How Much Should You Have Saved by 65? What the Numbers Actually Show for Average Americans

If you're 65 years old, or the milestone is fast approaching, retirement is likely on your radar. But before you sail off into the sunset, it's critical to ensure you have enough saved to cover the lifestyle you envision for your golden years.

How much should you really have saved by age 65? The answer varies based on your specific situation and retirement plan. This guide explores how much most Americans have saved, how to determine how much you need to save, and how to close the gap between your current savings and your goal.

Average retirement savings for 65-year-olds

On average, Americans aged 65 to 74 have $609,230 saved in retirement accounts, according to the most recent data from the Federal Reserve Survey of Consumer Finances (SCF). But, notably, the average is often skewed higher due to the fact that high earners are included.

The median of $200,000 in retirement savings for 65- to 74-year-olds is perhaps a more realistic assessment of how much most 65-year-olds have set aside for retirement.

How much should you have saved by age 65?

Everyone's financial situation is unique, which means the dollar amount you should have saved by age 65 will vary. But as a general rule of thumb, Fidelity recommends that Americans have 10 times their annual income saved by age 67. For example, if you earn $60,000 per year, having $600,000 saved for retirement by age 67 is a good goal.

How to determine how much you need for retirement

While having a benchmark to aim for is a good starting point, the reality is that the amount of money you'll need to live the retirement you have in mind will vary significantly based on your situation. You might want to save more or less depending on your particular retirement plans.

Generally, you'll need less if you have other income streams, like rental properties or bonds, to count on. But you might need more if you plan to spend more in your golden years on things like travel and lifestyle upgrades.

Take some time to consider what you'd like your retirement to look like, and map out what it might cost. Use these details to give you a better idea of how much you'll need to have saved before leaving the working world behind.

What to do if you're behind

As you check up on your numbers, you might realize you're a bit behind on saving for retirement. While the realization can be startling, the good news is that it's possible to close the gap. The strategies below might help you make headway toward your retirement savings goals.

Make catch-up contributions

If you are at least 50 years old, you can make higher annual contributions to popular retirement savings accounts, like your 401(k) and IRAs. For IRAs, you can contribute a total of $8,600, which is $1,100 higher than the standard limit of $7,500. For 401(k)s, you can contribute a total of $32,500, which is $8,000 higher than the standard limit of $24,500.

If possible, consider bumping up your retirement contributions in an effort to catch up.

Evaluate your spending to prioritize retirement

If you're light on retirement savings, it might be time to make this a top priority in your budget. Start by taking a look at your current spending. Look for ways to cut back in some areas in order to funnel extra funds toward your retirement savings goals.

Cutting back on small things, like subscriptions, is a good place to start. But if you want to make significant progress, you likely need to make bigger changes. For example, swapping out a vehicle to an older model or even becoming a one-car household could help move the needle on your savings goals.

Consider downsizing

For many households, housing costs represent the single biggest expense. If you're open to the idea, consider downsizing to a smaller place to lock in lower housing costs. This might look like renting a one-bedroom apartment instead of a three-bedroom or selling a larger home to settle into a more affordable footprint.

Find ways to increase your income

While cutting back on spending can help you save more for retirement, there's often only so much you can cut. On the other hand, there's no limit to how much income you could earn. If possible, seek out ways to increase your income. For example, you might pick up more hours at work, find a part-time job, or start a side hustle.

As more money comes in, make sure to direct it into your retirement savings accounts.

Consider working longer

If you aren't able to tuck enough away for retirement by your 65th birthday, that's okay. There's no concrete rule that says you must retire at age 65. If you haven't tucked enough away, it might be a good idea to keep working past 65. This can give you some extra time to tuck away more retirement savings.

Consider delaying Social Security

It's possible to claim Social Security benefits as early as age 62. But if you claim before your full retirement age (FRA), your monthly benefits check will be permanently reduced. For future retirees with less in savings, it might make sense to hold out until at least your FRA or even until age 70 to tap into a larger Social Security check.

Bottom line

It's tempting to compare your savings to the average. But in reality, most 65-year-old Americans have less saved than the average of $609,000. Instead of comparing your numbers to the average, take some time to build out a retirement plan and savings goal that matches your lifestyle goals.

With a realistic number in mind, start building your savings more aggressively to set yourself up for a stress-free retirement.

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