About 50% to 60% of Americans are in the middle class, depending on what definition you use. While being middle class has traditionally meant you make a pretty good living, that isn't always the case anymore.
After paying for housing and other bills, many middle-class Americans don't have much left to save. Where this really becomes apparent is in retirement savings. The middle class hasn't been able to save much for retirement, and it could have serious consequences in the future.
The average middle-class American's retirement savings
Middle-class Americans have a median retirement savings of $22,380 to $80,000, according to Federal Reserve data gathered by The Motley Fool. Those are the average amounts for Americans in the 25th to 49.9th and 50th to 74.9th net worth percentiles.
Here's a table with a complete look at median retirement savings by net worth. It also includes the growth in each group's retirement savings since 1989.
| Net worth percentile | Median retirement savings (2022) | Growth since 1989 |
|---|
| Below 25th | $6,000 | 160.24% |
| 25th to 49.9th | $22,380 | 162.35% |
| 50th to 74.9th | $80,000 | 246.98% |
| 75th to 89.9th | $269,000 | 366.69% |
| 90th to 100th | $900,000 | 713.24% |
Data source: Federal Reserve.
If your retirement savings is between $22,380 to $80,000, then you're in the middle-class range. It's not a bad place to be, but it might not be enough. Only 34% of Americans feel as if they're on track for retirement. If you're part of the 66% who don't, then it's time to consider what you can do to save more.
The best ways to get your retirement savings on track
There are lots of actions you can take to save for retirement. Below, you'll find several of the most effective options.
Open a 401(k) and an IRA
If you haven't already, set up retirement accounts. Traditional 401(k)s and individual retirement accounts (IRAs) help you save on taxes, because contributions reduce your taxable income. Roth 401(k)s and Roth IRAs don't reduce your taxable income, but they allow you to make tax-free withdrawals in retirement.
A 401(k) is a workplace retirement plan. You can open this if your employer offers one, or you can open your own solo 401(k) if you're self-employed. IRAs are accounts that just about anyone can open through a stock broker.
Contribute 10% to 15% of every paycheck to retirement
Saving for retirement isn't something to do once in a blue moon, when you have some extra money available. To save enough, you need to make it a financial habit.
A good goal is to save 15% of every paycheck for retirement. If you make $3,000 each pay period, then you'd contribute $450 of that to your retirement accounts.
Not everyone can set aside that much money. If not, start by doing what you can, and try to gradually increase it as your income rises.
Look for ways to increase your income
Raising your income rarely hurts. After all, one of the main reasons the upper class has so much more saved for retirement is because they earn more.
Be proactive in searching for opportunities to raise your income. You could talk to your manager about a raise, try to get promoted, or look for higher-paying jobs. Side hustles and freelance businesses are also good ways to make more money. I've been able to raise my income far more by freelancing than I ever would've as an employee.
Watch out for overspending, especially on fixed costs
Overspending is one of the biggest obstacles to saving for retirement. And in particular, it's overspending on fixed costs that can make saving difficult. Fixed costs include your rent or mortgage, car payment, child care, and anything else you pay regularly.
As a rule of thumb, try to keep these to 60% or less of your income. That way, you'll have enough money left over to save for retirement, put toward other savings goals, and to spend on yourself every month.
Taking an interest in your retirement savings is already a good first step -- lots of people don't even do that. Now that you know how to save for retirement, you can make it part of your routine and build a nest egg for the future.
FAQs
If your retirement savings is between $22,380 to $80,000, then you're in the middle-class range. It's not a bad place to be, but it might not be enough. Only 34% of Americans feel as if they're on track for retirement. If you're part of the 66% who don't, then it's time to consider what you can do to save more.
How many Americans have $1,000,000 in retirement savings? ›
As of June, there were roughly 497,000 so-called retirement-created millionaires in the U.S., according to the wealth management firm, which analyzed balances across 26,000 of its customers' accounts. Nearly 399,000 Americans also have a least $1 million in an individual retirement account.
What percentage of Americans have over $500000 in retirement savings? ›
Believe it or not, according to the 2022 Survey of Consumer Finances, only 9% of American households have saved half a million dollars or more for retirement. That's right, less than one in 10 families has reached this milestone.
