according to Preparing reports From the Transamerica Center for Retirement Studies People in the middle class expect diverse sources of retirement income. Below you can explore average cash, savings, and home equity balances in the United States
How do your financial statements stack up?
Keep reading to see how your accounts and investment types compare to most people’s accounts. Use the Boldin Retirement Planner to see your totals now and your projections for further growth. Make adjustments and try different scenarios to maximize your wealth.
Note on Average vs average: The average numbers you’ll review below are usually higher than the median value because very wealthy individuals can inflate the average. Median reflects the middle value in a set of numbers. Example: The average of 1, 5, and 10 is 5.3. The average of 1, 5 and 10 is 5.
Total savings
According to Transamerica research, as of late 2023, middle-class retirees reported $186,000 in total household savings excluding home equity (estimated average). Saving increases with family income. Those with household income of $50,000 to $99,000 had $120,000 in total savings excluding home equity, compared to those with higher household income of $100,000 to $199,000 who saved $349,000 (estimated averages ).
Cash and cash accounts
You want money in cash accounts that you will need to cover short-term living expenses and emergencies.
Average household emergency savings
Emergency savings are needed to cover unexpected financial setbacks, such as unemployment, medical bills,
Home repairs, car repairs, and other unexpected expenses. Emergency savings can also help people prevent
They can tap into their retirement savings to cover these expenses.
Transamerica reports that people in the middle class have $8,000 (average) in emergency savings.
Most experts recommend that you have enough emergency cash to cover living expenses for 3-6 months. In question? Find out why an emergency fund is the foundation of financial wellness.
Average household checking accounts
The Federal Deposit Insurance Corporation (FDIC) reports that 95.5% of U.S. households were “banked” in 2022, meaning at least one member of the household had a checking or savings account at a bank. This is the highest percentage since the survey began in 2009. Researchers attribute this change to improved social and economic conditions.
Latest Consumer Finance Survey He announced that the median household checking account balance in 2022 was $16,891, while the median household checking account balance was $2,800.
Americans ages 55 to 64 have the highest average checking account balance, at $3,500.
Average balances across all cash savings or transaction accounts
According to data from the Federal Reserve, Americans’ average total savings account balance is $8,000. This amount is what people keep in transaction accounts, which include checking, savings, money market, calling accounts and prepaid debit cards.
The average balance across all transaction accounts, including savings by age, is:
- $5,400 for those under 35 years old
- $7,500 for those ages 35 to 44
- $8,700 for those ages 45 to 54
- $8,000 for those ages 55 to 64
- $13,400 for those ages 65 to 74.
- Median bank account balances drop to $10,000 for those 75 and older
Average cash held at home
Since the good old days of the Y2K scare (and before that), it has been common practice for people to keep some cash at home. Whether hidden in the mattress or in a coffee can in the refrigerator, cash can come in handy in natural disasters when the grid is down.
Some experts recommend that you have enough money for about three days to get through a difficult situation. Think about what you might need to buy in the event of a disaster and keep that amount on hand. However, also remember that keeping cash at home means that the money does not generate returns and is vulnerable to theft and fires.
Recent trends indicate that young people are returning to the cash economy. Many adopt a practice called cash stuffing. They take their income in cash and store it in envelopes or jars, one container for each category of spending. When the container is exhausted, this is the case for the month. Recurring bills are paid through a checking account and credit cards are paid, but from the credit card cash container.
Supporters say it’s a way to control spending, and one online poll suggests that as many as 61% of adults ages 18 to 41 use cash stuffing to some extent.
Health care savings
Nearly three in four middle-class people (74%) are saving for health care expenses. Fifty-nine percent are
Saving in an individual account (e.g., savings, checking, brokerage, etc.), 23% save in a health savings account
(HSA), 14% save in a flexible spending account (FSA), and 4% through other means.
The Employee Benefit Research Institute (ERBI) reports that balances in HSAs are trending upward, but remain relatively low.
Year-end balances in 2022 rose to $4,607, but average balances remain modest. This may be a result of the fact that many of the HSAs in EBRI’s HSA database are relatively new. Roughly, a third of accounts have been opened since 2021.
Homeownership: 66% of Americans own their homes
Home ownership can constitute a significant portion of household wealth – and grow significantly as people age.
The average home equity for middle-class families is $177,000. Home equity increases with family income. Retirees with household incomes from $50,000 to $99,000 have $140,000 in home equity, compared to $254,000 in home equity for households with incomes from $100,000 to $199,000.
Average home ownership by age: According to recent data from Census Bureaufamilies aged:
- Under 35s have $60,000 in home equity
- 35-44 have $111,000
- 45-54 have $144,000
- 55-64 have $162,000
- 65 and over have $300,000
Home ownership can be a critical component of a retirement plan. Retirees can utilize these funds in a wide range of effective ways, most commonly by: Downsizing.
Design these strategies to use your home equity in your Boldin Plan and see the impact on your cash flow, ability to achieve your desired retirement lifestyle, and net worth.
Average retirement savings
Retirement accounts are tax-advantaged accounts that are typically not used until after retirement. In most cases, there are hefty tax penalties for withdrawals made before age 59½.
TransAmerica says the average middle-class retirement savings is $66,000.
The Federal Reserve’s latest survey of consumer finances shows that the average retirement savings account by age:
- $18,880 for those under 35 ($49,130 is average)
- $45,000 for 35-44 year olds ($141,520 is average)
- $115,000 for 45-54 year olds ($313,200 is average)
- $185,000 for 55-64 year olds ($537,560 is average)
- $2,000,000 for those over 65-74 ($609,230 is the average)
- $130,000 for those over 75 ($462,410 is average)
Average IRA Balance
investment company instituteICI) indicates that 36% of all Americans have an IRA — the vast majority of those accounts are traditional IRAs rather than Roth IRAs, SEP IRAs, SAR-SEP IRAs, or SIMPLE IRAs.
However, Roth IRAs are growing in popularity. In fact, it can be a smart tax strategy to convert money to a Roth IRA. (Learn more about Roth conversions…)
employee benefits research instituteIbri) reports that
- The average IRA balance is $123,973.
- However, IRAs held for 20 years or more are worth $283,200 on average.
Fidelity puts the average IRA balance at $116,600.
The average amount held in a 401(k), 403(b), or similar plan
Workplace retirement savings plans have become the way Americans save for retirement.
According to Retirement Rights Center45% of all workers participate in a workplace retirement plan. They reported that the average retirement account balance for all households in the public and private sectors is $86,900. For households with a worker or spouse between the ages of 55 and 65, the average balance is $185,000.
Vanguard’s How America Saves 2024 report, the average balance of defined contribution plans, most 401(k)s, was $134,128 in 2023.
Here are some average 401k balances by age from Fidelity:
- $10,500 for those between 20 and 29 years old
- $38,400 for those ages 30 to 39
- $93,400 for those ages 40 to 49
- $171,400 for those ages 50 to 59
Most valuable asset? plan! Only 18% of Americans have done it
Odds are that because you’re reading this article, you’re doing better than the averages — much better. But, do you have what may actually be your most valuable and untapped asset? plan? Written plan for your retirement funds?
However, according to SincerityOnly 18% of Americans have a written retirement plan. There is significant research indicating that a plan is the missing link to financial success and confidence.
When you retire, you no longer live month to month or year to year. When you retire, you are dealing with a limited pool of financial resources that you need to use to finance the rest of your life. You really need a plan.
It’s easy to create, manage, and track a retirement plan with Boldin Retirement Planner. Best of all, the comprehensive system enables you to optimize your time, taxes, investments, healthcare, and more to achieve greater wealth, security, and happiness.
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