When you're in your 20s or 30s, retirement can easily be pushed to the back burner because it's not as pressing as your daily expenses or obligations. After all, you likely have a few decades of saving and investing ahead of you.
However, the 40s are often a point where people begin prioritizing their retirement savings because the horizon is getting much closer. Everyone's financial situation is vastly different, so a comparison isn't always apples-to-apples. Still, it helps to know where you stand compared to people in your age range to help provide perspective and context.
According to data from the Survey of Consumer Finances released by the Federal Reserve (Fed), the average household retirement savings balance for people aged 45 to 54 is $313,220.
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How you stack up against the median retirement savings
Wealthier people can often skew the average of data points, especially in the 45 to 54 age range, because many people have had at least a couple of decades to save and build up their nest eggs. Someone with a million saved for retirement does a lot more tugging on the average than someone with $50,000 saved.
That's why it's also useful to look at median balances, so you can get an idea of what a more "typical" household has managed to save. According to the same Fed survey, the median household retirement savings balance for people aged 45 to 54 with a retirement account is $185,000.
How much are you going to need in retirement?
Unfortunately, there's no one-size-fits-all number when it comes to how much you'll need in retirement. A lot of that will depend on where you retire and your retirement plans. Want to retire in Florida and travel the world? You'll likely need more than someone who wants to retire in the countryside and simply enjoy their land.
So, even if you're far off from the average or median, don't panic. You still have time to get more aggressive with your retirement savings if you're able to. Even $500 invested monthly could grow to over $95,600 in 10 years if you average 10% annual returns. If you're able to invest $1,000 monthly, it could grow to over $191,200 in 10 years.
The specific investment numbers aren't the sole focus, because they'll vary based on how much you can invest and for how long. However, the more important point is how the power of compound earnings can help pick up some of the slack if you give it time. Since you can begin contributing more to retirement accounts at age 50, you have an extra boost opportunity at your disposal.
