Retirement is a significant phase of life, and the timing of it varies from person to person.
Some individuals choose to retire in their late forties, while others continue working into their late seventies.
One key factor to consider before retiring is financial preparedness for this stage. Since individuals no longer earn an active retirement income, substantial savings are necessary.
However, data from various sources indicates how many retirees are financially prepared.
Statistics reveal that around 10% of retirees have saved $1 million or more for their retirement.
How Much Does the Average Retiree Save?
The Federal Reserve’s Survey of Consumer Finances data shows that individuals aged 65 to 74 have an average savings of around $426,000, while those aged 75 and older have an average of $357,000 in savings.
This data, from 2019, reveals the retirement savings for different age groups in the U.S. It's evident that these amounts fall significantly below the recommended $1 million for a comfortable retirement.
According to Federal Reserve data, the median savings for people aged 65 to 74 is $164,000, while those aged 75 and older have only $83,000 saved for retirement.
Although the data is from 2019 and may be a bit outdated, it still provides insight into the financial situation of retirees both before and during retirement.
The term "net worth" refers to an individual's total assets compared to their liabilities. Essentially, a retiree's higher net worth indicates that their assets exceed their debts.
Assets considered in calculating net worth include retirement accounts, bank balances, certificate of deposit accounts, savings bonds, stock holdings, unrealized capital gains, and more.
According to data from the Federal Reserve, retirees aged between 64 and 74 years have an average net worth of around $1.2 million.
On the other hand, those aged 75 years and above have a net worth of $958,000.
Many still ask, " Is the supposed $1 million enough for those retiring?"
Is $1 Million Enough for Retirees?
One ongoing debate, even among financial experts, revolves around whether $1 million is sufficient for someone retiring.
The answer to this question is quite subjective and depends on numerous factors. These include the age at which one plans to retire, the desired retirement lifestyle, the expected length of retirement, healthcare and living expenses, and whether one intends to claim social benefits.
By carefully considering these variables, one can gauge whether $1 million will be adequate.