Average American Savings by Age: How Does Your Financial Progress Measure Up?

Saving money is a cornerstone of financial security. Whether it’s for a down payment on a home, an emergency fund, or retirement, setting money aside for the future is essential. However, it can be difficult to gauge whether you're saving enough. One way to assess your progress is by comparing your savings to the national averages by age group. This can offer insight into how your financial habits align with those of other Americans and help you plan for the future.

In this article, we’ll break down the average American savings by age, provide guidance on how much you should aim to save at each stage of life, and share tips on how to accelerate your savings to meet your financial goals.

Understanding Average Savings by Age

Before diving into the numbers, it’s important to understand that "savings" can refer to various types of financial assets. In general, savings are funds reserved for future needs, such as planned purchases or unexpected expenses. The Federal Reserve tracks Americans' savings through categories like "transaction accounts" and "time deposit accounts."

  • Transaction accounts are those you can easily access for deposits and withdrawals. These include:
    • Checking accounts
    • Savings accounts
    • Money market accounts
    • Prepaid debit cards
  • Time deposit accounts, such as certificates of deposit (CDs), generally restrict access to funds for a set period. Early withdrawals often come with penalties, making them less flexible but potentially more rewarding for long-term saving.

According to the Federal Reserve’s 2022 Survey of Consumer Finances, the average balance in transaction accounts (which includes checking, savings, and similar accounts) was $62,410. However, the median savings—the point at which half of Americans have more, and half have less—was only $8,000. This significant difference between the average and median highlights the disparity in savings across income levels and financial circumstances.

Average Savings for Individuals in Their 20s

It’s common for those in their 20s to have lower savings balances, especially as they might be paying off student loans or starting their careers in entry-level positions. However, this doesn’t mean young adults shouldn’t focus on saving. In fact, the earlier you begin, the more time your savings will have to grow through compound interest.

While the Federal Reserve doesn’t track data specifically for individuals in their early 20s, the broader group of Americans under 35 has an average savings of $20,540, with a median of $5,400.

Why Are Savings Low in Your 20s?

  • Educational Expenses: Many in their 20s are paying off student loans, which can limit their ability to save.
  • Lower Incomes: Early in your career, it’s typical to earn less as you build experience and climb the ladder.
  • Lifestyle Choices: Younger individuals often prioritize spending on experiences like travel, which can delay serious saving.

How to Start Building Savings in Your 20s

Even with limited income, it’s possible to start small and make consistent progress. Consider opening a high-yield savings account to earn more interest on your deposits. If your employer offers a 401(k) plan, contribute enough to take full advantage of any matching contributions—they’re essentially free money. Additionally, setting aside even small amounts each month in an individual retirement account (IRA) can lay the foundation for long-term financial security.

Average Savings for Individuals in Their 30s

By your 30s, you might have a more stable income, possibly having received promotions or made career advancements. As financial responsibilities grow—such as marriage, children, or homeownership—so does the need to boost savings.

Federal Reserve data shows that Americans under 35 have an average savings balance of $20,540, while the median savings for this group is $5,400.

Key Financial Goals for Your 30s

  1. Emergency Fund: At this point, financial experts recommend saving three to six months’ worth of living expenses in a readily accessible account.
  2. Retirement Savings: If you haven’t already started contributing to a retirement plan, now is the time. Take advantage of employer-sponsored plans like a 401(k) or invest in an IRA.
  3. Homeownership: Many people in their 30s begin saving for a down payment on a home. While saving 20% of the home’s cost is ideal, smaller down payments are possible, especially with government-backed loan programs.

Strategies to Increase Savings in Your 30s

  • Automate Contributions: Set up automatic transfers from your checking to your savings account. This makes saving easier and ensures you’re consistent.
  • Increase 401(k) Contributions: Each time you get a raise, consider increasing your 401(k) contribution by 1% or 2%. This allows you to save more without drastically impacting your budget.
  • Cut Unnecessary Expenses: Revisit your budget and look for areas to trim costs, like dining out or subscription services. Redirect these savings toward long-term goals.

