This is the Average Amount of Salary Americans Contribute to Retirement Savings**
The Average American’s Contribution to Retirement Savings in Salary
This represents the typical amount of salary that Americans allocate to retirement savings.
Financial advisors often suggest allocating 10% to 15% of your earnings towards retirement savings, yet most Americans are falling short of this target. A recent survey by GOBankingRates unveiled the surprisingly low average contribution made by the typical American towards retirement funds. Explore: 7 Expenses You Can Eliminate in Retirement Discover More: A Clever Strategy to Boost Your Retirement Savings in 2024.
A Comparison of Americans’ Retirement Savings Contributions to Ideal Savings Levels.
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A Large Number of Americans Are Not Saving for Retirement
According to the GOBankingRates survey, almost 40% of Americans are not saving anything for their retirement. On the other hand, 20% of Americans are saving within the recommended income bracket, with 11% contributing 10%, 4% contributing 11-14%, and 5% contributing 15%.
If you are currently saving less than 15% but receive a company match, you might be able to contribute a smaller portion of your salary.
Kris Carroll, CFA, CFP, managing director Carolinas at Wealth Enhancement Group, suggests aiming for a 15% savings rate. Since your employer might already contribute up to 5%, you would only need to save 10%. Saving 10% of your income may seem challenging, particularly in the initial years with a lower salary or during the child-rearing phase when funds seem tight. To reach this target, consider starting to save early and gradually raise your savings rate as time goes on.
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**Financial advisors often recommend allocating 10% to 15% of your earnings to retirement funds, yet a large number of Americans are not meeting this goal. According to a recent survey conducted by GOBankingRates, the average contribution made by Americans is surprisingly low.
- Almost 40% of Americans are not setting aside any funds for retirement.
- 20% of Americans are saving within the suggested range, with 11% putting away 10%, 4% saving between 11-14%, and 5% saving 15%.
If you’re contributing less than 15% but still receive a company match, you may qualify to contribute a lower percentage. Kris Carroll, CFA, CFP, the managing director for the Carolinas at Wealth Enhancement Group, pointed out that targeting a 15% savings rate could result in an employer match of up to 5%, enabling you to save only 10%. Saving 10% of your income may seem daunting, particularly in the early stages or while raising a family. Initiating early and gradually increasing your savings rate can assist you in achieving this objective.
“Embracing Abundance Leads to Greater Fulfillment”
Chris Urban, CFP and the creator of Discovery Wealth Planning, suggests saving anywhere from 10% to 30% of your income.
“It’s crucial to remember that everyone has unique lifestyles, living costs, and family situations,” he advised. “So, when deciding where you fall within this range, consider these factors.”
Nevertheless, if you’re not close to the 30% mark, you’re not alone – as per the survey, only 6% of Americans are putting away 20% or more of their earnings for retirement.
Anything is better than nothing.
Even if you are unable to contribute 10% at the moment, any contribution is better than none.
According to Urban, if your employer provides a matching contribution to their retirement plan, it is highly recommended to contribute at least the maximum amount eligible for matching. This is essentially free money. If possible, consider making additional contributions beyond the matched amount.
If you are unable to do so now, this is a goal to strive towards gradually.
According to Urban, “I recommend boosting your contribution as your income grows. Recognize the impact of compounding. Contributing smaller sums early on in your career could have a greater effect than larger amounts later due to the compounding returns.”
Survey Methodology:
- GOBankingRates conducted a survey involving 1,005 Americans aged 18 and above nationwide from Jan. 23 to Jan. 26, 2024.
- Participants were asked six questions:
- What is more important to you in a job/career?
- What is the minimum annual salary that would make you feel happy?
- How much do you believe you will need in savings to retire comfortably?
- How much do you currently have saved for retirement?
- Do you think you will be able and prepared to retire at 65?
- What percentage of your salary do you put toward a retirement plan, such as a 401(k)?
- The survey was carried out using PureSpectrum’s survey platform by GOBankingRates.
Chris Urban, a CFP and the founder of Discovery Wealth Planning, recommends saving between 10% and 30% of your income. Lifestyle, expenses, and family situations differ for each individual, so it’s vital to take these factors into account when determining your saving goals. Only 6% of Americans are setting aside 20% or more of their income for retirement, as indicated by the survey. If you can’t reach 10% at the moment, even saving a small amount is better than nothing. Urban suggests taking advantage of any employer-matched contributions to your retirement fund, as it’s essentially free money. Aim to increase your contributions gradually as your income rises. Keep in mind that the power of compounding can make early small contributions more impactful than larger ones made later on.
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This content was first published on GOBankingRates.com: Discover How Much the Average American Contributes to Retirement Savings.