirement age, now is the perfect time to double-check that your savings are on track. Here's exactly how much the average Gen Xer has saved for retirement.
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The average retirement savings by age
Again, there's no one-size-fits-all answer as to how much you should have saved for retirement. If you live in an expensive city or expect to enjoy a costly lifestyle in retirement, for example, you could need far more than average -- and vice versa.
Still, seeing average figures can help give you a ballpark estimate of how much your peers have saved. Researchers from The Motley Fool examined historical data from the Federal Reserve to determine how much U.S. adults across various age groups have saved for retirement.
Among those aged 45 to 54, the average savings in 2022 was $313,220. And those aged 55 to 64 have an average of $537,563 saved.
A more accurate representation of savings, however, may be the median numbers. Averages are often skewed by outliers, including extremely high earners who could have millions saved. In 2022, the median amount saved by those aged 45 to 54 was just $115,000, and the median among those aged 55 to 64 was $185,000.
How to tell whether you're on track
Seeing how your savings compare to the average and median numbers can be helpful, but it's more important to look at your unique situation and goals to determine how much you should save for retirement.
A common rule of thumb is that you'll need around 80% of your preretirement income once you retire. So if you need, say, $60,000 per year to cover all your expenses now, you might need around $48,000 per year in retirement.
This can give you a rough estimate, but to be as accurate as possible, it's wise to think about how your expenses might change. Certain costs may go down once you retire (such as the cost of commuting and other work-related expenses), but others may increase (especially if you plan to travel or pick up expensive new hobbies).
It's also a good idea to consider how much income you'll be receiving from other sources, such as Social Security. Your benefits may not be able to fully fund your retirement, but they can still go a long way. If you haven't already, you can check your future benefit amount through your mySocialSecurity account online. From there, it will be easier to determine just how much you'll need to rely on your savings.
You can also run your numbers through a retirement calculator, or you may get an estimate using the rule of 25. If you have an estimate of your annual income requirements, you can multiply that by 25 to see roughly how much you should have saved in total. So if you expect to need, say, $40,000 per year in savings, you might aim to have a total of around $1 million in your retirement fund.
It can be helpful to see how your savings stack up to the average for your age group, but it's still important to calculate your individual needs. When you know roughly what it takes to retire comfortably, you can ensure you're doing everything possible to set yourself up for success.
