American Savings Statistics: How Much Should You Have in Your Savings Account?

Americans are having an increasingly tough time squirrelling money away. For many, debt is a way of life. Others are simply living paycheck to paycheck, or are highly dependent on welfare. The data shows that Millennials start saving for their retirement earlier than previous generations. But they still end up with less money than what people their age had 10 or 20 years ago.

Experts recommend having twice your annual salary in savings by the age of 40. However, the statistics reveal that all age groups are falling short of their benchmarks.

US Savings Statistics for 2024 - Editor’s Choice

• 21% of Americans have no retirement savings, and 55% of the population believes they will have to work past 65.
• Millennials are doing a better job saving than older generations.
• Median household retirement savings for those aged 35 to 44 is around $40,000.
• Only 45% of women are saving more than 5% every month compared to 57% of men.
• The average American household, which doesn’t have a mortgage, is $132,529 in debt.
• Recent studies show that Afro-American wealth is around 7% that of whites.

A sizable portion of the US population is likely to face some sort of financial emergency at one time or another. Unfortunately, most American savings accounts are not equipped to deal with these financial shocks, which often plunge people deeper into debt.

The number of Americans with less than $1,000 in their bank account rose significantly between 2018 and 2019. Meanwhile, the amounts owed by indebted American households are continually soaring.

60% of American households experienced a financial emergency with a median cost of $2,000.

A survey of over 7,800 households found that Americans of all colors and creeds endured financial setbacks at similar rates. The median cost of the households’ most expensive shocks stood at $2,000.

So, how much should you have in savings? Although it’s impossible to predict the cost of an emergency, most financial experts recommend having enough money to live on for about three to six months.

That’s in addition to a prepared retirement plan. Bear in mind that this sum is calculated based on essential expenses that you would have in times of hardship: housing costs, food, utilities, insurance, transportation, debt payments and personal expenses.

That brings us to our next set of questions. How much does the average American have in savings? And what is the average level of indebtedness?

The average indebted American household owes $132,529.

This staggering figure includes everything from credit card and medical debt to car and student loans. Meanwhile, the average household with a mortgage carries a debt of over $172,800.

But that’s not all. There are a number of other factors that are making a dent in the average bank account balance.

The average household with a car loan is $28,535 in debt.

Many Americans take out car loans that are equivalent to half their annual salaries, and some go even higher. According to financial experts, this is a costly miscalculation often found among people in the 30-40 age group.

Personal loans often decimate the household budget, leaving little to cover credit card debt, potential financial emergencies or a retirement plan.

How much money we keep in the bank? GOBankingRates asked over 5,000 adults the same question, and here’s what they found:

Nearly 70% of Americans have less than $1,000 stashed away in their bank accounts. That number rose from 58% in 2018. Meanwhile, the number of those with savings between $1,000 and $5,000 stands at roughly 12%. Only 5% of Americans have savings accounts that range between $10,000 and $20,000.

The Median Savings Balance By Age

It goes without saying that low salaries and living paycheck to paycheck make it difficult to set anything aside. But are there any other factors impacting American savings accounts?

The following statistics offer an overview of what the various age groups are saving and how it stacks up against recommendations from experts.

Twentysomethings

The average savings by age 25 are relatively low in the US. There are a variety of economic forces at play that make it difficult to have any considerable chunk of money tucked away this early on in life. The weight of student-loan debt and the average millennial income are just some of the obstacles.

The average student loan debt is $32,731, while the median debt amounts to $17,000.

High levels of debt combined with an entry level salary often lead to people in the 20-30 age group struggling financially. But the future isn’t entirely bleak. Statistics on average retirement savings by age reveal that young people are still managing to contribute to their retirement account.

Millennials are doing a better job saving than older generations.

Recent studies show that Millennials started saving for retirement earlier than Gen Xers and baby boomers. The latest Better Money Habits report from Bank of America surveyed over 1,900 people and found that 73% of millennial respondents were saving.

Of those, 75% were saving for retirement. But the head start has not translated into tangible wealth building, and millennials have less money than the same age group had over ten or twenty years ago.

Thirtysomethings

People in this age group have likely moved up the ranks in their jobs and past the entry-level paychecks. But the growing list of expenses at this age, which includes a mortgage and the cost of starting a family, might make it difficult to think about a financial cushion for retirement. Keep reading to find out more about the average savings by age.

