Overview of Retirement Savings in America
The Federal Reserve recently released the findings from its 2022 Survey of Consumer Finances (SCF). This comprehensive report, conducted every three years, provides valuable insights into income, assets, liabilities, and net worth among American households.
While the SCF covers various retirement accounts, many individuals also have additional retirement savings in different investment options. Therefore, those assessing their financial status compared to others should include savings held in certificates of deposit, bonds, and stocks or index funds that exist outside of traditional retirement accounts.
The Median Savings in Retirement Accounts: $87,000
According to the Federal Reserve SCF, retirement accounts encompass individual retirement accounts (IRAs), Keogh accounts, and employer-sponsored accounts such as 401(k) and 403(b) plans. In 2022, approximately 54% of SCF participants reported having balances in these retirement accounts.
The following breakdown illustrates the conditional median retirement account balance among American households, excluding those without retirement accounts. The data is organized by the age of the reference person, defined as the male in mixed-sex couples or the older individual in same-sex couples.
Conditional Median Retirement Account Balances by Age
Here’s how the median savings in retirement accounts varies 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
The data reveals that American households have a median retirement account balance of $87,000, meaning half of the households have more and half have less in their retirement accounts.
As anticipated, the median retirement account balance tends to rise with age, peaking in the 65 to 74 age group before tapering off as retirees begin to withdraw funds. This pattern is consistent across other asset types discussed in this report.
The Median Savings in Certificates of Deposit (CDs): $26,000
Certificates of deposit, or CDs, are fixed-income investments offered by banks and credit unions. They yield a predetermined interest rate over a specified period and must be cashed out or renewed when they mature. In 2022, around 7% of SCF participants indicated they had money invested in CDs.
Conditional Median CD Balances by Age
The median savings in CDs, categorized by age, are 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 findings suggest that for households with CDs, the median balance is $26,000.
The Median Savings in Bonds: $211,000
Bonds, which are debt securities, provide a fixed interest rate until they mature. Only 1% of SCF participants reported owning bonds in 2022.
Conditional Median Bond Values by Age
Among American households that own bonds, the median investment value is 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 indicates that bond investors have reported a median value of their investments at $211,000.
The Median Savings in Stocks: $15,000
Stocks are 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 by age group 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 shows that the median account value for households that own stocks is $15,000.
The Median Savings in Pooled Investment Funds: $150,000
Pooled investment funds include bond funds and stock funds, such as mutual funds, index funds, and real estate investment trusts. Approximately 12% of participants had investments in pooled funds in 2022.
Conditional Median Values of Pooled Investment Funds by Age
For those who own 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 indicates that for households involved in pooled investment funds, the median value is $150,000.
In conclusion, while the statistics may be concerning for some, they also highlight areas for potential improvement. By practicing smart budgeting and making informed investments, individuals can enhance their net worth and strengthen their retirement savings. The path to success requires both 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 $87,000, reflecting a variety of savings across different demographics.
How does age influence retirement savings?
Age plays a significant role in retirement savings, with older individuals generally having higher balances due to longer investment periods.
What percentage of Americans have retirement accounts?
What are the average savings in CDs for Americans?
The median savings in certificates of deposit (CDs) stands at $26,000, with notable variations based on age.
How are retirement savings categorized?
Retirement savings are categorized into various asset types, including stocks, bonds, CDs, and pooled investment funds, with detailed breakdowns available for each demographic group.
