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How Does Your Retirement Savings Compare to Your Peers?

| June 14, 2017
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Do you ever look in the mirror and wonder, where did all those gray hairs come from? Or, better, where did all my hair go? Whether you like to admit it or not, time passes, and we are all getting older.

One thing you are probably thinking about more and more these days is retirement. Whether you’re on the cusp of retirement, or just realizing that you have a decade or so left to save, you should think seriously about your retirement prospects.

How much have you managed to save so far? How do you know how much is enough? How much do other people your age have saved? These are all good questions, so let’s take a look at them.

How Do Your Savings Compare?

Whether you think you’re on top of things or way behind, you may be surprised by what statistics show about retirement savings. Let these numbers serve you as a pat on the back or a kick in the pants.

Households Age 55-64

If you have at least $25,000 saved, you’re in the top 45% of households age 55-64, according to a May 2015 Retirement Security report from the U.S. Government Accountability Office. If you have anything at all saved, even $1, you are doing better than 41% of those surveyed.

It will take a lot more than $25,000 to survive in retirement, so what do those people plan on doing? They will have to rely on Social Security and pensions for those who have them. Otherwise, they will have to depend on family and friends for support.

Table 1 lays out the resources that households in this age group have available to them, separated by those with retirement savings and those without. How do you compare?

For those without retirement savings, it doesn’t look like they have a lot to fall back on. Low incomes, low net worth, and only a third of them have pensions. It looks like these people will have a tough road ahead of them in retirement.

The other group is doing better, but their numbers aren’t that impressive either. They have high homeownership rates, but most of them still carry a mortgage. The average retirement savings are only about $104,000. Because this group includes everyone with from $1 to $10 million saved, it would be helpful to break them down further. Table 2 does just that.

In this age group, it seems that only the very top savers are ready for retirement. Most of them are still working, though. What about those a decade older? How do you compare to those who have already reached retirement?

Households Age 65-74

After looking at the previous numbers, it shouldn’t come as any surprise that over half of the households in this cohort have no retirement savings. Many who had just a little bit have already spent it all. Here is a chart showing the exact same information as the previous age bracket. 

We can see that median net worth has greatly increased, fourfold for those with no savings. That’s good news. Homeownership rates are much higher as well. How do the savings break down for those that have saved?

Surprisingly, the median amount saved is not significantly higher than among households aged 55-64. It only increases from $104,000 to $148,000. The lower percentiles nearly double their savings. Where do you fall? If you’re in the 90th percentile, you’re sitting pretty and probably don’t have anything to worry about in retirement. But what about the lower percentiles?

It doesn’t take a whole lot of savings to look good relative to your peers. But how are your savings relative to your current lifestyle? Will you have enough to live the life you want or do you need to double down and save more?

Do You Have Enough Saved?

No matter how you compare to your peers, you need to figure out how your savings compare to the cost of the retirement you want. There are a lot of online retirement calculators available, but they are generic and don’t take into account all the factors that will impact your personal situation.

The only way to have a clear idea of what you’ll need to retire comfortably is to have a financial advisor run a thorough analysis. A professional will utilize technology to show you different possible retirement outcomes and how to prepare for both the good and the bad.

How We Can Help

You may think that if you don’t have much saved you don’t have enough to work with an advisor. The truth is, you can’t afford not to work with an advisor. You need to build wealth and partnering with an experienced professional is the best way to do that.

At DeLong & Brower, we provide retirement consulting and can do an expert analysis unique to your personal situation. Don’t keep yourself up at night wondering if you will have enough to retire on. Call us today at 616-396-0500 or email  joel.johnson@ceterafs.com to set up your complimentary consultation. Retirement is coming. Let us give you the peace of mind that comes from knowing where you stand and what you still need to do to achieve the retirement of your dreams.

About Joel

Joel Johnson, AIF® is an Investment Advisor Representative with DeLong & Brower, P. C., a Holland, Michigan accounting, retirement consulting, insurance, and financial services firm. He specializes in providing comprehensive wealth management and retirement plan consulting for individuals, families, retirees, and business owners. Along with more than 15 years of industry experience, Joel is an Accredited Investment Fiduciary® and Chartered Federal Employee Benefit Consultant. To learn more, visit www.cpaholland.com.

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