Average Savings for Individuals in Their 40s

As you enter your 40s, your peak earning years may begin, offering a prime opportunity to ramp up your savings. According to the Federal Reserve, Americans aged 35 to 44 have an average savings balance of $41,540, with a median of $7,500.

Shifting Financial Priorities in Your 40s

By this stage, many people focus heavily on retirement savings. With less time to let compound interest work its magic, it’s crucial to take advantage of catch-up contributions if you’re behind. Those over 50 can contribute additional amounts to retirement accounts, such as an extra $7,500 to a 401(k) in 2024.

You might also begin investing more aggressively, shifting from simply saving money to growing your wealth through a diversified portfolio. This could include a mix of stocks, bonds, real estate, and other investments.

Related: Understanding the Foreclosure Process: How to Navigate and Avoid Losing Your Home

How Much Should You Have in Savings?

The ideal amount to have in savings depends on your financial situation and goals. For emergency savings, a widely recommended guideline is to save three to six months’ worth of living expenses. This fund should cover essential bills, such as housing, utilities, and groceries, in case of job loss or other financial disruptions.

To calculate your savings goal:

  1. Total your necessary monthly expenses.
  2. Multiply this number by three to six to determine how much you need in your emergency fund.

For long-term goals like retirement, experts often recommend saving at least 10% to 15% of your income. If you’re behind, increasing that percentage is crucial to ensure a comfortable retirement.

Why Is Saving Money So Important?

Saving provides a financial safety net. When life throws unexpected challenges your way—like a car breakdown, a medical emergency, or job loss—having accessible savings can help you avoid taking on debt or liquidating investments.

Additionally, saving money can help you earn more over time. High-yield savings accounts, for example, offer interest rates much higher than traditional savings accounts, allowing your money to grow while remaining easily accessible.

Building savings also supports long-term financial goals. Whether it’s purchasing a home, sending your kids to college, or retiring comfortably, a robust savings strategy is key to achieving these milestones.

How to Jumpstart Your Savings Growth

If you want to boost your savings quickly, here are some practical steps to consider:

  1. Reevaluate Your Budget: Review your spending and identify areas where you can cut back. This could include canceling subscriptions, reducing discretionary spending, or cooking more meals at home.
  2. Set Up Automatic Transfers: Make saving effortless by automating transfers from your checking to your savings account. This ensures regular contributions without relying on willpower.
  3. Take Advantage of Windfalls: Anytime you receive unexpected money—whether it’s a tax refund, a bonus, or cash from a birthday gift—direct it to your savings rather than spending it.
  4. Open a High-Yield Savings Account: High-yield savings accounts typically offer much higher interest rates than traditional accounts, which can accelerate your savings growth without additional effort.

Where Should You Keep Your Savings?

Choosing the right place to store your savings depends on your goals. For emergency savings, consider high-yield savings accounts or money market accounts. These options offer higher interest rates while keeping your funds accessible. If you prefer easy access to funds for day-to-day spending, a checking account might be more convenient, though it typically offers little to no interest.

For longer-term savings, like a down payment or retirement, certificates of deposit (CDs) or investment accounts may be more appropriate. CDs lock in your money for a set period in exchange for higher interest rates, while investment accounts can provide the potential for greater returns, albeit with more risk.

Related: Where Do Millionaires Really Stash Their Cash? The Secrets Behind Their Financial Strategies

Conclusion: How to Use Average Savings by Age as a Benchmark

Tracking your savings against average balances for your age group can provide a useful benchmark for assessing your financial health. However, everyone’s financial circumstances are different, so don’t be discouraged if you’re behind. Instead, use this information to refine your savings strategy and set realistic goals.

The key to building wealth is consistency. Whether you’re in your 20s just starting out or in your 40s preparing for retirement, making saving a regular part of your financial routine is the surest way to achieve long-term success.