How Much Should the Average American Save for Retirement?. Using these numbers, we see that the average American male should plan for a 21.3-year retirement, while the average woman should plan for 23.6 years. The average American's household income is $74,000. If we take that $74,000 figure and subtract $16,320, we arrive at $57,680 -- that's the amount of income the average American will need to withdraw from their savings each year to replace their pre-retirement income. Multiply that by 22.5 years, and we can see that the average American who is near retirement should have about $1.3 million in savings. Reaching your savings goals At this point, I can guess what you're thinking: "There's no way I'll ever manage to amass $930,600 or more in my lifetime." On the other hand, you may be able to make up for lost time somewhat by reaching to save more. No matter how much you can spare for retirement savings each year, you owe it to your future self to save as much as possible, starting now. The bottom line When we talk about what the average American should be saving for retirement, we're dealing with a number of assumptions about income replacement needs and Social Security (not to mention retirement length). One top financial planner - working alongside the experts at Motley Fool Wealth Management - has prepared a report, " The 7 Deadly Retirement "Sins" (And How to FIX Them)."
The majority of Americans aren’t saving nearly enough for retirement, but millions of younger workers are greatly concerned with not having enough money to provide the financial security they’ll need to eventually leave the workforce. A survey by Principal Financial Group took a closer look at the habits of the most effective retirement savers, and found that there are a few key habits that many people in this group have in common.
Top habits of retirement super savers
Principal Financial surveyed more than 2,400 retirement-plan participants in the 23-51 years old age group who are actively contributing at least 90% of the IRS’s maximum for elective deferrals. This means that all of the individuals surveyed are contributing at a rate of at least $16,200 per year to their retirement accounts, and that’s not including any matching contributions from their employers.
Many of the survey participants aren’t stopping with high 401(k) contributions either. Fifty-six percent of the super savers in the survey reported that they plan to save $20,000 or more this year, meaning that some are likely saving for retirement in IRAs, self-employed retirement plans, and standard brokerage accounts, just to name a few options.
Individuals in the survey group were asked about their habits that allowed them to save so much money. What sacrifices are they making? Are they working longer hours or taking second jobs?
Most aren’t taking a second job, despite the popular perception that you need a “side hustle” if you want money to save. In fact, only 4% of survey participants reported working a second job in order to boost their savings. However, there are some habits that many super savers have in common. Here are the top five:
Percentage of Super Savers Who Do It
Drive older vehicles
Live in a more modest home
Travel less than they’d prefer
Put up with work-related stress
Put in extra hours at work
In addition to these, many survey participants also reported telling their family and/or friends “no” in situations where they would end…