Understanding Average Savings Account Balance Across the US

The average savings account balance in the US varies significantly depending on factors like age and income level. For example, in 2020, the average savings account balance for households with incomes above $100,000 was around $61,000.

According to a survey, about 27% of Americans have no savings at all, highlighting the need for better financial planning. This is a staggering number, and it's a reminder that we should all strive to save something, no matter how small.

The average savings account balance in the US is relatively low, with the average balance being around $3,800 in 2020. This number is concerning, especially considering the rising costs of living and the importance of having a safety net.

In contrast, households with higher incomes tend to have much higher savings account balances. For instance, households with incomes between $75,000 and $100,000 had an average savings account balance of around $23,000 in 2020.

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Fifty-four percent of Americans have three months of emergency savings, which is the minimum our experts recommend to aim for with an emergency fund.

The Federal Reserve collected this data in 2023, showing a decline from 59% in 2021, the first year-over-year decline since at least 2013.

Three months' worth of living expenses is considered the bare minimum for emergency savings.

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Your savings should grow over time, and one way to think about how much you should aim to have is to look at it as a multiplier of your income. A common formula suggests saving the equivalent of your annual salary by age 30.

By age 40, you should aim to have three times your income saved, and by age 50, six times your income. If you're not meeting these milestones, it might be a sign that you should try to save more aggressively.

Here's a rough guide to help you get started:

Your 20s are a great time to start saving, even if it's just a small amount each month. You're likely just getting started in your career and earning an entry-level salary.

You may not have a lot of money to spare, but it's essential to build an emergency fund, just in case. This can help you cover unexpected expenses, like car repairs or medical bills.

Consider putting as much as you can into a 401(k) or similar retirement plan if your employer offers one. This can help you take advantage of any employer matching, which can add up over time.

A Roth account is a good option if your employer offers it, especially since you're probably in a low tax bracket now. You'll be eligible to withdraw your money and any earnings on it tax-free when you retire.

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By your 30s, you likely have a more stable income and possibly a growing family, which means it's time to boost your savings. Americans under 35 have an average savings balance of $20,540, with a median savings of $5,400.

Having a stable income is a great starting point for building a safety net. Financial experts recommend saving three to six months' worth of living expenses in a readily accessible account.

Your 30s are a prime time to focus on retirement savings. If you haven't already started contributing to a retirement plan, now is the time to take advantage of employer-sponsored plans like a 401(k) or invest in an IRA.

Cutting unnecessary expenses can help you redirect funds toward long-term goals. Revisit your budget and look for areas to trim costs, like dining out or subscription services.

Here are some key financial goals to keep in mind as you approach your 30s:

Using average savings as a benchmark can be a helpful way to gauge your financial health. It's a way to see how your savings stack up against others in your age group.

One common guideline is to aim for a multiplier of your income. By age 30, you should have the equivalent of your annual salary saved. This increases to three times your income by age 40, six times by 50, eight times by 60, and 10 times by 67.

Here's a breakdown of what you should aim for at different ages:

It's essential to remember that these are just guidelines and that everyone's financial circumstances are different. If you're behind, don't be discouraged – use this information to refine your savings strategy and set realistic goals.

Demographics play a significant role in determining average savings balances. The Federal Reserve's data shows that White Americans have a median of $12,000 in cash on hand, roughly six times the amount that Black and Hispanic Americans hold.

Education level is another critical factor influencing savings balances, with families with higher educational attainment tending to have more substantial savings. The average savings balance for college graduates is $116,010, while those with a high school diploma have an average savings balance of $23,380.

Employment status also affects average savings balances, with self-employed workers having the highest median and average bank account balances, at $14,000 and $99,700 respectively. In contrast, those who are not working but not retired have the lowest balances, averaging $33,210.

By Education Level, people with higher educational attainment tend to have more substantial savings. The average bank account balance for college graduates is nearly four times higher than for high school graduates.

Education level has a direct correlation to earnings, and by extension, to the ability to save. This is evident in the Federal Reserve data, which shows that college graduates have an average bank balance of $78,890.

