The Federal Reserve’s Survey of Consumer Finances (SCF) is released every three years. The report is a financial snapshot of U.S. households by demographic and economic groups, providing details on income, assets, debt and net worth.
The last SCF was conducted in 2022 and released in October 2023. U.S. households reported an average retirement account balance of $333,940 and an average net worth of $1.06 million. Read on to see a breakdown of these numbers by age.
The average retirement account balance by age
Retirement savings are measured as the accumulated balance on individual retirement accounts (IRA), Keogh accounts and employer-sponsored accounts such as 401(k) plans, 403(b) plans and the Thrift Savings Plan. It is important to note that this does not include investments held in individual brokerage accounts.
The chart below shows the average U.S. household retirement account balance by the age of the reference person, defined as the man in mixed-sex couples and the older person in same-sex couples.
age range | Average retirement savings |
|---|---|
18-34 | $49,130 |
35-44 | $141,520 |
45-54 | $313,220 |
55-64 | $537,560 |
65-74 | $609,230 |
75+ | $462,410 |
All households | $333,940 |
Data source: 2022 Federal Reserve Survey of Consumer Finances.
The average net worth by age
Net worth is equal to assets (financial and non-financial) minus debts. The most common financial assets reported by U.S. households in the 2022 SCF were bank accounts (98.6%), retirement accounts (54.3%), and brokerage accounts (21%). The most common non-financial assets were vehicles (86.6%) and primary residences (66.1%).
More than three-quarters of U.S. households reported being in debt, with an average debt burden of $163,800. The most common sources of debt were credit cards (45.2%), auto loans (34.7%) and student loans (21.8%).
The chart below shows the average net worth of U.S. households based on the age of the reference person.
age range | Average Net Worth |
|---|---|
18-34 | $183,380 |
35-44 | $548,070 |
45-54 | $971,270 |
55-64 | $1.56 million |
65-74 | $1.78 million |
75+ | $1.62 million |
All households | $1.06 million |
Data source: 2022 Federal Reserve Survey of Consumer Finances.
The Median Retirement Account Balance and Net Worth by Age
Averages can be misleading when working with skewed data, that is, data that does not follow a uniform distribution. Net worth and retirement savings are good examples of asymmetric data because wealth is not evenly distributed across the U.S. population. The richest 10% of U.S. households control 66.9% of total household wealth, according to the Federal Reserve Bank of St. Louis.
In this case, the skewed data skews the average because a small portion of the population is very wealthy. For this purpose, the median (average) value is a better reference. By definition, 50% of data points are larger than the median and 50% of data points are smaller than the median.
The chart below shows the median retirement account balance and median net worth of U.S. households based on the age of the reference person.
age range | Median retirement savings | Median net worth |
|---|---|---|
18-34 | $18,880 | $39,040 |
35-44 | $45,000 | $135,300 |
45-54 | $115,000 | $246,700 |
55-64 | $185,000 | $364,270 |
65-74 | $200,000 | $410,000 |
75+ | $130,000 | $334,700 |
All households | $87,000 | $192,700 |
Data source: 2022 Federal Reserve Survey of Consumer Finances.
As noted above, the median U.S. household reported a retirement account balance of $87,000 and a net worth of $192,700 in the 2022 SCF. This means that half of U.S. households reported account balances of larger retirement accounts and more wealth, and half of U.S. households reported smaller retirement account balances and less wealth.
These statistics may give rise to feelings of dissatisfaction or even embarrassment in some readers. But anyone can improve their financial situation with the right attitude and advice. The first step is to establish a budget. Financial planners often recommend the 50-30-20 framework, as explained below.
Necessary expenses: 50% of income should be allocated to necessary expenses like groceries, gas, rent and utilities. Minimum debt payments also fall into this category.
Discretionary spending: 30% of income should be allocated to discretionary spending such as travel, entertainment and luxury purchases.
Savings: 20% of income should be saved for retirement through individual accounts, employer-sponsored accounts, or a combination of both. Debt payments above the minimum also fall into this category.
Generally, it’s best to pay off high-interest debt before investing additional dollars in brokerage or retirement accounts. The definition of high interest debt ranges from 6% to 8%, but it ultimately depends on what your investments will earn. Of course, no one knows the future, so we estimate things very conservatively. You want to avoid a situation where debt accumulates faster than dollars invested.
Once high-interest debts are paid off – a good example is credit cards – financial planners generally advise paying off other debts gradually, while saving for retirement. A common recommendation is to ensure that contributions to employer-sponsored plans are sufficient to obtain the full company match. Not all employers offer matching contributions, but those that do are essentially offering free money.
Beyond that, I think additional savings should be invested through an IRA or personal brokerage account, simply because they offer more flexibility. Anyone who doesn’t know where to start should consider an index fund that tracks the S&P500, a benchmark for the entire American stock market. Plus, with interest rates at their highest levels in decades, now is a good time to move money into a high-yield savings account.
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Here is the average net worth and retirement savings of American households by age was originally published by The Motley Fool
