The average person with a retirement plan -- particularly a 401(k) -- has just a little more than $60,000 saved, according to the Employee Benefit Research Institute's May 2012 Retirement Confidence Survey. Depending on your ending salary at retirement, that amount may not be enough to sustain you for the rest of your life, at your current lifestyle. Start saving as soon as possible with at least 12 percent of your income moved to a retirement plan annually to help ensure you'll have enough for a comfortable retirement.
Savings Needed at Retirement
The average retirement age is 62 and the average length of retirement is 18 years. Bankrate.com provides a retirement calculator that enables you to figure out how much you need to have stocked away so that you can have set monthly income after retirement. Based on a 7.5 percent annual percent yield on investments with 2 percent annual inflation over 20 years, Bankrate's calculator determined that you need to have saved $205,243.23 for a $1,000 monthly income in retirement; $410,486.46 for a $2,000 monthly income; and $615,729.70 for $3,000. This is money on top of what you would collect from social security and pensions.
Savings by Age
According to the Employee Benefit Research Institute, workers younger than 35 have an average of $6,000 saved. Those 35 to 44 years old have $22,500 saved on average, and those aged 45 to 54 have just less than $44,000 stowed away. The average 55 to 64-year-olds only have about $65,000 in savings and those 65 and older have saved $56,000.
Retire at 65
People should start saving for retirement as early as possible and try to avoid dipping into their retirement savings early. A new analysis reported by Time says people should aim to have 11 times their final working salary saved to retire at age 65. This is on top of what you expect to get from Social Security.
Income to Savings
To have enough saved, Steve Vernon of CBS Money Watch advises those who start saving at 25 to put away 22 percent of their pay to retire at 62, 15 percent to retire at 65, 12 percent to retire at 67 and 7 percent to retire at 70. People who start at 35 should put 35 percent of their pay into savings to retire at 62, 24 percent to retire at 65, 18 percent to retire at 67 and 11 percent to retire at 70. The older you start saving, a bigger percentage of your income needs to go into savings.
- Good Financial Cent$: Average Retirement Savings by Age – How Does Your Savings Stack Up?
- The Week: How 401(k)s are failing millions of Americans
- Time: Retirement Savings: 11 Times Final Pay is the New Target
- CBS Money Watch: How much should Gen X and Y save for retirement?
- Statistic Brain: Retirement Statistics
- Digital Vision./Digital Vision/Getty Images
- How to Save Money on a Concrete Driveway
- Can Deferred Compensation Be Rolled Into a 401(k)?
- Will Buying Solar Panels Really Save Money?
- What Are the Top 5 Things to Consider When Choosing a Bank?
- What Can We Spend Money on Now to Save Money Later?
- How a Homemaker Saves Money
- How to Pay for My Daughter's College Books
- How to Save Money When You Live Paycheck to Paycheck
- How to Make Money on Savings
- How to Remodel Your Kitchen for $1,000