Adults aged 35 to 44 said the biggest obstacle to saving was living paycheck to paycheck.

Financial experts recommend that people in this age group have an equivalent of an annual salary in their savings by the age of 30. The savings should be double that amount at 35 and three as high by the time they are 40. Let’s take a look at the average retirement savings for this age group.

Median household retirement savings for the 35-44 age group is around $40,000.

The Center for Retirement Research at Boston College concluded that these figures are well below the recommended retirement savings by this age group. According to experts, median retirement savings by that age should be 18-23% of the annual salary.

Experts are advising Americans to tighten the family budget and increase the percentage of the salary allocated for the savings account in order to attain those targets.

Fortysomethings

Ideally, this is the prime of one’s professional career, and their salary should reflect that. With any luck, people in this age group managed to pay off most of their debt and can look forward to freeing up more money. However, the house got bigger, and the kids are older.

People in this age group might also be in need for another student or car loan. Check out the data on the average American savings by this age.

Median household retirement savings for the 45-54 age group is around $97,000.

At first glance, this might seem like a solid sum of money for a retirement plan. But this age group appears to be blowing way too much money on things they could do without while ignoring their median retirement income.

The 45-54 age group spends an average of $7,230 on food away from home, which accounts for 40% of their food expenditures.

An American’s savings in the bank should be equivalent to four annual salaries by the time he is 45 years old. Although this age group does well when it comes to their retirement plan savings, it’s vulnerable to irrational spending and new expenses such as student and car loans.

At this stage, some might still be struggling to understand from what part of income should someone take savings. But things seem to improve as they get older.

Fiftysomethings

People in their 50s are nearing retirement. But helping with college tuition, car payments and covering a stack of different bills are still hurting the household budget. The following is an overview of the average retirement savings by the age of 50.

The average retirement savings balance for those in the 55-64 age group is around $135,000.

Although this might sound like a lot of money, it’s an awfully small amount to retire on. Most pensioners withdraw roughly 4% of their savings each year. With a retirement account of $135,000 that equals to $5,400 annually or $450 each month. Even with Social Security benefits, making ends meet with that sum of money would be extremely difficult.

That figure also falls short of the recommended retirement savings for this age group, which should be equivalent to at least six annual salaries.

Sixtysomethings

Now that the finish line is in sight, individuals in this group should be preparing to dig into their hard-earned savings. At this point, it is becoming increasingly difficult to save enough money to make up for any shortfalls. Let’s see what are the numbers when it comes to average savings in the age of 65.

Americans in their 60s have a median savings balance of $172,000.

The most recent data shows that the average American net worth at retirement for homeowners is $201,500. The median savings balance is slightly lower. But this age group still ranks highest when it comes to savings. Naturally, these are the people that have been working the longest and by extension should have the largest nest egg.

However, statistics reveal that many people plan to keep working into their 70s.

21% of Americans have no retirement savings, and 55% of the population believe they will have to work past age 65.

Unfortunately, many believe they will work past the age of 65, and many think there is a possibility they will outlive their retirement savings. In these situations, Americans are advised to consult with financial experts in order to salvage their golden years.

The average monthly benefit for a retired worker is $1,471.

An estimated 64 million Americans received more than one trillion dollars in Social Security benefits throughout last year. Of those, 44.5 million were retired workers who collected an estimated $65.4 billion per month.

Although benefits vary depending on the person’s work history, the monthly average stood at just over $1,470. Americans can boost their Social Security benefits by asking for a raise at work.

Median Savings Balance By Gender

Wage inequality continues to play a role in determining the amount that women are able to secure for their retirement. Creating a suitable savings account is challenging for every American. But numbers show that the road to retirement is even more complicated if you are a woman.

Women are 27% more likely to have no retirement savings.

A study conducted by the nonprofit National Institute on Retirement Security found that women 65 and older had an average income that was below that of men from the same age group. Consequently, women are 80% more likely to be impoverished than men. The chances of life in poverty during retirement are even higher among single women and minorities.

An online poll tracking more than 88,000 people found that women are less likely to have retirement funds.

66% of adult women have an IRA, pension plan, or other retirement funds, while 30% have no funds at all.

The number of women who lack funds for retirement is noticeably higher than that of men. This is a direct consequence of the gender pay gap. Women are continuing to grapple with lower paychecks, and consequently, cannot afford to save as much.

