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And I'm not just being dramatic like those fear-mongering cable news anchors or your niece when the tag on her shirt suddenly becomes itchy.
According to a recent study from Ramsey Solutions, nearly half of Americans aren't saving at all for retirement, and those who do save aren't saving enough. That's about as sad as that scene in Titanic where Rose killed Jack by not scooting over. Just scoot a little bit, Rose. Just a skosh would have done it. You could have saved a man's life by skoshing. But here's the deal. You don't have to be one of those people. You don't need anyone's permission to start saving right now to make your retirement dreams a reality.
So how much should you be saving? And what if you're behind and you're already in your 30s or 40s or even 60s? Well, in today's video, we'll take a look at what average Americans have saved for retirement by the decade so you can see how your nest egg stacks up. P.S. Don't stack eggs. It's very dangerous.
And more importantly, I'll unscramble what a grade A nest egg would be for your current age. That's right, we're gonna crack this case wide open so you can hatch a plan to retire with dignity. But first, you know what would be egg-cellent? If you would like and subscribe to the channel, and maybe share this with your friends, because as we know now, sharing is important. Just ask Jack from Titanic, oh wait, you can't because he's dead, Rose. A skosh, that's all it would take. I'll never let go.
Okay, let's take a look at what Americans have saved for retirement broken down by age group according to recent data. Americans in their 20s, average balance, $10,500. Contribution rate, 7%. Okay, that's, it's not a lot. And let me just say, 7%, it's not gonna get the job done. And I get it, you know, you're young, you probably haven't earned much yet, but the earlier you start investing, the better.
Even just five years can make a huge difference and could really impact when you'll be able to retire. The important thing is to just get started building a strong financial foundation as soon as you can. Build that habit. And this starts with getting out of debt, building an emergency fund. As soon as you've done that,
it's time to start investing. And what I recommend is 15% of your income going into retirement accounts. Look, if you're in your 20s, you're very young. You still have high natural levels of collagen, you know what no cap and delulu means, and you can sleep on a futon without needing two weeks of physical therapy to recover.
And on top of that, you also have time and compound growth on your side. And those two things combined are a pretty powerful wealth building force. So take advantage of them ASAP. Do not squander these years. Here's what I mean. Let's say your annual salary is $50,000.
Investing 15% of your income would be $7,500 a year or $625 a month. If you invested that amount every year for 30 years starting at age 25 and were assuming a 10% rate of return, you would have $1.3 million by age 55.
And that's if you never increase your contribution amount. So you could and should have way more than that because you'll likely make more money than you are today. That's the power of time and compound growth. So the bottom line, get started early. So how much should you have saved for retirement at this age? Well, an A plus in my book would be $50,000 or more by the end of your 20s.
But if you don't have that, don't freak out. If you're debt free and investing 15% before age 30, I'm still going to call that a win. You've got plenty of time left to build up that nest egg. All right, moving on. Americans in their 30s. Average balance, $38,400. Contribution rate, 8%. So the average American in their 30s still isn't contributing enough to their retirement.
And I'm guessing this is because a lot of people in their 30s are starting families, they're taking on mortgages, they still have debt hanging around, and at this point in your life, you might not even be thinking about retirement yet. You've subconsciously said to yourself, "That sounds like a problem for future me." - And now I am future me, and this sucks. - But that's a big mistake. This is the time to make saving for retirement a priority.
If you're in your 30s and you still have debt and no emergency fund, that's why you're only investing 8%. You're doing too much at once and you still have a mess to clean up. Here's what you need to do. Pause investing. That's right. I'm telling you to stop investing just for a little while to get these prerequisites knocked out so you can get back to investing way more than 8%. And research shows that the top indicator of investment success is your savings rate, aka the percentage of your disposable income that you're actually putting into retirement.
So let's get that 8% up to 15% to make sure you're doing enough to reach those retirement goals. So how much should you have saved by this age?
Let's do the math using that same $50,000 salary and a 10% expected rate of return from our last example to see what a grade A nest egg would be for someone in their 30s. If you're 35 years old right now and you started investing $625 a month at age 25, you likely have around $131,000 in your retirement fund. If you've got that much sitting in retirement, you're on track to retiring a millionaire. That's a good thing. Next,
Next up, Americans in their 40s. Average balance, $93,400. Contribution rate, 8%.
So if you're in your 40s, you're probably making more money than you ever have before. And because of that, it's easy to fall into the trap of keeping up with the Joneses, buying expensive cars, and going on vacations you can't afford. That's called lifestyle creep. And look, I'm not mad at you for using some of your hard-earned money for a girl's trip to Branson to see Yakov Smirnoff or the world-famous Baldnobbers. Whatever flips your flops.
