Average Retirement Savings ' How Does Your Savings Stack Up?

You've been busting your butt, scraping by, trying to save as much as you can into your retirement accounts, but you never feel like it's enough.

Money is such a taboo subject that most of your co-workers don't feel like opening up about how much they have saved (or how much they wish they would have), so it's tough trying to gauge if you're even in the ballpark of actually retiring one day.

How do you know how you compare to the average retirement savings figure?

According to a recent survey, 51% of workers over the age of 55 have less than $50,000 saved for retirement. And 39% in that same age group have less than $25,000 in retirement savings. Those are frightening numbers if you consider that those people are very close to the typical age of retirement.

The Employee Benefit Research Institute regularly publishes the average retirement savings of different age groups. Recent findings look like this:

If you actually do the calculations, you will discover that these are scary findings indeed.

Half of all Baby Boomers don't have enough money saved for retirement just to cover basic needs.

What can you do? First, you need to figure out how much money you will need for your retirement. There are many variables that must be considered including:

• At what age do you plan to retire? If you are thinking about leaving the workforce early, you will need more money for retirement as you will be retired longer. Consider how long you will be retired. Not a thrilling thing to ponder, but crucial nonetheless.
• How much of your current income do you feel you will need on a yearly basis once you retire? A common percentage range is 65-75%. Be sure to think about whether you will want to travel or relocate. Some people would like to have money to leave to their children. If this is true in your case, you might want to work with a percentage closer to 100.
• Don't forget inflation. Figure about a 3% per year inflation rate. Say you make $100,000 yearly and have decided that you require 65% of that per year during retirement. It is not sufficient to multiply $100,000 by 65% and come up with a neat amount of $65,000. Adding in inflation means you need to multiply your yearly salary by 1.03 and then take 65% of that. Remember you'll have to factor a 3% growth each year! Although, honestly, inflation could be so much more by the time as you get closer to retirement. A sobering thought.

How to Get Your Retirement Savings Above Average

Once you come up with a rough estimate of what you will probably need for retirement, you need to start saving more. Seriously. With the average savings figures what they are, chances are you are not saving enough. Here are a few simple tips to kick your savings into gear:

1. Save more. Add to whatever you are currently putting aside. Even a small amount, over a number of years, will add up. Put aside the most you possibly can.
2. Take advantage of any plans your employer may offer. If you haven't already, find out if your place of work offers 401Ks. Many companies contribute matching funds up to a certain percentage of your salary. But make sure you know how your money is being invested. Just because Dave Ramsey says to 'get your free money first' doesn't always mean it's a good idea, especially if your clueless in how it's invested.
3. Open an Individual Retirement Account. Even if you have a 401K you can usually put aside extra funds into an IRA.

Remember, you may think you are prepared for retirement. But statistics show you probably aren't.

So, how do you stack up?

Tagged as: average retirement savings, baby boomers, prepare for retirement, retirement savings