What Is The Average Retirement Savings in 2019?
How much does the average American have saved for retirement? Nothing. Nothing at all.
What Is The Average Retirement Account Value?
Age 55 - 64:
Average retirement account: $374,000
Median retirement account: $120,000
As a comparison, my girlfriend turns age 60 soon. Her retirement savings are $344,704 based on $34,000 salary and raising two kids on her own up until the last two years when she got a new job position. So she is at 10 times her old salary saved or can sustain that $34,000 life style in retirement.
So how much needed to be saved to get to a $374,000 retirement account?
Portfolio Visualizer goes back to 1986 so I started there for the analysis. I randomly picked 10 popular companies from 1986 and spread across the sectors. $600 was invested in each stock for a total of $6,000 and dividends were reinvested. This goes with my theme that a young person can invest $1,000 to $2,500 into a stock and then just move on to the next one. All they can lose is that initial investment.
PORTFOLIO VISUALIZER RESULTS
|Start Balance 1/1/1986||$6,000|
|End Balance 5/31/2019||$435,877|
After investing only $6,000, the portfolio ending balance was $435,877 after 34 years beating the average saving of $374,000.
POSITION RETURN CONTRIBUTIONS
|ABT||Abbott Laboratories||Health Care / Major Pharmaceuticals||10.00%||$50,290|
|PG||Procter & Gamble Company||Basic Industries / Package Goods/Cosmetics||10.00%||$32,848|
|MO||Altria Group||Consumer Non-Durables / Farming/Seeds/Milling||10.00%||$165,236|
|BA||Boeing Company||Capital Goods / Aerospace||10.00%||$34,994|
|JPM||J P Morgan Chase & Co||Finance / Major Banks||10.00%||$14,071|
|XOM||Exxon Mobil Corporation||Energy / Integrated oil Companies||10.00%||$18,144|
|TXN||Texas Instruments Incorporated||Technology / Semiconductors||10.00%||$45,942|
|KO||Coca-Cola Company||Consumer Non-Durables / Beverages||10.00%||$34,995|
|T||AT&T Inc.||Public Utilities / Telecommunications Equipment||10.00%||$5,427|
|WEC||WEC Energy Group, Inc.||Public Utilities / Power Generation||10.00%||$27,930|
Back in 1985 my income was $30,191 and $6,000 was 19.9% of my gross income. If $55,000 is average household income today, then 19.9% of that would be $10,945. It would probably take the household four years to save $11,000 covering about 38 years time span. I worked a total of about 43 years age 18 to 60.
Financial advisors say at age 65 retirement that the retirement account value should be 11 times desired income or in the case of the $55,000 household about $484,000 for 80% income replacement. This could have been achieved with about an $7,000 investment early in the person's career.
As a side note just investing $800 in $AAPL would have resulted in $445,938 for the same time frame. This is after they released the Macintosh computer. The Macintosh is a family of personal computers designed, manufactured, and sold by Apple Inc. since January 1984. The original Macintosh was the first mass-market personal computer that featured a graphical user interface, built-in screen and mouse.
Disclosure: I am/we are long ABT, MO, BA, JPM, TXN and WEC.