How Many Americans Actually Reach $1 Million in Savings for Retirement?

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It’s common not to have your retirement account balance at the $1 million mark yet. Although this figure might be an aspiration for numerous individuals, achieving it remains uncommon.

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Data from the Employee Benefit Research Institute (EBRI) suggests that merely 3.2% of Americans possess $1 million or more in their retirement accounts.

This shows how much many Americans have managed to save for their retirement, along with steps you can take to increase your own retirement savings.

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What amount of retirement savings do Americans possess?

EBRI examined recent retirement savings figures and discovered the following balances in American retirees' accounts:

  • $0 to $9,999: 58.4% of Americans
  • $10,000 to $99,999: 20.5%
  • $100,000 to $499,999: 13.9%
  • $500,000 to $999,999: 4%
  • From $1 million to $4.99 million : 3.1%
  • $5 million or more: 0.1%

It should be noted that these sums are within tax-advantaged accounts such as 401(k)s and individual retirement accounts (IRAs). This indicates that certain Americans might possess forms of wealth—like traditional IRAs—which enjoy specific tax benefits. brokerage accounts Or rental properties -- that are not part of these statistics.

So, how much should How much have you set aside for your retirement?

There isn't a universal solution for determining how much you should set aside for retirement, but a general guideline suggests saving around 15 percent of your annual pretax earnings each year.

Ways to Increase Your Retirement Savings

If your retirement savings aren’t where they should be, now is an excellent time to start getting things back on course. Below are some recommendations to help increase your savings.

1. Start now

If retirement isn’t something you’ve reached yet, there’s still an opportunity to save funds. Beginning earlier gives your savings more time to increase over time.

For instance, suppose you have 10 years until your retirement and currently possess $10,000 for retirement. investments If you contribute an additional $200 each month to your retirement fund and achieve the historical average yearly return of the S&P 500 at 10.2%, you will accumulate roughly $66,800 in approximately ten years.

Certainly, there’s no assurance you’ll achieve those returns in the stock market, but this illustration demonstrates how significantly even a small sum of retirement savings might grow.

2. Make catch-up contributions

If you're aged 50 or above, you might qualify for making additional catch-up contributions to your 401(k). IRA .

In 2024, older Americans will be able to contribute an extra $7,500 annually to their 401(k)s on top of the standard $23,000 cap. Regarding IRAs, they may add another $1,000 yearly over the usual $7,000 threshold.

3. Enroll in employer-sponsored matching programs

Should your employer provide a 401(k) matching plan, be sure to join! The terms and conditions related to contribution matches can differ based on the employer’s policy. For instance, some might contribute an additional 50%, but only up to 6% of your earnings.

In this situation, should you make an annual income of $75,000 and set aside $375 each month, your employer would add approximately $188, resulting in a combined monthly contribution of $563. This amounts to roughly $2,256 annually. free contributions every year !

Aim for saving $1 million by retirement age; however, fixating excessively on this substantial figure might demotivate you if your savings aren’t close enough yet. Rather than spending everything, aim to set aside 15% of your earnings (or as much as you can manage). Additionally, enroll in your company’s match plan if one is offered.

The earlier you begin, the more time your funds will have to increase.

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