The typical American worker has just $955 saved for retirement, study shows

A new study finds that the median American worker has just $955 saved for retirement through a defined contribution plan like a 401(k) account, with most falling well short of recommended retirement savings targets for their ages.

The study by the National Institute on Retirement Security (NIRS) found that among all workers between the ages of 21 and 64, including those who haven't saved anything for retirement, the median amount saved in a defined contribution plan was just $955 as of 2023.

By contrast, among those who have positive retirement plan wealth — or at least $1 saved in a defined contribution (DC) plan — the median savings were much higher at $40,000.

The report found that the average account balance among workers aged 21 to 64, including those with no savings, was $93,229. However, among those who have saved at least $1 in a DC plan, the average savings was $179,082.

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NIRS' study also compared Americans' retirement savings balances against the targets used by Fidelity, which developed guidelines based on age and income levels. 

Fidelity recommends Americans save their annual income in retirement by age 30, have three-times their income saved by age 40, six-times their income by age 50, eight-times their income at age 60 and 10-times their income when they reach the normal retirement age of 67.

NIRS found that for all the median respondents analyzed in the study across age, race, education and gender groups – none have retirement savings or net worth that's at or above their age-based savings target.

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Across all respondents, the median amount of DC retirement savings as a percentage of their savings targets is 4%. When using net worth instead of DC retirement savings, the median percentage of all respondents hitting their savings target is 41%.

Among those who have positive DC retirement balances, the median percentage of all respondents who hit the savings target was 18%.

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The median amount of DC retirement savings as a share of the savings target was 19% for men and 17% for women, while among racial groups, Asian (23%) and White (20%) workers saved more than Black and Hispanic workers (11% each).

The amount saved rises with higher levels of education from 10% for workers whose highest education was high school or less, to 15% for those holding associates degrees, 21% with bachelor's degrees and 26% for those with master's, doctorate or professional degrees.

Across age groups, the most successful savers were the youngest cohort of workers between 21 and 34, with 21% saved as a share of the target, followed by 19% of workers between the ages of 55 and 64.

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"As expected, those with some amount of savings is closer to their savings target than those with no savings. But even for those with savings, these amounts are quite low if the expectation is that retirement savings in a DC plan will constitute an important source of retirement income," NIRS said.