According to a recent report, the typical American worker sets aside only $955 for retirement in defined contribution plans, including 401(k) accounts—this, of course, is well below what’s often suggested for achieving a secure retirement based on one’s age.
The National Institute for Retirement Security (NIRS) found that across all workers aged 21 to 64—factoring in those who haven’t saved anything—the median retirement savings stood at just $955 in 2023.
Interestingly, workers with active retirement plan balances saved considerably more, with a median of $40,000 reported for those with at least a dollar in their defined contribution plan.
On a broader scale, the average savings account balance for all workers in that age range, including those without savings, was $93,229. For individuals who have saved at least a dollar, the average jumped to $179,082.
The NIRS also aligned these savings figures with targets established by Fidelity, which provides guidelines based on age and income. For instance, Fidelity suggests that individuals aim to save three times their annual income by age 30, and escalate to ten times their income by age 67, which is typically the normal retirement age.
Remarkably, the study indicated that across various demographic segments—like age, race, education level, and gender—none of the median respondents had achieved retirement savings that surpassed the recommended age-based targets.
The median savings in defined contribution plans accounted for a mere 4% of all respondents’ retirement goals. When evaluating net worth instead, about 41% of respondents met their savings benchmarks.
Among those with positive balances in their retirement accounts, only 18% overall managed to meet their savings goals. Interestingly, the median percentage of DC retirement savings goals met was slightly different between genders, with men at 19% and women at 17%. Moreover, Asian (23%) and white (20%) workers saved more than their Black and Hispanic counterparts, both of whom saved 11% each.
Education also played a significant role: savings percentages increased with higher educational attainment—10% for those with a high school diploma or less, compared to 15% with an associate’s degree, 21% for bachelor’s degree holders, and 26% for advanced degrees.
As for age groups, younger workers aged 21 to 34 were the most successful in reaching their targets, saving 21% of what they aimed for, followed closely by those aged 55 to 64 at 19%.
NIRS summed it up quite bluntly: while individuals with some savings are generally closer to their retirement goals, even those who have put away some cash are still significantly lower than what is needed if they expect their defined contribution plans to become a crucial source of income in retirement.
