Here's The Average Retirement Savings of 75-Year-Old Americans (How Do You Compare?)

While you may have many years to save for retirement, most nest eggs peak in the early to mid-60s. People tend to retire around this age and spend those savings down throughout their lifetime.

This is according to a standard retirement plan, but it also means that you will likely have less at age 75 than at 50, 55, or even 60. So, how much is that? We'll look at the typical retirement account balance for 75-year-olds so you can compare and course-correct if needed to live comfortably in older age.

The average savings of 75-year-olds today

According to the Federal Reserve Survey of Consumer Finances report, households headed by someone age 75 or older have average retirement savings of around $462,410. The number includes 401(k)s, IRAs, and retirement-focused accounts.

This is also an average number, determined by taking the total amount of all households and dividing it by the number of households. It includes those with the most saved (like billionaires) and those with nothing.

Why median savings means more

Perhaps more relevant than average savings is the median savings amount. In this case, it's $130,000, which is much less than cited above. As a median number, it also means that half of the households have less than $130,000.

So, if you're in that bucket, you're in good company. This number may not reflect money outside of retirement accounts and other types of assets, like a business or farm. They also don't include any adjustment for the cost of living in a particular geographic area, which determines just how far that $130,000 can actually go.

Why balances peak before 75

Taken on its own, the $130,000 median savings amount may not seem like much. But this number reflects an important truth about aging: The household has likely spent a good amount of the retirement savings prior to this point.

Consider that peak balances happen somewhere between 65 and 74. So, by the time 75 comes around, the senior has been living on that cash for almost a decade! Most people are firmly past the accumulation phase of wealth and actively using their accounts (often in tandem with Social Security benefits) to pay their bills.

Reasons balances shrink in your 70s

It's normal for account balances to decline at this age, partly because you typically won't be working (or at least not as much). Later in your mid-70s, it's partly because you've already passed the required minimum distributions (RMD) age of 73, so the IRS requires yearly withdrawals from tax-deferred accounts. This is exactly how retirement is designed to work.

Shrinking account balances in your 70s often include:

• Required minimum distributions (RMDs) from traditional IRAs and 401(k) plans
• Rising health care and long-term care costs
• Market volatility (in some cases)

This is a time of planned spend-down. Withdrawing from a nest egg is the plan.

What the retirement savings numbers leave out

Retirement account balances don't factor in how far that money needs to go. Two very different households will look at $130,000 differently, depending on:

• Total debt levels, including money owed on cars or homes
• Market value of real estate
• Future value of Social Security benefits
• Value of traditional annuity-like or pension income streams

Even facts like whether you need to pay for long-term care or can live with children during your final years matter. A standard "here's what you need to retire" number can't capture these nuances.

The real benchmark to consider

A healthy retirement plan focuses less on national averages and more on cash-flow sufficiency. Do you have enough income to cover your bills now, and well into your future? If the answer is "yes," it doesn't matter if you have $130,000 or $1,300,000 in your accounts.

To figure this out, add up all of your predictable monthly income (savings, investments, pensions, Social Security, side jobs) and compare it to your monthly spending. Note any cushion available for unexpected medical or home emergencies. A consistent surplus shows you are doing better than the raw "average" account balance suggests.

What if your numbers look low?

If nothing else, these national averages get you thinking about your true financial situation. So, if you find yourself with lower numbers than what's needed to thrive, you still have time to change things. Look at trimming discretionary expenses, such as gifts to adult children, travel, or dining out, before cutting essentials like prescription meds.

You can also review your withdrawals with a fiduciary financial planner to see if an advanced tax strategy can help. A proper triaging of what accounts to tap first, such as taxable vs. tax-deferred vs. Roth, may put you in a better place.

Bottom line

Whether you are closer to the average of $462,000 or the median of $130,000, the principle remains the same. You are supposed to spend down balances in older age, and there's no need to worry unless the money coming in is far less than what's needed to last your lifetime.

An annual review of your Medicare plan, medical needs, account balances, and expected income can help you make the right moves for a long retirement. Consider these reviews a necessary financial wellness check and a reason to celebrate another year of retirement.

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