Retirement is often viewed as the well-deserved reward after years of hard work, a time when the alarm clock is silenced, schedules become flexible, and individuals can finally enjoy the freedom they have earned. However, for many Americans, the prospect of retirement is fraught with anxiety rather than excitement.
According to a national survey by LiveCareer, 61% of working Americans express a greater fear of retirement than death, primarily due to financial worries. Instead of envisioning leisurely travels or engaging hobbies, many are consumed with concerns about whether their savings will sustain them, the anticipated costs of living, and the potential for rising expenses.
This fear is particularly pronounced among married couples, who must plan not just for their own retirement but for two individuals with distinct earning histories, life expectancies, and healthcare needs. The concerns appear justified, as data from a 2024 AARP survey reveals that 20% of adults aged over 50 have no retirement savings whatsoever, and 61% fear they will not have enough funds to last through their retirement years.
The Federal Reserve’s Survey of Consumer Finances lays bare the stark differences in retirement savings across age groups. For those under 35, the average retirement savings stands at $49,130, although the median amount is significantly lower at $18,880. As individuals age, their savings typically increase, yet the disparity between average and median savings remains evident:
– Ages 35 to 44: Average savings are $141,520 with a median of $45,000.
– Ages 45 to 54: Average balances reach $313,220, while the median is $115,000.
– Ages 55 to 64: Average savings climb to $537,560, with a median of $185,000.
– Ages 65 to 74: Average balances peak at $609,230, but the median is only $200,000.
These figures illustrate a significant gap between the average and median savings, where a small number of individuals with high balances inflate the average, obscuring the reality faced by most households.
T. Rowe Price offers retirement savings targets based on income, age, and whether a household is supported by one or two incomes. These guidelines provide a practical framework rather than a rigid rule. For example, a married couple earning $75,000 a year should aim to have approximately five times their income saved by age 55, increasing to about eight times by age 65. Conversely, a single earner at the same income level would target around 4.5 times by age 55 and seven times by age 65. As household incomes rise, these recommended savings multiples also increase, which reflects higher expected expenditures and the need for more comprehensive long-term planning.
The emphasis on realistic saving benchmarks serves to empower individuals in their financial planning, fostering a sense of preparedness and confidence in approaching retirement. With increased awareness of the challenges and potential solutions, Americans can begin to alleviate some of the anxiety surrounding their transition into this next phase of life.