How much does the average middle class person have in savings? ›
Key Statistics on Average Savings Account Balances
According to the Federal Reserve's 2022 Survey of Consumer Finances (SCF), Americans' average (mean) household savings account balance is $62,410. However, the median savings account balance of $8,000 might be a more accurate representation.
What is the average US retirement savings by age How do you compare? ›
Average Savings by Age
| Age Range | Account Balance |
|---|
| Ages 45-54 | $71,130 |
| Ages 55-64 | $72,520 |
| Ages 65-74 | $100,250 |
| Ages 75+ | $82,800 |
2 more rowsAccording to estimates based on the Federal Reserve Survey of Consumer Finances, a mere 3.2% of retirees have over $1 million in their retirement accounts. The number of those with $2 million or more is even smaller, falling somewhere between this 3.2% and the 0.1% who have $5 million or more saved.
How many couples retire with $1 million dollars? ›
Only approximately 10% of American retirees have successfully saved $1 million or more, as indicated by the most recent Survey of Consumer Finances conducted by the Federal Reserve. What is the recommended age to have $1 million saved for retirement? It is feasible to retire at the age of 65 with $1 million.
What is the average 401k balance at age 65? ›
Average and median 401(k) balance by age
| Age | Average Account Balance | Median Account Balance |
|---|
| 35-44 | $91,281 | $35,537 |
| 45-54 | $168,646 | $60,763 |
| 55-64 | $244,750 | $87,571 |
| 65+ | $272,588 | $88,488 |
3 more rowsAug 8, 2024
There are estimated to be a little over 8 million households in the US with a net worth of $3 million or more.
How many Americans have $300,000 in savings? ›
The poll also found that among those who have been saving for retirement, 6.7% have saved between $10,000 and $49,999, 12.6% have saved between $50,000 and $99,999, 12% have saved between $100,000 and $199,999, 9.9% have saved between $200,000 and $299,999 and 16.5% have saved $300,000 or more.
Americans in the top 10% now have median retirement savings of $900,000. While higher incomes play a large role in that, upper-class Americans also build wealth by saving consistently and investing in the stock market.
How many Americans have $200,000 in savings? ›
The Average American's Savings
27% have between $10,000 and $50,000 saved, and 15% have between $50,000 and $100,000 saved. 9% of Americans have between $100,000 and $200,000 saved, and 4% have between $200,000 and $350,000 saved.
What does the average 70 year old have in savings? ›
The Federal Reserve also measures median and mean (average) savings across other types of financial assets. According to the data, the average 70-year-old has approximately: $60,000 in transaction accounts (including checking and savings) $127,000 in certificate of deposit (CD) accounts.
What is the average nest egg at retirement? ›
Among all adults, median retirement savings are $87,000, according to the most recent Federal Reserve Survey of Consumer Finances (SCF) data.
What is considered a good monthly retirement income? ›
The ideal monthly retirement income for a couple differs for everyone. It depends on your personal preferences, past accomplishments, and retirement plans. Some valuable perspective can be found in the 2022 US Census Bureau's median income for couples 65 and over: $76,490 annually or about $6,374 monthly.
How much do most people retire with? ›
What are the average and median retirement savings? The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.
What percentage of Americans have more than $100000 in savings? ›
How many Americans have $100,000 in savings? About 26% of U.S. households had more than $100,000 in savings in retirement accounts as of 2022, according to USAFacts, a nonprofit organization that analyzes data from the Federal Reserve and other government agencies.
How far will $1,000,000 last in retirement? ›
For example, if you have retirement savings of $1 million, the 4% rule says that you can safely withdraw $40,000 per year during the first year — increasing this number for inflation each subsequent year — without running out of money within the next 30 years.
How many Americans have less than 10000 saved for retirement? ›
56% of Americans Have Less Than $10,000 Saved for Retirement
One-third of Americans report they have no retirement savings. 23% have less than $10,000 saved.
How many Americans earn more than $1000000? ›
Best I can find is about 0.2% of taxpayers make $1,000,000+ in a given year. Many don't make it consistently.
