Understanding your financial position in retirement is crucial, particularly as you age. It involves not only monitoring your annual expenditures against your accumulated wealth but also estimating how long your funds will sustain you. The Federal Reserve's triennial Survey of Consumer Finances offers valuable insights into these trends, with the latest data from 2022, published in 2023, providing a comprehensive overview.
The survey reveals that Americans aged 75 and above possess an average retirement savings of approximately $462,400. This amount is lower than that of younger retiree groups, specifically those aged 55 to 64 ($537,600) and 65 to 74 ($609,200), primarily because individuals in their late 70s have typically been drawing down their savings for a decade or more. However, this average can be misleading due to the impact of high-net-worth individuals. A more accurate representation is the median savings, which for the 75-and-older demographic is $130,000, significantly less than the median for those aged 55 to 64 ($185,000) and 65 to 74 ($200,000).
It's important to note that these figures for retirement savings—both average and median—do not encompass an individual's total net worth. They are limited to specific retirement vehicles such as IRAs, Keogh accounts, and employer-sponsored plans like 401(k)s. When considering overall net worth, which includes liquid assets like checking and savings accounts, as well as non-financial assets like vehicles and real estate, the numbers are substantially higher. For instance, the average net worth for individuals aged 75 and above is around $1.6 million, with a median of $334,700. This increase is largely attributable to homeownership, with about 66% of Americans owning their primary residence at the time of the survey, and housing values having appreciated considerably in recent years, surpassing inflation rates.
Effective retirement planning necessitates a holistic view of all your assets, not just those held in dedicated retirement accounts. By considering your full financial picture, including real estate and liquid savings, you can better prepare for a secure and comfortable future, ensuring your resources are managed thoughtfully and aligned with your long-term goals.
