Baby boomers and seniors who proactively set up retirement accounts have more than $100,000, on average, in savings than their peers who did not, according to a recent study by personal finance publication MagnifyMoney. But across the entire board, 29% of households have less than $1,000 saved in any type of account.
Using data from the Federal Reserve and the Federal Deposit Insurance Corp., MagnifyMoney looked at the saving trends of about 126 million U.S. households as of June 2018. In an effort to substantiate reports that Americans weren’t setting aside enough, MagnifyMoney estimated the average and median balances of different types of savings accounts.
The study found that when it comes to funds for Americans regardless of age or income, the biggest amount of savings — a whopping 83% — was in retirement accounts, such as IRAs and 401(k)s, with an average of $144,560 per household stored there.
Baby boomers and those born before 1946, both with and without retirement accounts, have an average of $274,910 total, the study reported. Besides retirement accounts, this money could be stocked away in savings accounts, certificates of deposit, money market deposit accounts, and checking accounts. When looking solely at boomers and seniors who have a retirement account, that amount jumps up to $380,100 saved in those accounts.
These numbers also mean that, given common suggestions to amass $1 million to last for an entire retirement period, the average boomer or senior is facing down an underfunded future.
Not surprisingly, wealth is a big determiner of nest egg size, and the study highlighted the disparity between different income levels.
“The top 1% of households (measured by income) have an average of $2,495,930, in these various savings accounts,” the study states. “The bottom 20% have an average of $8,720.”
Despite these findings, the study also suggests that having a lower income does not necessarily mean an individual will not be able to save.
“When you look at households who have saved more than the national average of $175,410, 59% of them are top income earners — those households in the top 20% of annual income. But 41% of above-average savers are in the bottom 80% of income,” the study noted.
Written by Maggie Callahan