Most people know that saving money for the future is important, but it’s unclear exactly how much you should save. Some financial experts recommend saving enough to cover six months of expenses, while others urge you to save 15 percent of your income.
Not to mention, the amount of savings you need widely varies by age since those nearing retirement require more savings than young people who have just entered the workforce.
Below, we’ve investigated Americans’ average savings by age, income, and education level to give you a better understanding of how much money you might expect to have saved at each chapter of your life.
How Much Does the Average American Have in Savings?
Savings is defined as income that has not yet been spent. Although savings can include investments, in this article, we’ll be referring to savings as money held in transaction accounts, such as a checking account, savings account, or money market accounts. Keep in mind that this number doesn’t include other assets that may contribute to your net worth.
According to the Federal Reserve Board’s most recent Survey of Consumer Finances, the median transaction accounts balance of all families in 2019 is $5,300 and the average balance is $41,600.
In the chart below, we’ve organized the Americans’ average savings by age. Although there are some exceptions, you can see that the amount of savings tends to rise with age.
| Age | Median account balance | Average account balance |
|---|---|---|
| Less than 35 | $3,240 | $11,250 |
| 35 to 44 | $4,710 | $27,910 |
| 45 to 54 | $6,400 | $48,200 |
| 55 to 64 | $5,620 | $57,670 |
| 65 to 74 | $8,000 | $60,410 |
| 75 or older | $9,300 | $55,320 |
Average Savings by Age 25
While the Federal Reserve doesn’t provide specific data for individuals in their twenties, those under 35 have a median of $3,240 and an average of $11,250 saved in transaction accounts. If you’re in your twenties, you may have less than those numbers, especially if you’ve just graduated from college and entered the workforce.
Although it’s not uncommon to have little savings in your twenties, this is the time to develop healthy financial habits that open up opportunities for your future self. Be sure to start contributing to investment accounts if you can to take advantage of the benefits of compound interest, which allows you to earn interest on interest and grow your money over time.
Tips for saving money in your 20s:
- Build an emergency fund: Most financial professionals agree that you should aim to save enough to cover three to six months of expenses.
- Start saving for retirement: Experts recommend that individuals in their twenties invest 15% of their pretax income in a 401 (k) or similar retirement account.
- Prioritize paying off debt: Get ahead of paying off debt to avoid incurring high amounts of interest.
- Consider your lifestyle goals: While some people dream of owning a house, others prefer to rent. Take this time to consider your future goals and how you prefer to spend your money.
Average Savings by Age 30
As mentioned above, the median account balance among those under 35 is $3,240, and the average balance is $11,250.
By this age, you may have been working for a few years, receiving salary increases that allow you to increase your savings. However, you may also have more expenses than you did previously, especially if you have fallen victim to “lifestyle creep”—a phenomenon that involves increasing your spending as your income increases.
Tips for saving money in your 30s:
- Aim to have one year’s salary in savings: Many financial experts recommend having one year’s salary saved by the time you’re thirty. Since this is a difficult goal to achieve for most, you may also consider working toward it during your thirties.
- Take steps to avoid lifestyle creep: Set positive financial habits like sticking to a budget, paying yourself first, and avoiding impulse buying to prevent lifestyle creep.
- Increase your emergency fund: As your expenses increase, be sure you are maintaining three to six months of expenses in your emergency fund.
- Diversify your investments: Invest in various stocks and bonds to diversify your investment portfolio.
Average Savings by Age 40
Individuals aged 35 to 44 have a median of $4,710 and an average of $27,910 in transaction accounts.
For most Americans, your forties are when you reach peak earning potential. At the same time however, expenses may start to rise, especially if you’ve purchased a home or started a family. Saving money during this period of time is crucial if you wish to retire on time.
Tips for saving money in your 40s:
- Pay off all credit card debt: By the time you reach age 40, aim to pay off your credit card balances.
- Consider financial planning: You may choose to hire a financial planner who can help you develop a plan to reach your financial goals.
- Increase your retirement savings: If you plan to retire in your sixties, your forties are the midway point, so it’s important to make sure you’re on track and ramp up your savings if needed.
- Re-evaluate your future goals: Your forties are the perfect time to reevaluate your goals. Whether you want to buy a house, fund a renovation, or retire early, you’ll need to plan for those milestones.
Average Savings by Age 50
Americans ages 45 to 54 have an average of $48,200 and a median of $6,400 in savings.
At age fifty, you may begin to feel more financially comfortable. With retirement approaching in the next decade or so, now is the time to ramp up savings and pay off all debt. Consider maxing out your retirement contributions every year to boost your savings.
Tips for saving money in your 50s:
- Cut down on spending: You may have more money on-hand in your fifties, especially if your kids are out of the house. Take this opportunity to save more and spend less.
