According to Federal Reserve data, the average savings amount in America was $8,863. Now in 2022, the average amount Americans are aiming to save over the course of the year is $5,710 according to CNBC/New York Life. The personal savings rate is around 7-8% in 2022 as well according to the Bureau of Economic Analysis. Not bad, considering there are other surveys that show the average American can't come up with a $400 – $1,000 emergency.
Despite all the dire assessments that the average American is financially screwed, the reality from government data is that the average American is living quite a healthy lifestyle.
For example, we also learned from the US Bureau of Labor Statistics that the average American is spending $45,756 a year to live, after taxes. That's quite a healthy spending amount given the median home price is around $358,000 in 2022.
But let's drill down deeper into the average savings figure of $8,863. The amounts vary widely by age, as you would expect. Further, the savings amounts vary by whether you have children or not. Goodness knows raising children is an expensive endeavor!
Average Savings Amounts By Age In America
Below is the break down of savings by age group, by singles with children, singles without children, couples with children, and couples without children.
Age 34 and younger
- Singles with children: $1,350
- Singles with no children: $2,729
- Couples with children: $3,682
- Couples with no children: $4,727
Ages 35 to 44
- Singles with children: $2,422
- Singles with no children: $3,693
- Couples with children: $10,399
- Couples with no children: $5,306
Ages 45 to 54
- Singles with children: $4,163
- Singles with no children: $5,763
- Couples with children: $15,589
- Couples with no children: $11,483
Ages 55 to 64
- Singles with children: $6,911
- Singles with no children: $6,786
- Couples with children: $17,587
- Couples with no children: $15,722
Ages 65 to 74
- Singles with children: $6,652
- Singles with no children: $7,292
- Couples with children: $13,164
- Couples with no children: $15,297
Age 75 or older
- Singles with children: $6,909
- Singles with no children: $9,981
- Couples with children: $8,967
- Couples with no children: $16,025
Average Savings Amounts By Age Analysis
Across all age groups, the savings figures are disappointing. I was hoping that those in the 45 and over bracket would have 2-3X more in savings to pay for a rainy day.
After all, it's always a good idea to save up at least 6 months of expenses in savings in case of an emergency. If the average American is indeed spending $45,756 a year, that means the average American should have around $23,000 a year in savings.
Unfortunately, need even the 75+ age group couple with no children has that much saved ($16,025).
Let's be real on the average savings amount. $8,863 in savings isn't going to get you very far if you want to retire. If you're under 25, having $8,863 in average savings is good, but not if you are older.
Saving More Aggressively For Your Financial Future
If the amount of money you're saving each paycheck doesn't hurt, you're not saving enough. Too many people go through life, winging their finances. Then they wake up 10, 20, 30 years from now and wonder where all their money went.
Below is my savings rate percentage guide. The higher percentage of your after tax income you save, the sooner you are able to retire. For example, I recommend everyone save a minimum 20% of their income after maxing out their 401(k) and/or IRA.
If you can save at least 20% each year, you'll be able to retire in 37 years, or age 59 if you started working at 22. However, if you're able to save 50% of your after tax income each year, you can comfortably retire in 18 years at age 40.
I retired at age 34 because I was saving 60% – 75% of my income for 13 years. It has been wonderful not working a full-time job since 2012. Not a day goes by where I'm not thankful for making financial sacrifices in my 20s and early 30s to be free.
Stay On Top Of Your Finances
The best thing all of us can do is to save aggressively and then diligently track our net worth. Use a free financial tool such as Personal Capital to track your wealth, analyze your investments for excessive fees, and properly forecast your retirement future.
You can always use a pen and paper or a spreadsheet to manually keep track of your finances, by why not leverage free technology to improve your financial life? Once you link all your accounts to Personal Capital, the software will track all your finances automatically for you. You can check your finances on your phone or on your laptop.
Retirement planning is so important. You need to make sure the capital you have is sufficient to produce enough passive income in retirement to cover your best life's living expenses. Check out Personal Capital's Retirement Planner tool below which calculates whether you are on track.
Always Be Saving As Much As Possible
Remember, there's no rewind button in life. It's much better to end up with a little too much money, than too little money.
The last thing you want to do when you're old is to go back to work! I promise you that the financial sacrifices you make will be worth it. When you look back on your life, you will realize these sacrifices are not sacrifices at all.
My wife and I are both stay at home parents to our 2 year old boy. We appreciate being able to spend as much time with him as possible and not have to go to work.
Nobody looks back and regrets spending time with their family. But plenty of people look back and regret spending so much time trying to seek money and prestige.
Achieve Financial Freedom Through Real Estate
Real estate is my favorite way to achieving financial freedom. About 70% of my savings has gone into real estate for over 20 years because it is a tangible asset that is less volatile, provides utility, and generates income.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up.
Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
About the Author: Sam worked in investing banking for 13 years at GS and CS. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income, most recently helped by real estate crowdfunding.
He spends most of his time playing tennis and taking care of his family. Financial Samurai was started in 2009 and is one of the most trusted personal finance sites on the web with over 1.5 million pageviews a month. You can sign up for his free newsletter here.