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2024 Retirement Acct Statistics

beebee
edited October 27 in Other Investing
Lots of interesting Stats

deposit accounts retirement statistics

Comments

  • Thank you, @bee
    Yes, interesting data.
  • Thanks, @bee!
    Interesting stats.
  • Kind of bizarre I think. Op. cit.

    A one,
    Americans believe they need to save an average of $1.8 million for retirement,
    And a two:
    The average 401(k) balance in the second quarter of 2024 was $127,100
    And a three:
    68% of American workers in 2024 feel somewhat or very confident in their ability to have enough money in retirement,
    That don't add up, do it?
  • edited October 27
    Yes, this does not compute.
    Possible explanations include:
    a) Americans have saved huge amounts in taxable accounts.
    b) Americans will sell their businesses for large profits and use proceeds to fund retirement.
    c) Americans will sell their pricey homes for large profits and use proceeds to fund retirement.
    d) Americans will receive a huge inheritance and be on "easy street" in retirement.

    I don't believe most Americans will experience the scenarios listed above.
  • Another possibility - multiple sources (with different sampled populations), multiple definitions.

    Americans believe they need to save an average of $1.8 million for retirement,
    From Charles Schwab, presumably but not necessarily Schwab customer beliefs.

    The average 401(k) balance in the second quarter of 2024 was $127,100

    From Fidelity - probably just the accounts that Fidelity administers. How representative is that of the working (and retired) population? Also and importantly, this is an average per account, not per person, and people may have multiple 401(k) accounts, not to mention 403(b) accounts, 457 accounts, and other employer-sponsored accounts.

    68% of American workers in 2024 feel somewhat or very confident in their ability to have enough money in retirement

    From EBRI - a source I consider more reliable, but I'd still have to look at their methodology to know whom they were polling and how the question was phrased.
    https://www.ebri.org/docs/default-source/by-the-numbers/ebri_rsrc_facts-and-figures_011923.pdf

    I view this piece as financial porn, or more magnanimously financial popcorn - fun to munch on but ultimately just airy fluff. Enjoy it for what it's worth.

    Bonus: The average IRA balance, as opposed to the median retirement account balance could be skewing high thanks to IRA accounts like Mitt Romney's, which was worth $1M over a decade ago.
  • Challenge here is that these are statistics data taken from several sources. I will leave the rest to your imagination.
  • Per the OP provided link - The average retirement account balance for U.S. households was $333,940 in 2022, according to the Federal Reserve Survey of Consumer Finances (SCF). That’s a 12.9% increase from $295,740 in 2019.
  • edited October 27
    @msf

    Good points!
    I realize this is "financial popcorn" but I sometimes read these articles for entertainment.
    Perhaps I should pursue a different hobby? ¯\_(ツ)_/¯
    The average IRA balance could be skewed much higher if Peter Thiel's IRA was included.
    Lord of the Roths
  • msf said:

    Another possibility - multiple sources (with different sampled populations), multiple definitions.

    You're killing me man. Simply murder.

    I view this piece as financial porn, or more magnanimously financial popcorn - fun to munch on but ultimately just airy fluff. Enjoy it for what it's worth.
    Turns out I won't be here all week. Eat whatever you like. But the chef's specials are leftovers.:)



  • You guys are getting very loose with your commentary. It looks like I've corrupted yet another previously well-regulated operation.:)
  • Yes, this does not compute.
    Possible explanations include:
    a) Americans have saved huge amounts in taxable accounts.
    b) Americans will sell their businesses for large profits and use proceeds to fund retirement.
    c) Americans will sell their pricey homes for large profits and use proceeds to fund retirement.
    d) Americans will receive a huge inheritance and be on "easy street" in retirement.

    I don't believe most Americans will experience the scenarios listed above.

    e) Winning the lottery
    f) Successfully suing something, or somebody, for something, anything, and the lawyers didn't take all of it.
    g) Elon Musk will give a million dollars to anyone that says a nice thing about the app formerly known as Twitter.

    Strategies that won't be tried:

    a) Paying cash for used vehicles

  • edited October 27
    Speaking of paying cash- we recently had extensive tree work done at the place in Guerneville. It ran about 14k, and the tree service company sent us an email invoice which was set up to pay by credit card. That got me thinking- by CC we would get 1% back, right?

    So I used two JPM credit cards to pay the invoice instead of sending a check, as we usually would have done. By coincidence the JPM checking account had just received two retirement deposits and was flush, so I just transferred 14k from the checking account to pay the CC charges. The $140 CC spiff paid for a new garden edger which we needed.

    Every little bit helps!
  • edited October 27
    Nice job, Old_Joe!
  • edited October 27
    I may have a 403(b) from the university, but *all* of my investments are in my taxable accounts that I consider as 'retirement accounts'. So just focusing on tax-deferred/exempt accounts doesn't present a complete or accurate picture, umho.
  • I have less than the average 401(k) balance but I'm not worried because the government will take care of me. With SS, Medicare, and other handouts, I'll make more than before retiring. No worries.
  • beebee
    edited October 28
    Food for Thought... @msf popcorn for thought

    @WABAC highlighted:
    Americans believe they need to save an average of $1.8 million for retirement
    @ a 4% SWR that $1.8M would provide $72K of income for spending. Seems like a reasonable retirement spending amount.

    Looking at this $1.8M nest egg another way, one could assign a 25 year asset value to one's pension, SSI or a combination of the two by adding up the 25 years of payouts.

    SSI Only:
    Those that will receive SSI, one could assign a "25 yr asset value" to SSI. An average earner will receive $24K while a high earner will receive about $42K for 2024. In today's dollars, one would need $600K to provide a $24K SWR for an average earner and $1.05M to provide a $42K SWR for a high earner.

    Average earners will still need ($1.8M-$600K) or $1.2M to bridge their $24K SSI income of $72K
    High earners will still need ($1.8M-$1.05M) or $750K to bridge their $42K SSI income of $72K

    For most Americans who have little or no savings, SSI optimistically will provide about 30-60% of a retiree's income needs. Retirees will need to make up the difference by spending down savings/assets, working after age 65, and modifying their spending.

    Sadly for some, it's a bridge too far.
  • Of course the average 401K balance is low. It includes people who just started saving and have $2000 in their account.
    A better statistic is the average balance of 55 or 60 year old people.
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