Quick Summary

  • Almost half of Americans aged 55 and up have nothing saved for retirement.
  • The top 1% of American families have over $1 million in retirement accounts.
  • The other 99% should try to start saving in tax-advantaged accounts, the sooner the better, to benefit from the power of compounding.


Analysis from the U.S. Government Accountability Office (GAO) shows that 48%, or nearly half of households headed by people age 55 and older have no retirement savings. First released in 2015 and updated in 2019, the study, aptly entitled “Most Households Approaching Retirement Have Low Savings,” found that among households with some retirement savings, the median amount of savings is about $104,000 for households headed by those who are 55-64 and $148,000 for those ages 65-74. That, according to the GAO, is “equivalent to an inflation-protected annuity of $310 and $649 per month, respectively.”

One-Percenters’ Savings

Meanwhile—and this won’t come as a surprise—the top 1% of families are much better prepared for retirement, at least financially speaking. One-percenters, by the way, are families with an adjusted gross income of at least $480,804 (for the 2016 tax year), according to statistical data from the Internal Revenue Service.

Just how much savings are we talking about? A 2016 report from the Economic Policy Institute (EPI) writes that the top 1% of working-age (32-61) families had $1.08 million or more in retirement accounts, which include 401(k)s, IRAs and Keogh plans.  By comparison, the same report found that the median working-age family had only $5,000 saved—equal to about 0.46% of that $1,080,000 figure.

Federal Reserve and Federal Deposit Insurance Corp. figures from 2018 indicate the top 1% have a median balance of $1.13 million across all savings accounts, and the size of the average account is $2.5 million.

Fast Fact: 42% of Americans have less than $10,000 saved for retirement, according to GoBankingRates’ 2018 Retirement Savings survey.

Rich Getting Richer

The EPI report states that retirement inequality is growing, with the rich getting richer and the poor getting poorer. “Participation in retirement savings plans is highly unequal across income groups,” the EPI reports. “In 2013, nearly nine in 10 families in the top income fifth had retirement account savings, compared with fewer than one in 10 families in the bottom income fifth. This disparity has grown in the new millennium as the share of working-age families with retirement account savings declines for all except the top income group.”

The following table shows the retirement savings for families ages 32-61 by savings percentile, according to the EPI report. Overall, the gap in retirement account savings tends to grow wider the closer you get to that 1% (technically, families in the 99th percentile).           

Percentile Retirement Account Savings
50th (median) $5,000
60th $20,100
70th $50,000
80th $116,000
90th $274,000
99th $1,080,000


How to Build a Bigger Nest Egg

While it’s no surprise that wealthier people have more money stashed away for retirement, there are steps “the other 99%” can take to build a bigger nest egg. For starters, try to max out contributions to your 401(k) plan (if your employer offers one). Any match your employer provides is essentially free money—so make the effort to take advantage of it.

Whether or not you have a 401(k), you can also set up and contribute to other tax-advantaged retirement accounts, such as Traditional and Roth IRAs. Of course, the sooner you get started, the better, so you can benefit from the power of compounding. Here’s an example. Assume you start a traditional IRA when you are 45 years old, contribute $5,000 each year and earn 5% annually. When you turn 70½ and start taking required minimum distributions (RMDs), you would have contributed $125,000 and your account balance would be about $250,567.

Now assume all things are the same except you start contributing to your IRA 20 years earlier, when you’re 25. With 20 extra years to save, you’ll contribute more, of course, but your balance will grow even more due to compounding. In this example, you would have contributed $225,000 over the years, but your balance would be a whopping $838,426 when you hit 70. (And keep in mind that if you open a Roth IRA—starting in your twenties gives you decades for it to grow—you never have to take RMDs.)

If you can’t swing $5,000 a year, that’s okay. Any money you set aside is better than nothing. If you contribute just $500 a year for 45 years with that same 5% rate of return, for example, you’ll have a balance of almost $84,000, and you will have contributed just $22,500. Every bit helps—especially if you start early. The key is to make saving a habit, or better yet, make it automatic by having a percentage of each paycheck go directly into your retirement account(s).

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