Average Retirement Savings vs. Emergency Savings by Age Group

Don't Overlook the Importance of Emergency Savings.


The Balance / Julie Bang

Saving for retirement is an important financial goal, and ideally your nest egg will follow a steady upward trajectory over time. But just how much do Americans have tucked away for their later years and for an emergency?

Whether you're in your 20s or in your 40s, saving for both retirement and a crisis like job loss should be a top priority. Having benchmarks for tracking your progress as you save can be helpful and important.

Key Takeaways

  • Emergency savings of at least three months’ living expenses should be your first goal, before you even begin thinking of saving for retirement.
  • Fidelity indicates that you should have one year’s salary tucked away in retirement savings by the time you reach age 30.
  • The average retirement savings for people age 38 through age 43 is just shy of $62,000, increasing by about $100,000 for those from age 56 to 61.
  • Experts indicate that you should have $1 million set aside by retirement time, but the average for people in their fifties is significantly less.

Retirement vs. Emergency—Which Comes First?

Experts advise that you should put away at least three months' worth of living expenses before you begin saving for retirement. Six months' worth is even better. Tally up what you spend on rent or mortgage payments, utilities, transportation, insurance premiums, uninsured health care costs, food, and debt service. Then, multiply that number by three to six, depending on your goals.

Set this money aside so it will be there for you in the event that something catastrophic occurs that prevents you from earning income for an extended period of time. Consider keeping your funds in an easily accessible, interest-bearing account, like a high-yield savings account or money market account.

Retirement Savings
  • Knowing how much you'll need for retirement is something of an educated guess, particularly when you're younger, because you can't yet know how long you'll be living off your savings.

  • You must also forecast your financial needs, estimating what your budget will be, years in the future.

  • Experts recommend having at least one year's current salary saved by your thirties.

  • Experts recommend having three times your current annual salary saved in your forties.

Emergency Savings
  • Experts suggest having at least three months, but preferably six months, of living expenses saved in an emergency fund. The amount is calculated by multiplying your budget by the appropriate number of months.

  • You can shave some luxuries off your monthly budget to arrive at this number, whittling it down to just must-pay bills.

  • Earners in their thirties spend, on average, $3,400 per month on living expenses.

  • Earners in their forties devote approximately $4,300 per month to their budgets.

Average Savings for 20-Somethings

Between stagnating wages and heavy student loan debt, millennials face some of the biggest challenges when saving for retirement, but a Bankrate survey indicates that they're actually taking the lead when it comes to proactively contributing to their retirement plans.

The Transamerica Center for Retirement Studies estimates that the median retirement savings for millennials are about $23,000. According to Fidelity, the typical saver should aim to have one year's worth of salary saved by age 30. A 25-year-old should aim to have 25% to 50% of that number.

Data from the Bureau of Labor Statistics (BLS) shows that the average 25-year-old earns a median annual salary of $51,168. A 20-something with a median of $31,000 in savings could reasonably be on the right track to having a year's worth of income saved by age 30.

Average Savings for 30-Somethings

Your financial picture might begin to shift a bit when you reach your 30s. You might be earning more, but life changes like getting married or having children will probably increase your expenses. Higher expenses could make saving for retirement more difficult—and there are still those emergency savings to consider.

Individuals in this demographic had average monthly expenses just north of $3,400 as of 2018. That might work out to at least $20,400 for six months' living expenses, or $10,200 for three months.

According to the Economic Policy Institute, the average retirement savings of Americans ages between ages 32 and 37 was $32,602 as of 2016. Ideally, it should be closer to $67,000. This figure increases dramatically for savers in their late 30s and early 40s. In that age range, the average retirement savings grows to $61,933. That's a significant jump, but are older 30-somethings keeping the pace? The median annual salary for 35- to 39-year-olds is $50,752, according to the Department of Labor Fidelity recommends that people aim to save the equivalent of at least one year's income by age 30 and three years' income by age 40. Thirty-somethings are missing the mark, based on the EPI's numbers, however.

Average Savings for 40-Somethings

You might be heading into your peak earning years and carrying less debt by the time you reach your forties, but the prospect of paying for your children's college educations in a few years can put pressure on your ability to save for retirement.