- Max out your retirement contributions: When you hit 50, you can now contribute up to $7,5000 to an IRA or $7,500 more above the normal contribution limit to a 401(k).
- Pay off your mortgage: Prioritize paying off your mortgage and becoming completely debt-free.
- Iron out your retirement plans: While you may have already been preparing for retirement in the past couple of decades, your fifties are the time to create a concrete plan of exactly when you aim to retire.
Average Savings by Age 60+
Individuals ages 55 to 64 have an average of $57,670 and a median of $5,620 in savings. Meanwhile, those between the ages of 65 and 74 have an average of $60,410 and a median of $8,000 saved. Finally, seniors ages 75 or older have an average of $55,320 and a median of $9,300 in transaction accounts.
By age 60, you may be nearing retirement. During retirement, managing your finances may look different as your focus shifts from growing your finances to saving them. Although you definitely want to enjoy your retirement, it’s also important to stick to a budget to make sure your funds last.
Tips for saving money in your 60s:
- Consider lowering your cost of living: Whether it’s downsizing your home or selling a vehicle, there are lifestyle changes you can make to reduce your spending.
- Look into relocating to a tax-friendly state: Residing in a tax-friendly state with a lower cost of living can save you thousands of dollars throughout retirement.
- Take advantage of senior discounts: Many companies offer senior discounts that can help stretch your budget during retirement.
- Delay collecting Social Security benefits: Keep in mind that your benefit increases each year that you delay collecting Social Security until age 70.
Average Retirement Savings by Age
In addition to saving money in transactional accounts, it’s also important to save specifically for retirement. The following chart outlines how much the average American has in retirement savings organized by age. As you can see, retirement savings grow with age, and then seem to plateau around age 55 to 64. This is likely due to the fact that the average retirement age among retirees is 61, according to Gallup Research.
By looking at this chart, you can get a sense of if you’re on track with your retirement goals.
| Age | Median account balance | Average account balance |
|---|---|---|
| Less than 35 | $13,000 | $30,170 |
| 35 to 44 | $60,000 | $131,950 |
| 45 to 54 | $100,000 | $254,720 |
| 55 to 64 | $134,000 | $408,420 |
| 65 to 74 | $164,000 | $426,070 |
| 75 or older | $83,000 | $357,920 |
Average Savings by Income
In addition to age, Americans’ average savings vary due to other factors, such as income. As seen in the following data, those with higher income levels are able to save more. The most significant difference in savings is between individuals who earn between $80,000 and $89,999 and those who make between $90,000 and $110,000.
| Income | Median account balance | Average account balance |
|---|---|---|
| Less than $20,000 | $810 | $8,400 |
| $20,000 to $39,999 | $2,050 | $11,260 |
| $40,000 to $59,999 | $4,320 | $16,390 |
| $60,000 to $79,999 | $10,000 | $28,689 |
| $80,000 to $89,999 | $20,000 | $51,840 |
| $90,000 to $100,000 | $70,000 | $229,030 |
Average Savings by Education Level
There is also a correlation between average savings and education level. The chart below shows that the largest difference in savings is between those who completed some college and those with a college degree. This is likely due to the fact that a college degree is required for many high-paying careers.
| Education level | Median account balance | Average account balance |
|---|---|---|
| No highschool diploma | $1,020 | $9,190 |
| High school diploma | $2,500 | $20,100 |
| Some college | $3,900 | $23,550 |
| College degree | $15,400 | $78,890 |
The Importance of Saving Money
Saving money ensures that you’re prepared for the future. Not only does it give you peace of mind, saving money allows you to have more choices regarding your lifestyle. Whether you’re saving to make a big purchase or wish to travel the world, your savings can help you reach your goals.
Not to mention, it’s important to save for an emergency. That way, you have a sense of security in the event an unexpected expense occurs, such as a home repair, job loss, or injury.
How to Budget and Save Money for the Future
Now that you know the importance of saving your money, we’ve outlined some tips to help you get started below:
- Follow a budget. Create a budget to make sure you’re prioritizing saving and cutting down on excess spending.
- Set aside money automatically. Set up your bank account to automatically transfer a certain amount of money into savings each month.
- Consolidate and pay down debt. Consolidate your debt into one loan and work on paying it off so you can focus on saving money.
- Diversify your savings. In addition to saving money in a transaction account, diversify your savings by investing in stocks, bonds, or real estate.
- Connect with a financial expert. A financial adviser can provide you with personalized advice on how to manage your financial assets.
- Maintain a good credit score. A high credit score can save you money on interest and allow you to qualify for better terms.
Saving money is important for fostering financial stability while giving you opportunities to reach your personal goals. Although your financial priorities may fluctuate during different stages of life, it’s never too late to start making positive financial decisions. Start by checking your credit score for free today.
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