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Average Savings by Age: What the Numbers Say

Written by Banks Editorial Team
8 min. read
Written by Banks Editorial Team
8 min. read

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When you retire, you will have to lean on your savings to cover living expenses. Well, before you retire, savings can still have an impact. For example, you can use the money you store to buy a home, plan a vacation, or build up an emergency fund. So it’s no wonder many people encourage others to save.

While many people preach saving money as a way to build wealth, some people save more than others. Each person has a different financial situation, but consumers tend to have larger savings accounts as they get older. We don’t have to guess average savings because the Federal Reserve compiles this data. Every three years, the Federal Reserve conducts a survey that gives us an inside look at the average savings account by age. 

We will use numbers from the Fed’s 2019 Survey of Consumer Finances (SCF). New Federal Reserve data will come out in its 2022 Survey of Consumer Finances. The Fed began conducting this survey in March 2023 and will release the results in late 2023. This report will provide a glimpse into how savings accounts have changed since the pandemic. Reviewing averages from the 2019 report will give you a benchmark and help you understand if you are moving at a good pace or need to ramp up your savings goal to hit the average savings number for your age group.

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The Importance of Saving

Having more money increases our possibilities. Vacations, homes, and cars all cost money, and you will need enough money to cover the cost of living when you retire. Not having enough funds reduces your choices and can create other problems. Worrying about not having enough money can hurt your sleep, self-esteem, and happiness. These fears can also lead to depression and tension in your relationships. 

Every dollar you save minimizes financial stress and gives you more choices. It’s easier to spend money on things you want now, but it’s more rewarding to store it in the bank and invest.

How Much Should You Save Each Month?

Each person has different capacities to save based on their income and expenses. Ideally, you should save at least 20% of your income. However, some people may have to trim their expenses to save 20% of their income. Many banking apps have features that let you track your spending. This information can guide you on the path of saving money. You may discover an unused subscription or a frequent purchase that doesn’t need to be in your budget anymore. Discovering ways to lower your monthly budget will help with savings. It’s a good idea to look at ways to improve your situation before checking out averages. Once you make some progress, look at the average savings account by age. These numbers will set benchmarks and give you the inspiration to increase your income and minimize expenses. Then, you can calculate how much money you need to save each month to keep on the right pace to achieving key benchmarks.

Average Savings by Age in the U.S.

Many Americans add to their savings accounts, especially as they get closer to retirement and big-ticket purchases. You can use these average savings account balances as a benchmark for your finances to see if you are in line, above average, or need to increase your savings to reach the average savings amount.

Average Savings by 30

The average savings by 30 is $11,250. The median balance is $3,240.

Your 20s are some of the best years to make money and save accordingly. People complete their highest educational level before reaching this point. Some have a college degree, while others stopped at high school. American households with college degrees tend to earn more money, but high school graduates can also explore compelling career opportunities earlier.

People in this age group start saving up for big purchases like a house and car. Young adults obtain higher-paying jobs during these years and can make meaningful contributions to their savings accounts. Student loans and other costs may restrict them, but having a salary gives them the financial means to cover their expenses. 

Some people let their 20s slip away without thinking about retirement goals and building up their savings. It’s okay to spend money and have fun, but having savings objectives will help you now and later in life. Most people aren’t raising families in this age bracket, and if they do, it’s usually in their late 20s.

Average Savings by 40

The average savings by 40 is $27,900. The median balance is $4,710.

Another decade of earning at work gives this group more money to save. This is a recurring theme as we reach older age groups. People have more opportunities to save money, and big purchases can be on the way. Some plan for travel, while others are saving money for their child’s future college education. Some people in their 30s think about retirement. More people think of retirement savings as they get older, which explains the surge in savings for the 50-year-old group, which we will cover soon. People approaching their 40s may also leave money aside for an emergency fund as a backup.

Average Savings by 50

The average savings by 50 is $48,200. The median balance is $5,620.

The average retirement savings account jumps by over $20,000 between 40-year-olds and 50-year-olds. Inflation has been in the headlines for over a year and prompting more people to save money, but it’s always present in the economy. The Fed believes an annual 2% inflation rate is healthy for the economy. This continuous inflation means consumers will notice more goods becoming more expensive as they get older. These rising costs may make people more cautious about having enough for retirement. Some people in this age group may seek help from financial advisors at this point to prepare for retirement.

Average Savings by 60

The average savings by 60 is $57,800. The median balance is $6,400.

At this stage, almost everyone is thinking about retirement and social security benefits. Some people in this age group will scramble in their 50s to accumulate as much cash as possible. That’s why individual retirement accounts have catch-up programs for people over 50 years old. The IRS adjusts maximum contribution limits from time to time, but people who are over 50 years old can usually contribute an additional $1,000 to their IRAs each year. 

This catch-up program can partially explain the increase in median retirement savings, but it’s also in part because retirement has become more realistic. Most people in their 20s do not think about retirement because they have many years ahead of them. However, when people get closer to reaching 60, the thought of retirement grows. Many Americans retire in their mid-60s or hope to retire at that age. Some people want to work for their entire lives, but a medical event or something similar can cut your working years short.

Sign up for Current - The future of mobile banking
Earn 4.00% APY on your savings. No overdraft fees/hidden fees. Get paid up to two days faster with direct deposit. Earn up to 15x the points on swipes.

How to Maximize Your Savings

Increasing your income gives you more savings opportunities, but raising your annual income isn’t the only way to grow your savings account. Making more money can hurt your finances if you inflate your lifestyle based on your annual salary. Lifestyle inflation can increase your debt and lead you into a precarious position, especially if your income takes a hit. This lifestyle creep explains why many people with 6-figure incomes still find themselves living paycheck to paycheck and behind on their retirement plans. 

