Advise Financial

The retirement of immigrants and how to break the cycle of poverty
¿Cómo va tu ahorro para el retiro a tu edad?
12 de August de 2022
The Hispanic Retirement Crisis Is IRA the Solution?
La crisis de las jubilaciones en los Hispanos ¿IRA es la solución?
26 de August de 2022
The retirement of immigrants and how to break the cycle of poverty
¿Cómo va tu ahorro para el retiro a tu edad?
12 de August de 2022
The Hispanic Retirement Crisis Is IRA the Solution?
La crisis de las jubilaciones en los Hispanos ¿IRA es la solución?
26 de August de 2022

How are your retirement savings going at your age?

For the past 32 years, the Employee Benefits Research Institute has asked more than 2,600 active workers in retirement the question:

How confident are they about their quality of retirement or retirement? And it is striking that:

“7 out of 10 active workers feel confident that they have the necessary resources to live comfortably in retirement”

Seeing these answers, one might think that the vast majority of people are doing very well with their retirement…

They are saving and investing appropriately, and inflation has not affected Americans’ ability to have an independent retirement as much.

Credits: Magisto

But if we compare the number of people over the age of 65 living in poverty in the United States, we notice that:

“1 in 3 adults over 65 live in poverty with incomes that are 200% below the poverty level” and if we look at this number for Hispanics it is even worse “1 in 2 live in poverty”

So is it that we are having a problem of expectations versus reality?

Because 70% think they will have a wonderful retirement, but when they retire, 30% live in poverty and this figure rises to 50% for Hispanics.

Therefore, in this article we will help you determine how well prepared you are for your retirement.

Analyzing how much others save on average, and having a rule so that you have an idea of how much you should have at different ages:

1. Let’s see how much the average American has saved for retirement

We rely on a study by Vanguard called How America Saves, which shows the average balances that Americans have in their 401K retirement plans.

Credits: Magisto

More than 100 million Americans participate in 401k retirement plans and have assets of over $11 Billion dollars in this type of account, with the average balance standing at about $141,542.

However, when we look at the amount that the majority have, we see that it drops to $35,345. This tells us that there is a group of people who have large amounts, which increases the average amount, although the vast majority have a much lower balance.

In addition, if we see these values by age groups, the realities are different, and this is where you can compare yourself with the vast majority:

  • If you are under 25 years old, the most common balance is $1,786 and when taking the entire population, the average balance is $6,264
  • Between 25 and 34 years old, most common balance $14,068 and average balance $37,211
  • 35 and 44 years old, most common balance $36,117 and average $97,020
  • 45 and 54 years old, most common balance $61,530 and average $179,200
  • 55 and 64 years old, most common balance $89,716 and average $256,244
  • Over 65 years, most common balance $87,725 and average $279,997

So, with the result of this study you will be able to compare your current savings for retirement versus the 5 million participants in this study.

Even though women are more likely to save in this program (401k) they still earn less than men, if we compare we have the following:

  • Men: most common balance $45,106 and average $170,942
  • Women: most common balance $31,291 and average $118,849

Seen in another way, the average balance of women is 30% lower than that of men.

2. Identify if you’re behind schedule and need to get busy instead of worrying

The Fidelity financial group has a formula that gives an initial idea of the direction of your savings towards retirement, without taking into account some variables:

“By age 67 you should have 10 times your current annual income in savings.”

Let’s see this with an example, according to the U. S. Department of Housing and Urban Development the average annual income of a family is about $79,900

Credits: Magisto

In other words, for your 67 years you should have saved about $799,000, if we see it is above what the vast majority have saved.

Based on the data we pointed to earlier when we said the average savings for people over 65 is $279,997.

Therefore, if we take this rule to the amount we should have saved for each age group, we would see:

  • At 30 you should have saved the equivalent of 1 year or about $79,900
  • 40, three years or about $239,700
  • 50, 6 years or about $479,400
  • 60, 8 years or about $639,200
  • 67, about 10 years.

Another of the formulas that you could use is to propose to save at least 15% of your annual income and invest it in a diversified and low-cost fund, for which we always suggest you support yourself with CERTIFIED FINANCIAL PLANNER™.

In conclusion, the goal is not easy, but the sooner you start, it will be much more bearable and remember that it is never too late to start.

Alonso Rodríguez Segarra
Alonso Rodríguez Segarra
Founder & CEO Advise Financial Alonso Rodriguez Segarra is a “CERTIFIED FINANCIAL PLANNER™” named by Investopedia among the Top 100 Financial Advisors in the USA  with more than 20 years of experience. His specialty is helping those people who want to plan for their retirement or optimize their retirement, with Hourly Financial Planning always looking for the best for his clients, under fiduciary criteria.


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