Overview of Retirement Savings in America
The Federal Reserve conducted its latest Survey of Consumer Finances (SCF) in 2022 and published the results recently. This triennial report offers an extensive examination of income, assets, liabilities, and net worth across American households.
In terms of assets, the SCF details various retirement accounts, but many individuals hold additional retirement savings in different investment vehicles. Thus, those looking to evaluate their financial standing against peers should also consider savings kept in certificates of deposit, bonds, as well as stocks and index funds that are maintained outside traditional retirement accounts.
The Median Savings in Retirement Accounts: $87,000
The Federal Reserve SCF classifies retirement accounts as including individual retirement accounts (IRAs), Keogh accounts, and employer-sponsored accounts like 401(k) plans and 403(b) plans. Around 54% of SCF participants had balances in retirement accounts in 2022.
The following presents a breakdown of the conditional median retirement account balance among American households, excluding those without retirement accounts. The information is categorized by the age of the reference person, defined as the male in mixed-sex couples or the older person in same-sex couples.
Conditional Median Retirement Account Balances by Age
Here is the median savings in retirement accounts segmented by age:
- Less than 35: $18,880
- 35-44: $45,000
- 45-54: $115,000
- 55-64: $185,000
- 65-74: $200,000
- 75 and older: $130,000
- All households: $87,000
It is clear from the data that American households reported a median retirement account balance of $87,000, meaning half of households had more and half had less in their retirement accounts.
As expected, the median retirement account balance increased with age, peaking in the 65 to 74 age group before declining thereafter as retirees start withdrawing funds. This trend is reflected in other asset types covered in this report.
The Median Savings in Certificates of Deposit (CDs): $26,000
Certificates of deposit, commonly referred to as CDs, represent fixed-income investments offered by banks and credit unions. They pay a predetermined interest rate over a specific timeframe and must be cashed out or renewed upon reaching maturity. Approximately 7% of SCF participants reported having money invested in CDs in 2022.
Conditional Median CD Balances by Age
The median savings in CDs, segmented by age, is as follows:
- Less than 35: $10,000
- 35-44: $10,000
- 45-54: $14,000
- 55-64: $25,000
- 65-74: $53,000
- 75 and older: $33,000
- All households: $26,000
The data indicates that for households owning CDs, the median balance stood at $26,000.
The Median Savings in Bonds: $211,000
Bonds, as debt securities, provide a fixed interest rate until maturity. Only 1% of SCF participants indicated owning bonds in 2022.
Conditional Median Bond Values by Age
Among American households that owned bonds, the median investment value was as follows:
- Less than 35: $20,000
- 35-44: $45,000
- 45-54: $265,000
- 55-64: $400,000
- 65-74: $322,000
- 75 and older: $236,000
- All households: $211,000
This suggests that bond investors reported a median value of their investments at $211,000.
The Median Savings in Stocks: $15,000
Stocks ranked as the second-most commonly held asset with 21% of participants reporting ownership in the recent SCF.
Conditional Median Stock Values by Age
The median savings in stocks varies across age groups as follows:
- Less than 35: $2,500
- 35-44: $12,000
- 45-54: $11,000
- 55-64: $30,000
- 65-74: $65,000
- 75 and older: $100,000
- All households: $15,000
This indicates that the median account value for households owning stocks stood at $15,000.
The Median Savings in Pooled Investment Funds: $150,000
Pooled investment funds comprise bond funds and stock funds, including mutual funds, index funds, and real estate investment trusts. About 12% of participants had investments in pooled funds in 2022.
Conditional Median Values of Pooled Investment Funds by Age
For those owning pooled investment funds, the median balance is:
- Less than 35: $24,000
- 35-44: $80,000
- 45-54: $175,000
- 55-64: $300,000
- 65-74: $250,000
- 75 and older: $356,000
- All households: $150,000
This shows that for households involved in pooled investment funds, the median value reached $150,000.
In summary, while the statistics might be disheartening for some, they also present an opportunity for improvement. With thoughtful budgeting and wise investments, one can enhance their net worth and bolster their retirement savings. The keys to success lie in commitment and patience.
Frequently Asked Questions
What is the median retirement account balance in the U.S.?
The median retirement account balance in the U.S. is reported at $87,000, indicating a mix of savings across demographics.
How does age influence retirement savings?
Age significantly impacts retirement savings, with older age groups typically holding higher balances as they have invested over more years.
What percentage of Americans have retirement accounts?
About 54% of survey participants reported having money invested in retirement accounts in 2022.
What are the average savings in CDs for Americans?
The median savings in certificates of deposit (CDs) is reported at $26,000, significantly varying with age.
How are the retirement savings categorized?
Retirement savings are categorized across various asset types, including stocks, bonds, CDs, and pooled investment funds, with detailed breakdowns available for each demographic.
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