While it’s great to make income, it takes time to get job opportunities and side hustles that increase your earnings. On the other hand, we can immediately address our expenses and become more effective at managing our money. Mastering these core components will help you save more of what you earn. In addition, you can incorporate these strategies to maximize your savings.

Set Your Savings Goals and Financial Priorities

Long-term goal setting gives you a target and refines your focus. Having savings goals for the month, year, and other intervals will make you more conscious of every dollar you spend. You can set goals around emergency savings, retirement planning, and other objectives. Creating goals for multiple areas of your life helps you become more intentional with how you save money and provides more benchmarks. Goals inspire us to take action and address our financial priorities.

Track Your Spending

Tracking your spending can help you save money, especially if you have never done it before. Many consumers underestimate how each subscription and habitual purchase eat into their savings. A Netflix subscription won’t break the bank, but paying for several subscriptions adds up. You may have forgotten about some of your subscriptions and no longer have a need for them. If you use your credit card for your purchases, reviewing the monthly statement can help you stay on top of expenses. You can also look at your checking account’s transactions to see what happens to your money. Many banks have resources that lay out your expenses and put each purchase into a spending category.

Learn to Budget and Manage Your Finances

Budgets act as the safety brakes for our finances. Spending within the confines of a budget teaches money management and can increase your savings. The 50/30/20 Rule encourages people to spend 50% of their income on necessities, 30% of their income on wants, and 20% on savings. Some people minimize how much they spend on wants to grow their savings quicker. You can swap the percentages so that 30% of your income goes towards savings while 20% of your income goes towards wants. Making this decision early will compound your savings quicker and give you more flexibility when you retire.

Pay Off Your Debts

Building up your emergency savings and keeping the long term in perspective will help with any retirement planning. However, building up your bank accounts without addressing debt can create issues in the future. Any unpaid debt will accrue interest and become more difficult to pay off. The debt snowball can catch many people by surprise and wipe out the money you have saved for retirement.

Prioritizing debt repayment helps you avoid that scenario and strengthens your financial plan. Making a second mortgage payment each month, eliminating credit card debt, paying off student loan debt, and avoiding high-interest loans will reduce your financial stress and keep your expenses low. Having less debt will also improve your credit score and help you qualify for better loans. This advantage will become crucial if you apply for a mortgage or auto loan. You can also use the higher credit score to refinance your existing debt and reduce your monthly payment. It’s possible to save hundreds of dollars each month if you can secure a lower interest rate.

Invest Your Money

People work for several decades to earn money. A good paycheck can speed up your path to retirement, but you should also have some of your money work for you. Investing your money into various assets, such as stocks and crypto, will help you earn higher returns on your investments. A 10% gain on $100,000 in savings adds an extra $10,000 to your accessible funds. Most people have to work for a few extra months to have access to an additional $10,000.

Returns vary with investments, and it is a good idea to pick investments based on your risk tolerance. Younger investors usually accumulate growth investments, while older investors focus on safer assets like bonds and blue-chip dividend stocks. Setting a monthly contribution goal for your portfolio can keep you on target and strengthen your money management.

Automate Your Savings

Will you remember to invest in your portfolio each month? What about moving money from your checking account to your savings account? Mobile banking apps can automate your investing, so you don’t have to remember. You can select which stocks, ETFs, or other investments to buy with your money and set up automatic transfers.

Automating your savings can also keep you away from your portfolio. While it may seem counterintuitive to ignore your portfolio, you also don’t want to spend too much time in your portfolio. An automated approach may make bear markets more manageable since you don’t see the day-to-day fluctuations in your portfolio. Of course, it’s good to stay on top of your investments, but checking your portfolio each month instead of every day can save a lot of time and stress. You can also keep emotions at bay when looking at an investment’s long-term potential.

Buy Used Products

Consumers can choose from many iPhone models, but many of the recent releases have the same core features. An older iPhone model may look slightly different from a newer model, but you can still make calls, download your favorite apps, take great pictures, and browse the internet. New products may be slightly fancier, but they also command much higher prices.

Opting for used products instead of new ones can provide similar, if not identical, utility. However, you also save hundreds of dollars if you get an older iPhone model compared to a new one. You can also save money on books, but the savings aren’t as dramatic. Still, every dollar adds up, and you can save thousands of dollars in the long term.

While buying used books and smartphones will lower your bill, few purchases will impact your savings as much as getting a used car. Opting for an older model with some mileage on it can save you well over $10,000. You might even save over $20,000 buying a used car depending on the model and how much the latest car costs. When buying used cars, you should pay close attention to the vehicle’s condition. A poorly maintained used car can become more expensive than a new one, but there are plenty of old cars with similar functionality as new cars. The price gap is quite extraordinary and can help with your financial goals.

Sign Up for a High-Yield Savings Account

Most savings accounts offer interest rates so low that they’re not worth mentioning. These low-interest rates aren’t encouraging, and your money will grow at a snail’s pace. However, you can put your funds in a savings account with a better yield. You can save money in your Current account and receive 4% APY without touching your cash. That rate of return is better than most bonds, and you can access your cash at any time.

The high-yield savings account isn’t the only thing that makes Current special. The fintech company has features that help you save money, build a diversified portfolio, and stay safe from overdraft fees. You can open a bank account with Current by visiting their website or downloading the mobile app.

Sign up for Current - The future of mobile banking
Earn 4.00% APY on your savings. No overdraft fees/hidden fees. Get paid up to two days faster with direct deposit. Earn up to 15x the points on swipes.

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