Finance

How much has the average 70-year-old saved?

Published

2 days ago

June 30, 2024

how much does the average 70-year-old have in savings

Part of retirement planning involves determining how much you need to save and invest so that you can enjoy the kind of lifestyle you want. Setting your savings goal based on age can be a good way to organize your strategy and measure how to track progress on your goals. You may also be interested in how much the average retiree has saved at ages 65, 70 and older. In this article, we’re going to focus on how much the average person has saved and possibly should have saved by age 70. However, keep in mind that your situation is still completely unique to what your goals are. You might want to working with a financial advisor to ensure your savings goals align with where you need to be later.

How much savings does the average 70-year-old have?

According to data from the Federal Reserve’s most recent Survey of Consumer Finances, the average 65- to 74-year-old has saved just over $426,000. That’s money specifically set aside in retirement accounts, inclusive 401(k) plans and IRAs.

The Federal Reserve also measures median and mean (average) savings for other types of financial assets. According to the data, the average 70-year-old has approximately:

$60,000 in transaction accounts (including checking and savings accounts)
$127,000 in certificate of deposit (CD) accounts
$17,000 in savings bonds
$43,000 in cash value life insurance

In terms of overall trends, the figures show an increase compared to the previous Survey of Consumer Finances. According to that study, the average 65 to 75-year-old had $381,000 saved for retirement in 2016. However, that figure was well below the $486,000 that 70-year-olds saved on average in 2013.

Whether the Survey of Consumer Finances shows an increase or decrease in savings for 2022 remains to be seen. While Social Security benefits have seen the cost of living rise several times since the last survey was completed, lastingly high inflation has put even more pressure on American purchasing power. The research could show that 70-year-olds have less pension savings if they spend more to compensate for higher prices.

If you’re ready to be matched with local advisors who can help you achieve your financial goals, start now.

How much should a 70 year old have in savings?

Financial experts generally recommend saving somewhere between $1 million and $2 million for retirement. When you look at an average retirement savings of $426,000 for people between the ages of 65 and 74, the numbers clearly don’t add up.

The amount a 70-year-old needs to save for retirement can depend on several things, including:

Desired retirement lifestyle
When they apply Social Security Benefits
Other sources of retirement income, such as a 401(k), IRA, pension or annuity
Other savings accounts, including taxable investment accounts, savings accounts and CDs
General health and life expectancy

The more money you expect to spend to cover living expenses in retirement, the more you will typically need to save. Social Security benefits are an important part of many retirees’ income picture, but these payments may not go very far. Pensions are becoming increasingly rare, as employers opt for defined contribution plans instead.

Long-term care can put a strain on retirees’ budgets and increase the amount of money you need to save. Medicare does not cover long-term care, but Medicaid does. But to qualify for Medicaid, you typically have to spend your assets. Getting long-term care insurance may be a solution so you don’t risk draining your savings.

What is a good net worth at age 70?

Net value is a measure of your assets versus your liabilities. In other words, it’s the difference between what you own and what you owe.

The average net worth of Americans between the ages of 65 and 74 hovers around $1.2 million. The average net worth is lower, at $164,000. The average 70-year-old has about $105,000 in debt, including mortgages, mortgages, credit cards and student loans, as measured by the Fed’s data.

What constitutes a good net worth is situation-specific and largely linked to your retirement goals. There are several rules of thumb you can apply to arrive at an ideal net worth calculation. For example, one line suggests that you have a net worth of 70, which is 20 times your annual expenses.

If you spend $100,000 a year to retire, you should have a net worth of at least $2 million. On the other hand, if you only spend $40,000 on living expenses, your target net worth would be much lower at $800,000.

Is retirement at age 70 a good idea?

If it makes sense retired at the age of 70 may depend on your finances and what you envision for your dream retirement. When choosing a retirement age, it is useful to take the following into account:

When you really need Social Security benefits
Whether you will continue to work part-time after your retirement
How long you plan to retire
Your desired savings goal and current savings interest rate

If you can delay receiving Social Security benefits until age 70, that could increase your benefit amount. You will be eligible for 132% of your benefit amount if you wait longer to file.

You can also continue saving and investing pension if you work longer. For example, you can continue to max out your 401(k) each year, or at least contribute enough to get your full employer match. You can also move money into an IRA for additional savings.

If you retire at age 70, you have a two-year break before you have to start taking required minimum distributions (RMDs) from a traditional 401(k). You must also carry RMDs if you have a Roth 401(k), but Roth IRAs are exempt from this rule.

Within that window, you may decide to convert your traditional IRA to a Rot account. Doing so could mean a higher tax bill in the year of the conversion because you will have to pay taxes on your traditional IRA earnings. But in the future, you could receive tax-free distributions from your Roth IRA.

It comes down to

How much savings does the average 70-year-old have? According to the Federal Reserve, just under $500,000. The better question, though, might be whether that’s enough for a 70-year-old live on in retirement so you can get your budget corresponding. With no end in sight to higher inflation, a $500,000 pension may not be realistic for everyone. The good news is that the younger you are, the more time you have to plan, save and schedule to invest for the future.

Retirement planning tips

Consider talking to your financial advisor about the pros and cons of retiring at age 70 and what your personal timeline for retirement should look like. If you don’t already have a financial advisor, finding one doesn’t have to be difficult. SmartAsset’s free tool matches you with up to three financial advisors serving your region, and you can interview your advisors for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.
Delaying Social Security benefits can help you accumulate more money in retirement. Receiving benefits early may reduce your monthly payment amount. The earliest you can start taking Social Security is age 62, but it may be beneficial for you to wait until at least your full retirement age to file. Also keep in mind that if you decide to take Social Security early and continue to work, your benefit amount may be reduced even further. Understand how maximize Social Security benefits can help you make the most money.
Have an emergency fund on hand in case you encounter unexpected expenses. An emergency fund should be liquid – in an account that is not at risk of significant fluctuations like the stock market. The trade-off is that the value of liquid cash can be eroded by inflation. But with a high-interest account, you can earn compound interest. Compare savings accounts from these banks.