In 2022, almost half of American households had no savings in retirement accounts, according to the Survey of Consumer Finances (SCF). These accounts include individual retirement accounts; Keogh accounts; certain employer-sponsored accounts, such as 401(k), 403(b), thrift savings accounts; and pensions.
Personal saving has grown more important as employers have shifted away from defined benefit plans, or pensions, putting more of the responsibility on workers to plan for retirement. In 1989, half of working households ages 50 to 60 had a defined benefit plan. In 2022, only a quarter did.
How much do people save for retirement?
In 2022, about 46% of households reported any savings in retirement accounts. Twenty-six percent had saved more than $100,000, and 9% had more than $500,000.
These percentages were only somewhat higher for older people. Those ages 50 to 54 were the most likely to have a retirement account. About 63% in this age group had any savings, and 35% had saved more than $100,000.
Households with more than $0 saved for retirement, by age
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Retirement savings accounts are not the only place that people could store money for retirement. Is it possible that people are primarily saving their money elsewhere?
Who has more than $0 in these types of accounts?
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Retirement Savings
e.g. IRA, Keogh, pensions
Checking and Savings
Including money market accounts
Financial Assets
e.g. Liquid assets, stocks, bonds
Net Worth
All assets minus debt
Most American households have at least $1,000 in checking or savings accounts. But only about 12% have more than $100,000 in checking and savings. About 45 percent of the households nearing retirement age have that amount of financial assets, including checking and savings accounts,retirement accounts, stocks, bonds, and certificates of deposit.
Higher percentages of households have a net worth of at least $100,000, especially as they grow older. Net worth includes non-liquid assets, such as a vehicle or house, that would have to be sold to provide income.
Even including these assets, many Americans appear to be set up to depend heavily on Social Security benefits after they stop working. Workers currently younger than 63 are eligible for full Social Security retirement benefits at 67. The average yearly Social Security benefit is currently about $22,000.
How do your retirement savings compare to others?
Households with higher incomes have more saved no matter what is counted as retirement savings.
How do your savings compare to other households?
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At 30 to 34 years old, median retirement savings was$4.7K.
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The median household between the ages of 30 and 34 had $4,700 in dedicated retirement accounts, $7,000 in checking and savings accounts, $20,100 in financial assets, and a net worth of $89,800. (In the surveys, the age of the household reflects the male’s age in mixed sex couples and the older individual in same-sex couples.)
At ages 55 to 59, the median household had $24,500 in retirement accounts, $7,900 in checking and savings accounts, $76,000 in financial assets, and a net worth of $320,700.
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Sources & Footnotes
Survey of Consumer Finances
Last updated
October 18, 2023
As an enthusiast deeply immersed in financial literacy and retirement planning, I'll dive into the provided article, shedding light on the concepts mentioned:
Retirement Savings Landscape in 2022:
1. Survey of Consumer Finances (SCF):
- The data cited in the article is derived from the SCF, a triennial survey conducted by the Federal Reserve, providing comprehensive insights into the financial status of American households.
2. Types of Retirement Accounts:
- The article mentions various retirement accounts, including individual retirement accounts (IRA), Keogh accounts, employer-sponsored accounts like 401(k) and 403(b), thrift savings accounts, and pensions.
3. Evolution of Retirement Planning:
- The shift from defined benefit plans (pensions) to individual responsibility is highlighted. In 1989, half of working households ages 50 to 60 had a defined benefit plan, but by 2022, only a quarter did.
4. Savings Statistics:
- In 2022, almost half of American households had no savings in retirement accounts.
- Only 26% had saved more than $100,000, and 9% had accumulated over $500,000 in retirement savings.
5. Age-Related Patterns:
- The article explores age-related trends. For instance, those aged 50 to 54 were most likely to have a retirement account, with 63% having some savings, and 35% saving more than $100,000.
Alternative Avenues for Savings:
1. Diversification of Savings:
- The article raises the question of whether people are primarily saving money elsewhere besides dedicated retirement accounts.
2. Financial Assets Beyond Retirement Accounts:
- The inclusion of checking and savings accounts, money market accounts, stocks, bonds, and certificates of deposit in the broader category of financial assets is discussed.
3. Net Worth:
- The concept of net worth, encompassing all assets minus debt, is introduced. It is highlighted that many Americans, even with non-liquid assets like vehicles or homes, might heavily rely on Social Security benefits in retirement.
Dependence on Social Security:
1. Social Security as a Primary Income Source:
- With statistics indicating that the average yearly Social Security benefit is around $22,000, the article suggests that a considerable number of Americans might heavily depend on these benefits after retirement.
2. Income Disparities:
- A comparison is drawn between households with higher incomes and their increased savings across various categories.
Comparative Analysis of Savings:
1. Median Savings Across Different Age Groups:
- A comparative analysis of median savings at different age ranges is presented, emphasizing retirement savings, checking and savings accounts, financial assets, and net worth.
2. Age-Related Median Savings:
- Noteworthy figures include a median retirement savings of $4,700 for those aged 30 to 34 and $24,500 for those aged 55 to 59.
Additional Information:
1. Data Sources and References:
- The article cites the Federal Reserve and the Survey of Consumer Finances as the primary sources of information. The last update was on October 18, 2023.
2. Social Security Eligibility Age:
- It's mentioned that workers currently younger than 63 are eligible for full Social Security retirement benefits at 67.
In conclusion, the data presented in the article paints a comprehensive picture of the retirement savings landscape in 2022, highlighting the evolving nature of retirement planning, the role of different savings instruments, and the potential reliance on Social Security benefits for a significant portion of the population.
