The average retirement age in the U.S. is 62 , so most people in their 70s have already left the workforce. This likely means they are relying on savings, as living on Social Security alone isn't going to cut it in most cases.
So, the big question is, how much money do all of these 70-year-olds have, and is it enough?
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This is the average 401(k) balance for people in their 70s and beyond
Empower reported recently on the average 401(k) balance among people of different age groups. The research showed:
- The average 401(k) balance for people in their 70s was $420,975, while the median was $92,611
- The average 401(k) balance for people in their 80s was $413,614, and the median was $78,534.
Of course, there's a clear gap between averages and medians here, which likely means that there are a lot of people who have a lot of money in their retirement plans, and they are bringing up the average. The median 401(k) balance provides a more accurate picture.
Unfortunately, if retirees follow the 4% rule, those with the median balance in their 70s would be able to safely withdraw only $3,704.44 per year to live on. That's not a ton of money, especially when you consider that Social Security is only intended to replace 40% of pre-retirement income.
What to do when your 401(k) is too small?
If your 401(k) is too small in your 70s and 80s:
- You could keep working at least part-time if you're able and willing
- You could choose a low-cost-of-living area and keep fixed costs down by downsizing, driving an older used car, and trying to live somewhere walkable or with good public transportation.
Ultimately, the key is to keep a close eye on your budget and just be sure you are not spending outside of your means so you don't drain your savings too fast.