It's your life. ♪ I said a flip flop ♪ ♪ A flippy, a flippy to the flip flip top ♪ ♪ And it don't stop ♪ Just make sure that you're also thinking long-term and putting enough of your paycheck into your retirement accounts. So how much should you have saved by your 40s? Well, using the same salary and expected rate of return from our last example, let's say you're 45 years old and you started investing $625 a month at age 25, you should be around $472,000 in that nest egg.
which is well above the average we saw earlier. But if you're in your 40s and you haven't even started saving for retirement yet, there's still time and there's still hope. The average salary for Americans in their 40s is around $59,000. So if you started investing 15% of that salary starting at age 40 and did that every year until you retired, you could still retire with a million dollar net worth. So have hope. Next up, we've got Americans in their 50s. Average balance, $160,000.
Contribution rate, 10%. Okay, still not looking good here. But remember, this is an average. And clearly, average sucks. But it also means a lot of people have more than that and a lot of people have less than that. So how much should you have at this age? If you're 55 years old right now and you started saving $625 a month at age 25, you should have about $1.3 million in that nest egg, plus some gray hairs and a full arsenal of dad jokes. I used to hate facial hair.
but then it grew on me. But if you're closer to average and you're feeling way behind, don't panic. You still have time to get back in the game. Here's some things you can do to catch up if you're in your 50s. Number one, cut all unnecessary spending so you can increase your investment contributions. Number two, put every single pay raise or bonus toward your investments. Maybe even take on a side job or a side hustle.
Number three, take advantage of catch-up contributions in your retirement accounts, which is an additional $6,500 for a 401k and $1,000 for an IRA. Number four, you may want to downsize your home if that mortgage is a heavy burden and keeping you from investing more. And number five, lastly, if you still have any consumer debt hanging around, what are you doing? Pay that junk off, you chicken-hearted chucklehead. You call me.
Let's talk about Americans in their 60s. Average balance in the 401k, $182,100. Contribution rate, 11%. Now, most people I know would like to step away from their career at some point in their 60s so they can focus on time with family or pursue other passions like traveling, gardening, or sexagenarian parkour.
What? It just means people in their 60s, okay? It's not a dirty reference. Google it. Don't Google sexagenarian parkour. That's a more specific reference. But sexagenarian just means someone in their 60s. I digress.
Looking at the average numbers, though, we see a different story. Lots of Americans have to keep working well into their 60s because they didn't build these habits early enough. And maybe you're okay with that. A recent survey found that more than a third of American workers say their retirement dream involves some sort of work. That's great. That's not a bad thing. But if you're going to work in your retirement years, it should be because you want to, not because you have to.
So what would a grade A nest egg be at this age? Well, if you're 65 years old and you've saved $625 a month for 40 years, you should have about $3.6 million in that nest egg. Way to go, you. Looking at you, Barb. Looking at you, Gus. When I'm 60, we're all gonna be named Ashton and stuff. It's sad.
All right, we're not done yet. You can't forget about people that are older than 60, and that would make them 70. So let's talk about Americans in their 70s. Average balance, $171,400. Contribution rate, 12%.
Now, this last number is truly heartbreaking. It's clear that many Americans simply aren't prepared for retirement. I mean, 171 grand is nowhere near enough to cover healthcare expenses in the later years of your life. But again, keep in mind that this number is an average. There are also plenty of millionaires with a high net worth who are comfortably living out their dream retirement. They've used common sense, they've worked hard, and they've built wealth that will help them leave a legacy for their families and their communities. And that's where I want you to end up.
with enough to live and give like no one else. So hopefully by this point, you haven't fried your nest egg and you still have millions of dollars sitting there allowing you to give, save, and spend to your heart's delight. All right, I hope this video was helpful for you or at least eye-opening. Let me know in the comments if you're on track, if you're behind, or you're ahead with your retirement goals. And if you haven't started yet, don't put this off. As the old saying goes, the best time to plant a tree was 20 years ago. The next best time...
So get out there and stick a big old sugar maple in the ground.
Doesn't even have to be a sugar maple. Could be a spruce, flowering dogwood for all I care. Just get to planting, all right? Build that habit. And if you need some hope for your financial future, check out my new book called Breaking Free from Broke. You can get your copy with the link in the description below. As always, make sure to like, subscribe, and share this with your friends who couldn't tell the difference between a weeping cherry and a crab apple. Listen, we can't all be arborists. Thanks for watching. I'll see you next time.