Americans in their early 40s have a median income of just over $67,000, according to the EPI. The average savings amount checks in at $113,370 for 44- to 49-year-olds. Money is beginning to add up, but savers in their 40s still have their work cut out for them.

Total annual expenditures average $49,279 among older households. Their expenses drop from $56,267 for the 55–64 age group to $36,673 for the 75-and-older group Using that base, they should also have $12,900 to $25,800 set aside in an emergency fund.

Average Savings for 50-Somethings

You can probably anticipate having a sizable cushion of funds set aside for retirement and for an emergency by the time you reach your 50s, but the EPI data suggests that 50- and 60-somethings still have a long way to go.


Turning 50 also allows supercharging your savings, because you can begin making catch-up contributions to your employer's 401(k) or your individual retirement account (IRA).

According to the research, the average retirement savings amount for people in their 50s was $124,831 in 2013. It's $163,577 for the people ages 56 to 61.

These figures are far less than the $1 million that many experts recommend as a target for retirement savings. Social Security can supplement existing retirement savings, but the average monthly retirement benefit of $1,471 as of 2019 might not be enough to fill the gap. The almost-good news is that although monthly living expenses don't decline for this demographic, they at least hold steady at about $4,300 a month.

Average Savings for 60-Somethings

Now you're inching up toward retirement. Individuals in this age group earned about $80,500 annually as of 2018. Their retirement savings should be roughly eight times that amount by that point, or about $644,000.

Your costs of living should drop somewhat in this age range, however, so you won't be laboring under quite as much of a burden to create an emergency account if you haven't already done so. This demographic lives on about $38,000 per year as of 2018.

According to the Government Accountability Office (GAO), about half of households age 55 and older have no retirement savings (such as in a 401(k) plan or an IRA).

Some Savings Tips

These numbers might seem intimidating, but remember that contributions to most retirement savings aren't taxed until you take the money back out again. That will likely happen at a point in time when you'll fall into a lower tax bracket.

Some experts advise setting up automatic deposits to savings to help set money aside consistently. The theory is that you won't miss money you never see in the first place. Your savings will grow while you become accustomed to living on whatever money remains in your account.

Keeping Average Savings in Perspective

The average retirement savings is $95,776 across all age groups, according to the EPI. Overall, the data suggests that Americans are simply not saving enough for retirement, regardless of age. 


As you evaluate your own plan, don't let the average retirement savings by age distract you from your goals.

Comparing your savings to those of others in your age group can be instructive, but the more important issue is whether what you're saving now will allow you to have the kind of retirement you desire. 

If your savings are below the average for your age group, it's time to reconsider your plan and determine what you can do to get back on course. You might consider increasing your elective salary deferrals if you're not saving enough in your employer's plan to get the full matching contribution, or use an IRA to grow your savings if you don't have access to a 401(k). 

Being realistic about your retirement timeline is also necessary. You might have to consider staying in your full-time job longer or working part-time after you retire to make up for any shortfall if you have less saved than you'd like. Calculating how much you need to retire, looking at what you already have saved, and determining how much you'll need to reach your goal can help you shape your plan more effectively. 

Frequently Asked Questions (FAQs)

How long will my retirement savings last?

The length of time your retirement savings will last depends on how much you have saved, other sources of income during retirement, how much you withdraw each year, and market performance during your years of withdrawing from your account. A financial advisor can help you combine these factors to estimate how long your planned savings will last.

How much retirement savings is enough?

The amount you need to save for retirement depends on the standard of living you hope to have during your retirement years, as well as whether you want to work at all and any other sources of income you may have, such as Social Security. One simple way to estimate this is to take 80% of your current annual income and multiply it by the number of years you expect to live in retirement. There are a variety of other ways to estimate your needs in retirement, and you should discuss your goals with a financial advisor.

Where is the best place to keep your emergency savings?

Keep your emergency savings in an account that you can access quickly and that earns a decent yield so you'll lose little or nothing to inflation. Some of your best options may include a high-yield savings account, a money market account, a certificate of deposit, stocks, or mutual funds.

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  2. Bankrate. "Not Much of a Retirement Saver? This Is Why You’re Feeling Fomo."

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  12. Economic Policy Institute."The State of American Retirement: How 401(k)s Have Failed Most American Workers."

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