According to a report from the Transamerica Center for Retirement Studies, the middle class expects a variety of sources of retirement income. Below you can check average cash, savings, and home equity balances in the US
How does your money stack up?
Read on to see how your accounts and investment types compare to most people’s. Use the Boldin Retirement Planner to see your current amount and projections for additional growth. Also, make changes and try different situations to increase your wealth.
NOTE to Average versus median: The average numbers that you will review below are usually higher than the median value because the wealthiest people can inflate the average. Median shows the middle value in a set of numbers. Example: The ratio of 1, 5 and 10 is 5.3. The median of 1, 5 and 10 is 5.
Total Savings
According to Transamerica research, by the end of 2023, middle-class retirees reported $186,000 in home savings without home equity (median). Savings increase with household income. Those with household incomes of $50k to $99k have $120,000 in total savings excluding home equity, compared to those with household incomes of $100k to $199k who saved $349,000 (estimated median).
Cash and Cash Accounts
You want money in cash accounts that you will need for short-term living expenses and emergencies.
Average savings for home emergencies
Emergency savings are needed to limit unexpected financial problems, such as unemployment, medical bills,
house repairs, car repairs, and other unexpected expenses. Saving for emergencies can also help prevent people
in getting their retirement income to meet such expenses.
Transamerica suggests that people in the middle class have $8,000 (median) in emergency savings.
Most experts recommend that you have enough emergency cash to cover 3-6 months of living expenses. In pink? Explore why an emergency fund is the foundation of financial well-being.
Average family checking accounts
The FDIC reports that 95.5 percent of US households will be “banked” by 2022, meaning at least one household member has a checking or savings account at a bank. This is the highest percentage since the survey began in 2009. They say the change is due to better socio-economic conditions.
The most recent Survey of Consumer Finances announced that the average household checking balance in 2022 was $16,891, while the average household checking account balance was $2,800.
Americans ages 55 to 64 have an average checking account balance of $3,500.
Average balance across all savings or checking accounts
According to data from the Federal Reserve, the average savings account balance of Americans is $8,000. That amount is what people hold in checking accounts, including checking, savings, money market, phone accounts, and prepaid debit cards.
The average balance across all checking accounts, including savings by age is:
- $5,400 for those under 35
- $7,500 for those between 35 and 44
- $8,700 for those 45 to 54
- $8,000 for those 55 to 64
- $13,400 for those 65 to 74.
- The average bank account balance drops to $10,000 for those 75 and older
Average household income
Since the good old days of the Y2K panic (and before), it has been a common practice for people to keep some amount of cash at home. Whether it’s hidden in a mattress or a coffee can in the fridge, money can come in handy in a natural disaster when the grid goes down.
Some experts recommend that you have three days worth of cash to get you through the rough patch. Think about what you would really need to buy in a disaster and have that cash on hand. Although, also remember that keeping cash at home means that the money has no return and is at risk of theft and fire.
Recent trends suggest that young people are returning to the cash economy. Many are adopting a practice called cash-stuffing. They take their income in cash and keep it in envelopes or containers, one container for each spending category. When the bowl is finished, that is for the month. Recurring debts are paid through a checking account and credit cards are paid off, but from the credit card funds.
Supporters say it’s a way to control spending and one online survey suggests that 61% of adults aged 18-41 use cash to some extent.
Health Care Savings
About three out of four people in the middle class (74%) save on health care costs. Fifty-nine percent
savings in each account (eg, savings, checking, retail, etc.), 23% savings in a life savings account
(HSA), 14% save through a flexible spending account (FSA), and 4% through other means.
The Employee Benefit Research Institute (ERBI) reports that balances in HSAs are trending higher, but remain relatively low.
Year-end rates rose in 2022 to $4,607, but average balances are still modest. This may be a result of the fact that many HSAs in the EBRI HSA Database are relatively new. Approximately, one third of the accounts have been opened since 2021.
Home Equity: 66% of Americans Own Their Home
Home equity can account for a large portion of household wealth – it increases more as people age.
The average home equity for middle-class families is $177,000. Home equity increases with household income. Retirees with household incomes of $50k to $99k have $140,000 in home equity, compared to $254,000 in home equity for households with incomes of $100k to $199k.
Average home equity by age: According to recent data from the Census Bureau, older families:
- Those under 35 have $60,000 in home equity
- 35-44 has $111,000
- 45-54 has $144,000
- 55-64 were $162,000
- 65 and over have $300,000
Home equity can be an important part of retirement planning. This money can be received by retirees in a number of effective ways, the most common of which are: Downsizing.
Evaluate these strategies for using your home equity in your Boldin Plan and see the impact on your cash flow, ability to achieve your desired retirement lifestyle and net worth.
Average Retirement Savings
Retirement accounts are tax-advantaged accounts that can generally be used until retirement. In most cases, there are significant tax penalties for withdrawals made before age 59 1/2.
TransAmerica says the average retirement savings for the average person is $66,000.
The latest Federal Reserve Survey of Consumer Finances shows that the average retirement account savings by age:
- $18,880 for those under 35 ($49,130 average)
- $45,000 for those 35-44 ($141,520 average)
- $115,000 for those 45-54 ($313,200 average)
- $185,000 for those 55-64 ($537,560 average)
- $2000,000 for those over 65-74 ($609,230 average)
- $130,000 for those over 75 ($462,410 average)
Average IRA balance
The Investment Company Institute (ICI) reports that 36% of all Americans have an IRA – the majority of those accounts are traditional IRAs as opposed to Roth IRAs or SEP IRAs, SAR-SEP IRAs or – Easy IRA.
However, Roth IRAs are growing in popularity. In fact, it can be a tax savvy strategy to convert money into a Roth IRA. (Read more about Roth Conversions…)
The Employee Benefit Research Institute (EBRI) reports that
- The average IRA balance is $123,973.
- However, IRA accounts held for 20 years or more are worth $283,200 on average.
Fidelity puts the average IRA balance at $116,600.
Average amount saved in a 401(k), 403(b) or similar plan
Workplace savings plans have become the way Americans save for retirement.
According to the Pension Rights Center, 45% of all workers participate in a workplace retirement plan. They report that the average retirement account balance for all private sector households is $86,900. For households with a worker or spouse aged 55-65, the average balance is $185,000.
In Vanguard’s How America Saves 2024 report, the average balance in defined contribution plans, most of which are 401(k)s, was $134,128 in 2023.
Here are some average 401k balances by age from Fidelity:
- $10,500 for those aged 20-29
- $38,400 for those aged 30-39
- $93,400 for those aged 40-49
- $171,400 for those aged 50-59
Most Valuable Property? The program! Only 18% of Americans did
Chances are, because you’re reading this article, you’re doing better than average – a lot better. But, do you have that perhaps most valuable and underutilized asset? The plan? A written plan for your retirement funds?
However, according to Fidelity, only 18% of Americans have a written retirement plan. Also, there is significant research suggesting that planning is the missing link to financial success and self-esteem.
When you retire, you no longer live month to month or year to year. When you retire, you are faced with a limited set of financial resources that need to be used to support the rest of your life. You really need a plan.
It’s easy to create, manage and track a retirement plan with the Boldin Retirement Planner. Best of all, a comprehensive plan enables you to do better with your time, taxes, investments, health care and more for more wealth, security and happiness.
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