How Do You Compare? Average Cash, Savings, Home Equity and Other Balances

How Do You Compare? Average Cash, Savings, Home Equity and Other Balances

According to reporting from the Transamerica Center for Retirement Studies, retirees have a wide variety of savings and investments.  Here are the average cash, savings, and home equity balances in the U.S. How do your financials stack up?

Keep reading to see how your accounts and investment types compare to that of most retirees.  Use the NewRetirement Planner to see your totals now and projections for further growth. And, make adjustments and try different scenarios to maximize your wealth.

NOTE on Average versus median: The average numbers you will review below are usually higher than the median because very wealthy individuals can inflate the average. The median is just the middle number in a set of numbers.

Cash and Cash Accounts

You want money in cash accounts that you will need for shorter term living expenses and emergencies.

Living Expenses: You want cash available to cover your spending needs that are not met by existing income.  Ideally you have cash available for the next 6 months to 2 years of spending.  Use the NewRetirement Planner to see the delta between your income and expenses.

Emergency Cash: Most experts recommend that you have enough emergency cash to cover 3-6 months of living expenses.  In a pinch? Explore the best and worst sources of emergency money.

There are three common types of cash accounts: checking accounts, savings accounts and… cold hard currency.

Checking Account: 77% of Retirees Have a Checking Account

Before ebanking, it was almost impossible to function without checking.  And, Transamerica reports that a full 77% of retirees have this type of account.

The most recent Survey of Consumer Finances announced that the average checking balance in 2016 was $10,545 (with the median balance being only $3,400).

Balances are only slightly higher for older Americans at:

  • $10,337 for 45-54 year olds (median is $3,400)
  • $11,098 for 55-64 year olds  (median is $5,000)
  • $15,752 for 65-74 year olds (median is $7,000)
  • $15,803 for people over 75 (median is $7,600)

Average Cash Savings Account: 62% Have Savings Accounts

Transamerica reports that 62% of retirees have a savings account.

The balances listed below reflect the averages across savings accounts, money market accounts, call deposit accounts and prepaid cards.  

  • $30,563 for 45-54 year olds
  • $46,102 for 55-64 year olds
  • $51,948 for 65-74 year olds
  • $35,597 for people over 75

Cash: 46% of Retirees Keep Cash on Hand

Transamerica reports that 46% of retirees are keeping cash at home.

Since the good old days of the Y2K panic (and before), it has been a common practice for people to keep some amount of cash on hand at home.  Whether it is stashed in the mattress or a coffee can in the freezer, cash can be useful in a natural disaster when the grid might be down.

Some experts do recommend that you have about three days worth of cash to get through a tough spot. Think through what you might absolutely need to buy in a disaster and have that amount on hand.

However, also remember that keeping cash at home means that the money is not earning returns and is also vulnerable to theft and fire.

Home: 74% of American Retirees Own Their Home

Three out of four retirees own their home. And, home equity accounts for a significant portion of household wealth — growing significantly as people age.

According to Census Bureau data, households aged:

  • 45-54 have $70,860 in home equity totaling 64% of their net worth
  • 55-64 have $103,400 in home equity totaling 61% of their net worth
  • 65-69 have $136,670 in home equity totaling 61% of their net worth
  • 70-74 have $153,300 in home equity totaling 72% of their net worth
  • 75 and older have $149,860 in home equity totaling 75% of their net worth

Home equity can be a critical component of a retirement plan.  This money can be tapped by retirees in a wide variety of effective ways, most commonly through: downsizing or securing a reverse mortgages.

Model these strategies for using your home equity in your NewRetirement Plan and see the impact on your cash flow, ability to achieve your desired retirement lifestyle and net worth.

Retirement Accounts

Retirement accounts are tax advantaged accounts that are typically not used until you are in retirement. In most cases, there are hefty tax penalties for withdrawals made before you are age 59 1/2.

IRA: 36%

The Investment Company Institute (ICI) reports that 36% of all Americans have an IRA — the vast majority of those accounts being traditional IRAs as opposed to Roth IRAs or SEP IRAs, SAR-SEP IRAs or Simple IRAs. 

However, Roth IRAs are growing in popularity.  In fact,  it can be a savvy tax strategy to convert money to a Roth IRA.  (Learn more about Roth Conversions…)

The Employee Benefit Research Institute (EBRI) reports that

  • The average IRA balance is $123,973.
  • However, IRA accounts that have been held for 20 years or longer are valued at $283,200 on average.

401(k), 403(b) Or Similar Plan: 45%

According to the Pension Rights Center, 45% of all workers participate in a workplace retirement plan and 34% participate in a retirement savings plan. 

According to Fidelity, the average 401(k) balances by age cohorts are:

  • $93,400 for those ages 40-49
  • $160,000 for those ages 50-59
  • $182,100 for those ages 60-69
  • $171,400 for those ages 70-79

Types of Investments

Not all investments are equally valued by retirees.  Ownership in the stock market is the most popular.

Stocks, Mutual Funds and Exchange Traded Funds (ETFs): 58%

According to Gallop, 55% of all Americans and 58% of those over 65 own stocks. 

And the Pew Research Center, found that the the median holding for those over 65 is $100,000. Most of that investment is in 401(k) accounts, and some of it may be represented by pensions that invest in the stock market.

Certificates of Deposit (CDs): 20%

A Certificate of deposit is a deposit you make with a bank that includes the promise that you won’t withdraw the money for a set period of time. To make that deal attractive, the bank gives you a better interest rate than you get with a regular savings account. 

After a long decline in use, CDs have been making a come back.

Transamerica reports that 20% of retirees have CDs.

Bonds: 12%

A bond is debt you can buy from a government or a corporation. You loan the bond issuer money for a set period of time, and they pay you a premium for that loan that’s known as the yield of the bond.

Overall, direct household participation has fallen largely due to low interest rates.

Transamerica reports that 12% of retirees have bonds.

Real Estate Investments: 9%

There are many different ways to invest in real estate beyond owning rental property. 

Transamerica reports that 9% of retirees have real estate investments.

No Investments: 12%

Cue the sad music. The reality is that many retirees don’t have investments at all.  The good news? It is possible to live on Social Security alone

Own Their Own Business: 1%

While this percentage is low, more and more retirees are starting businesses after retirement and they are good at it.

According to the Global Entrepreneurship Monitor (GEM), the highest rate of entrepreneurship worldwide has shifted to the 55-64 age group. And, entrepreneurial activity among the over 50s has increased by more than 50% since 2008.

In America, 34 million seniors want to start a business.

Learn more about financial success later in life and explore 12 business ideas for over 50.

Annuities: 18%

Transamerica reports that 18% of retirees are getting income from an annuity.

An annuity is a payment stream that you purchase with savings.  You are paying a fixed sum of money for a predetermined revenue stream. 

You can model an annuity purchase as part of your overall NewRetirement Plan.  Annuities are a great way to guarantee income rather than relying on riskier investment options.

The Most Valuable Asset? A Plan!  Only Done by 18% of Americans

Odds are that because you are reading this article, you are doing better than the averages — far better.  But, do you have what is actually perhaps the most valuable and underutilized asset?  A plan? A written plan for your retirement finances?

However, according to Fidelity, only a mere 18% of Americans have a written retirement plan.

When you retire, you are no longer living month to month or year to year. When you stop working, you are dealing with a finite set of financial resources that need to be budgeted to fund the rest of your life. You really do need a plan.

It is easy to create, manage and track a retirement plan with the NewRetirement Planner. Best of all, the comprehensive system enables you to do better with your time, taxes, investments, healthcare and more for more wealth, security and happiness. 


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