In comparison, 72% of adult men have an IRA, pension plan, or other retirement funds, while about one quarter don’t have any funds.

The collected data shows that women are 13% more likely not to have any retirement funds.

The simple fact is that women are saving less, and the following US savings rate graph crystallizes the problem.

This simple survey paints a disturbing picture, while other research studies suggest that women are investing 43% less into retirement plans as opposed to men.

Only 45% of women are saving more than 5% every month, compared to 57% of men.

Part of the problem is that women are earning less than men. Recent data shows that women earn roughly 80% of what men earn in full-time jobs. One aspect driving the income gap is the low ratio of women working in the highest-paid fields, including engineering and tech jobs.

At the same time, there are fewer women employed than men. This employment gap is only fueling the savings gap.

Meanwhile, a Senate hearing several years ago noted that company policies prohibiting employees from discussing their salaries with co-workers help keep women in the dark about wage discrimination. The American Savings Bank was named as one of the companies enforcing this rule.

Women make $0.79 on average for every dollar earned by their male counterparts.

Therefore, women need to work longer and have more prominent careers to be able to address the pay disparity. Also, lower earnings can result in lower Social Security checks since the latter is based on average indexed monthly earnings.

This can lead to medical debt and lower credit scores during a women’s retirement. Women tend to live longer, which is an additional issue if they struggle with lower earnings and smaller savings.

Median Savings Balance By Race

The racial wealth gap in the US is generally defined as the disparity in wealth holdings between the median household among populations grouped by race or ethnicity.

According to a Yale study conducted in 2018, white Americans severely underestimate the existing racial wealth gap. The respondents stated they believe that Afro-American wealth is about 80% that of whites. However, the reality is far more disturbing.

Data from the US Census Bureau shows that Afro-American wealth is around 7% that of whites.

In the period between 1983 and 2013, white households experienced a 14% increase in wealth. Meanwhile, Afro-American and Hispanic households saw a serious decline of 75% and 50% respectively.

One of the reasons behind such a drastic wealth gap is the number of extremely poor black families. Meanwhile, only 10% of white households live in that level of poverty.

The Economic Policy Institute reported that 25% of Afro-American households have zero or negative net worth.

Since so many black families have nothing in their savings account or are in debt, the average wealth of the entire racial group plummets.

Afro-American families have a net worth of $5.04 for every $100 held by white families.

In contrast, Asian American households have more wealth when compared to the total credit score of white households. Even though this appears to be a success story for a minority group, the Asian American community suffers from an internal wealth gap.

The richest Asian American held 168 times more wealth than the poorest Asian Americans.

Such disparities are also common among other racial groups. For example, the richest 10% of white households own almost 121 times more than the poorest 10%.

When it comes to Native American wealth, there are obvious shortcomings in the amount of available data, including the fact that the community’s wealth hasn’t been measured since 2000.

At that time, the median net worth of Native American households was just $5,700.

Due to the fact that data on Native Americans is outdated or insufficient for reaching proper conclusions, the economic conditions of these communities tend to be overlooked. But in many instances these conditions are worse than those of Latino or Black households.

The median household net worth of Hispanic households is $17,530.

There are many factors contributing to the wealth gap in the United States. One of those is education, which improves economic mobility and increases American savings. Educated minorities help to drive up the average income.

Numerous studies say that Americans with a college degree earn over 84% more than the ones with a high school education. However, the racial gap also exists in the education sector and is having an impact on average American savings.

According to a McKinsey study, the average score of black and Latino students on standardized tests was two to three years behind that of white students of the same age.

Even after graduation, the racial gap still exists between black and white graduates. The debate on how much does the average American make is quite pointless when these racial inequalities spill over into the workplace. This gap affects job opportunities for minorities and later their financial success. Check out how the racial wealth gap affects the average millennial income.

A black family with a graduate has $200,000 less wealth than a comparable white family.

This underscores the fact that educational upgrading does little to alter conditions for wealth building. Black families where the head of the household holds a college degree only have one-eighth the wealth of a white family with the same circumstances.

When gender disparities are taken into consideration, the numbers are even more disturbing as the average of American minorities with higher education decreases further.

White males earn a bachelor's degree in engineering at roughly six times the rate of Hispanic women and more than 11 times the rate of black women.

These figures underscore the dramatic underrepresentation of black and Latino women in the field of engineering. Unless these gaps are addressed, they will continue to grow and constrain the US economy.