Average Retirement Savings for Americans by Age

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Maximizing the chance of a comfortable retirement is more important than ever, as predictions suggest that 45 percent of US households will struggle financially in retirement. However, making simple moves can ensure that the vast majority of Americans are not left short in their silver years. Morningstar, an investment research firm, found that the best way to ensure a smooth retirement was to invest in a workplace pension.

The firm reported that 79 percent of Americans who invested in a defined contribution plan, such as a 401(k) or 403(b), and did so for at least 20 years, would have enough money for retirement. Another critical move to secure financial wellness in retirement is determining the right time to stop working. The longer you delay retirement, the better the odds are of having enough money until the end of your life.

According to Morningstar, 45 percent of households that retire at 65 will run out of money. However, if retirement is delayed until age 70, the chances of running out of money drop dramatically to 28 percent.

Investment steps for secure retirement

Social Security benefits, a key pillar alongside a 401(k) for retirement income, begin at age 67 for anyone born after 1960. The Social Security Administration will boost the payment by 8 percent for each year beyond full retirement that you delay claiming, up to age 70. “The model paints a clear picture: Participating in an employer-sponsored defined-contribution plan significantly lowers the risk of retirement shortfalls,” said Spencer Look, associate director of retirement studies for Morningstar.

“Our model not only sets a new standard in retirement research, but we’ll be able to identify actionable insights for policymakers and plan sponsors to improve product design, all with the goal of helping more Americans reach their retirement goals.”

The report also found that some demographics are more at risk of financial hardship in retirement. Approximately 55 percent of single females may be at risk in retirement, compared with 41 percent of couples and 40 percent of single males. While individual savings are crucial, Morningstar emphasized that the findings should prompt the retirement industry to provide more Americans with access to employer-sponsored plans and improve participation rates for those who already have access.

“Plan sponsors should consider adding auto-enrollment and additional features to a plan, such as a student loan match or an emergency savings account, to boost participation,” the report recommended. By participating in a workplace pension, delaying retirement, and advocating for broader access to employer-sponsored plans, Americans can significantly enhance their chances of a financially secure retirement.


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