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Turning 65? Here’s What the Average American’s IRA Looks Like (And What Yours Should Be)
For many, hitting the big 6-5 means retirement is no longer a distant dream, but a rapidly approaching reality. And with that reality often comes a big, slightly unsettling question: “Is my IRA enough?” While national averages aren’t the be-all and end-all, they can offer a helpful starting point to gauge your own retirement readiness.
Think of it as a friendly check-in to see how your nest egg stacks up against your peers.
What’s the “Average” IRA Balance for Those Around 65?
While there isn’t one perfect number specifically for 65-year-olds, major investment firms provide a clear snapshot. According to Fidelity’s data, Americans between 65 and 69 boast an average IRA balance of roughly $251,400. Vanguard’s research echoes this, showing that older savers generally have higher balances than their younger counterparts.
Quick caveat: These averages can be a bit deceiving! They’re often pulled up by a few very large accounts, meaning many folks have significantly less. Your personal financial plan will always trump a national average.
Why That Average Can Be a Bit Misleading
It’s tempting to compare your savings to the national average, but “enough” is a highly personal concept. Your cost of living, potential medical expenses, a spouse’s income, when you plan to claim Social Security, and your desired lifestyle all play huge roles in how long your savings will last. In fact, median balances (representing the middle saver) are often much lower than the averages.
Plenty of people enter retirement with smaller accounts and live comfortably by making smart adjustments to their spending and income strategies. The average is a guideline, not a pass-or-fail grade.
Smart Moves to Boost Your IRA Now
While averages offer context, what truly matters is how you manage your own retirement funds moving forward. If you’re looking to strengthen your IRA as you approach or enter retirement, here are some practical steps:
- Max Out Contributions (Especially Catch-Up!): If you’re still working at 65, you’re eligible for “catch-up” contributions, allowing you to stash away extra cash. It won’t instantly transform your account, but consistent contributions in these final working years can significantly bolster your nest egg, especially if that money has a chance to grow before you start drawing it down.
- Explore Tax Diversification (Traditional vs. Roth): Traditional IRAs offer upfront tax breaks, while Roth IRAs can provide tax-free withdrawals in retirement.
Some retirees even consider partial Roth conversions during lower-income years before Required Minimum Distributions (RMDs) kick in. This strategy isn’t for everyone, as conversions trigger taxes, but it can offer more flexibility later on.
A tax professional can help you crunch the numbers.
- Strategic Investment Mix: At 65, many investors shift from an aggressive “growth-only” approach to a more balanced strategy that blends growth with stability.
This might involve reducing riskier holdings and adding more conservative assets, while still maintaining some exposure to growth to keep your account from stagnating. The ideal balance depends on your withdrawal plans and comfort with market fluctuations.
- Minimize Fees: Investment and advisory fees, though seemingly small, can quietly chip away at your long-term returns. Comparing fund costs or opting for lower-expense investments can help keep more of your money working for you within your IRA.
Cutting costs might not be exciting, but over a retirement that could span decades, it can make a real difference.
- Delay Withdrawals (If You Can): Not everyone has this luxury, but postponing IRA withdrawals, even for a year or two, can allow your balance to continue growing.
Your Social Security timing often plays a role here. Just remember that once RMDs begin, you’ll be required to take a minimum amount each year.
The goal is sustainable withdrawals, not hoarding.
- Consolidate Old Accounts: If you’ve accumulated retirement savings across various employers or institutions, consider rolling those old plans into a single IRA.
This can simplify tracking, streamline your investment strategy, and make managing your funds less overwhelming. Just be sure to compare fees and tax implications before making any moves.
- Don’t Forget Other Income Streams: Your IRA is just one piece of your retirement puzzle. Social Security, pensions, part-time work, rental income, and a spouse’s savings all contribute to your overall financial picture.
Someone with a modest IRA might still be financially secure if they have consistent outside income. View your IRA as part of a larger, integrated income plan.
- Consult a Professional: IRA rules, tax implications, and investment choices can quickly become complex. While you don’t need an advisor for every decision, a professional review can help you avoid costly mistakes, especially concerning withdrawals, RMDs, or conversions.
A personalized plan can offer far more clarity than trying to navigate everything alone.
The Bottom Line
The average IRA balance for Americans around age 65 hovers near $251,400. However, this figure is merely a reference point, not a judgment of your success or failure. What truly matters is how all your savings and income sources work together to support the lifestyle you envision in retirement.
Remember, the average is often skewed by high-dollar accounts, meaning a significant number of investors actually hold less. It’s crucial to regularly assess your retirement readiness and ensure your withdrawal strategy, tax plan, and investments align with your long-term goals. Ultimately, what your IRA balance needs to be depends entirely on your future plans, not a national average.