Additional Coverage:
- Here’s The Average Retirement Savings of 64-Year-Old Americans (How Do You Compare?) (financebuzz.com)
Nearing Retirement? Here’s What Your Savings Should Look Like at 64
As many Americans approach the cusp of retirement, a common question looms large: “Am I financially ready?” Taking a candid look at your retirement savings and comparing them to national trends can offer valuable perspective, highlighting areas of strength and potential gaps.
For those who didn’t kickstart their investment journey early, these figures might seem daunting, but they also provide a crucial roadmap for the path ahead. Understanding the typical financial landscape for savers at age 64 can clarify the next steps on your journey to a secure retirement.
So, let’s dive into what the data reveals about retirement savings at this pivotal stage of life.
The Landscape of 401(k) Balances for 64-Year-Olds
While there isn’t a single, universally accepted benchmark for retirement savings at 64, due to the highly individualized nature of earnings, investment choices, and years of participation, available data offers a compelling snapshot of how Americans are faring as they draw closer to their golden years.
According to financial giant Fidelity, the average 401(k) balance for workers between ages 60 and 64 hovers around $246,500. However, CNBC reports a significantly lower median balance for those aged 55 to 64, sitting at approximately $95,642. Looking slightly ahead, for workers aged 65 to 69, the average 401(k) balance is reported at $251,400, with the median for those 65 and older at about $95,425.
While 64-year-olds might find themselves at the higher end of these average ranges due to more years of work and saving, the stark disparity between the average and median figures is noteworthy. This gap clearly illustrates how a smaller cohort of high-net-worth savers can significantly inflate the average, while a substantial portion of the population remains well below that level.
How Much Should You Aim to Have Saved by Age 64?
Fidelity offers a useful guideline, suggesting that savers aim to have roughly eight times their annual income saved by age 60. As retirement age extends, the recommendation increases, with 10 times annual income suggested by age 67. Given that 64-year-olds are closer to 67 than 60, a plausible target to aim for could be at least nine times your annual income saved by this age.
These guidelines are predicated on a consistent saving and investing strategy throughout one’s career, coupled with prudent spending habits in retirement. Falling short of these benchmarks doesn’t automatically close the door on retirement, but it may necessitate adjustments. Strategies such as delaying retirement, reducing expenses, or exploring additional income streams can help bridge any financial gaps.
Understanding Why Some Fall Behind in Retirement Savings
Many Americans may reach their mid-60s with lower-than-desired balances for various reasons. A lack of access to employer-sponsored retirement plans, such as 401(k)s or matching contributions, earlier in their careers is a common factor.
Others may have simply been unaware of the crucial amount needed to save for a comfortable retirement. Additionally, the burden of high-interest debt can often siphon off funds that could otherwise be directed towards retirement contributions for years on end.
Life’s unpredictable events also play a significant role. Caregiving responsibilities or unexpected health issues that lead to years out of the workforce can severely limit the ability to save consistently. Over decades, these setbacks can compound, making it increasingly challenging to catch up.
Strategies for Strengthening Your Retirement Savings
Improving your retirement readiness at age 64 often requires a blend of realistic assessment and proactive planning. Even seemingly modest changes during your final working years can yield substantial benefits. The most effective strategies focus on actions within your control, rather than fixating on national averages.
Here are three broad approaches that can help bolster your financial position as retirement looms:
1. Boost Savings and Delay Withdrawals
Continuing to contribute to your retirement accounts for as long as feasible can significantly enhance your outcomes. Workers aged 50 and older have the advantage of “catch-up contributions,” which permit higher annual savings limits.
Furthermore, avoiding early withdrawals is crucial for preserving tax advantages and allowing compound growth to work its magic. Even a few additional years of dedicated saving can noticeably increase your retirement income.
2. Thoughtfully Adjust Your Investment Mix
As retirement draws near, your investment strategy should shift from maximizing aggressive growth to achieving a thoughtful balance. Maintaining some exposure to equities can help preserve your long-term purchasing power, while gradually reducing excessive risk helps mitigate market volatility.
Gradual, well-considered adjustments to your portfolio often prove more effective than sudden, dramatic shifts. A diversified portfolio, carefully aligned with your time horizon, can help manage both growth potential and stability.
3. Plan for Income Beyond Your 401(k)
Retirement savings rarely exist in a vacuum. Social Security benefits, potential part-time work, pensions, or other income sources all contribute to your long-term financial security.
Understanding how these various income streams interact can help you stretch your savings further. Strategically coordinating withdrawals and the timing of your income can potentially reduce taxes and improve your overall cash flow throughout retirement.
The Bottom Line
The data clearly indicates that while the average 64-year-old may have a substantial sum saved in a 401(k), the median balance is considerably lower. This disparity underscores the uneven landscape of retirement readiness across the nation.
By honestly evaluating your current financial standing, making necessary adjustments to your plans, and focusing on actionable steps within your control, you can proactively strengthen your financial position and make the most of the crucial years leading up to retirement.