I was curious to understand how much money the average American has saved for retirement. The information I learned scared the hell out of me and should scare the hell out of you.
If you are long time reader of my work, then you know that there are a couple of things I wholeheartedly believe in. I share this data about traditional or typical retirement age, just because this is the norm.
However, you know that I personally believe you should retire much sooner and that retirement shouldn’t be determined by your age. No. It is determined by a financial number. And the sooner you can get that number the better.
But for the purposes of this post. I will state the facts of a lot of peoples fate when it comes to retirement.
The average person retires at age 65 in America. I actually think this will continue to rise for many reasons over the next decade or so. However, the average social security benefit a person receives in $1,550 a month. I don’t know about you, but this amount of money can barely cover my groceries each month.
The 3 Facts
1 According to data from the Employee Benefit Research Institute (EBRI), the median retirement savings for households near retirement (ages 55-64) in 2019 was $124,831. However, this figure includes both pre-retirees who have traditional defined benefit pensions and those who do not. For households that do not have a pension plan, the median retirement savings was $17,000. These figures suggest that a significant portion of the population may not have enough savings to maintain their standard of living in retirement
2 The Federal Reserve’s Survey of Consumer Finances (SCF) shows that the median retirement account balance for all households in 2016 was $60,000. This figure also includes both pre-retirees with and without pension plans. For households headed by someone between the ages of 55-64, the median retirement account balance was $135,000. These figures suggest that for many households, retirement savings may not be sufficient to maintain their standard of living in retirement.
3 In contrast, a 2020 report by the Center for Retirement Research (CRR) at Boston College found that the average retirement savings for households near retirement (ages 55-64) was $228,900. This figure includes both pre-retirees with and without pension plans. For households that do not have a pension plan, the average retirement savings was $172,000. These figures suggest that many households may have enough savings to maintain their standard of living in retirement.
Regardless of which of these facts you believe the truth is the same. It is pretty dire out there for most people in retirement. Social Security benefits aren’t going to save you either.
So what can you do?
I believe in buying cash flowing assets that appreciate in value. Obviously I am a real estate guy, so I am going to suggest buying income producing real estate first. If they don’t cash flow now for you, that’s okay, if you have some time before you would like to retire, these assets with appreciate over time. But the key is to buy as much as you can.
The key to everything is to start thinking about this now. Most people don’t ever think about it and when it happens they have nothing. You don’t want to be that person. I also don’t want you to live your life in a way that all you do is think about retirement. I want you to enjoy your life now.
Final thought for you. Do you want to be average? You can see above what average is. And it sucks. My guess is you are reading this post because you aren’t average and you don’t ever want to be. Plan your life the way you want it.
We all have the ability to design the life we want. Stop just living the life you think you were dealt and start living the life you want.
To your success and your future.
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