Here's a breakdown of the average bank account balance by education level:

The data shows that families with higher educational attainment tend to have more substantial savings, with college graduates having an average savings balance of $116,010.

Your 40s are a prime time to ramp up your savings, with Americans aged 35 to 44 having an average savings balance of $41,540.

By this stage, many people focus heavily on retirement savings, which is crucial with less time to let compound interest work its magic.

The Federal Reserve reports that Americans aged 35 to 44 have a median savings balance of $7,500, highlighting the importance of starting to save more aggressively.

If you're behind on retirement savings, you can take advantage of catch-up contributions, such as contributing an extra $7,500 to a 401(k) in 2024 if you're over 50.

As you enter your 40s, you may begin investing more aggressively, shifting from simply saving money to growing your wealth through a diversified portfolio.

The racial wealth gap in America is staggering, and it starts with something as simple as savings balances. White Americans have a median of $12,000 in cash on hand, roughly six times the amount that Black and Hispanic Americans hold, according to the Federal Reserve.

Looking at averages, the gap is even larger. White Americans have an average transaction account balance of $80,000, while Black Americans hold $13,370 and Hispanic Americans have $15,710 in the bank.

Here's a breakdown of the average savings account balances by race, based on data from the Federal Reserve:

It's worth noting that bank account balances have hardly changed for Black and Hispanic Americans over the past 30 years, while the median balance for white Americans has nearly doubled and the average balance has more than doubled.

By Employment Status, we can see some interesting trends when it comes to bank account balances. Self-employed workers have the highest median and average bank account balances, with an average balance of $99,700.

The data also shows that retired people have a significantly higher average bank account balance than employees, with an average balance of $41,840 compared to $31,160. This is likely due to the fact that retirees often have more time to focus on building their savings.

Here's a breakdown of the average bank account balances by employment status:

As the data shows, self-employed people have the highest balances, and it's likely due to the fact that they may benefit from earning the full profits on their work, allowing them to build up their savings.

Saving money is a challenge many of us face, and it's interesting to see how income levels affect our bank account balances. Americans in the lowest income bracket, those in the 0 to 20th percentile, have an average bank account balance of just $8,400.

Income is a strong predictor of bank account balance, and this is reflected in the data. Americans in the 20th to 40th percentile income range have an average bank account balance of $11,260.

As income increases, so does the average bank account balance. Those in the 40th to 60th percentile income range have average bank account balances of $16,390.

Looking at the data, it's clear that there's a significant jump in average bank account balances as income levels rise. Americans in the 60th to 80th percentile income range have average bank account balances of $28,680.

Here's a breakdown of the average bank account balances by income percentile:

The richest Americans, those in the 90th percentile or above, have average bank account balances of $229,030.

The median income in the US is a more accurate representation of the average person's income than the mean.

In fact, the median is a better representation because very high values can skew the mean, making it not very representative of the average person's income.

For example, if we have five people who have $10, $100, $1,000, $10,000, and $100,000 in income, the mean is over $22,000, which is not a good representation of the average person's income.

The median, on the other hand, is the middlemost value, which in this case would be $1,000, a much more accurate representation of the average person's income.

As you survey more people, the median becomes even more robust, providing a more accurate picture of the average income in the US.

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Variations in savings balances are influenced by a range of demographic factors. Education level is a significant factor, with college graduates having an average bank balance of $78,890, compared to $9,190 for those without a high school diploma.

Employment status also plays a role, with self-employed individuals having an average bank account balance of $99,770, more than double that of employed individuals. Retirement status is another factor, with retirees having an average bank account balance of $41,840.

Income is the strongest predictor of bank account balance, with Americans in the top decile having average bank account balances over 27 times higher than those in the lowest quintile. This is evident in the fact that those in the 90th to 100th percentile have an average bank account balance of $229,030, compared to $8,400 for those in the 0 to 20th percentile.

The gap in savings balances between different racial groups is also notable. White Americans have a median of $12,000 of cash on hand, roughly six times the amount that Black and Hispanic Americans hold.

Here's a breakdown of the median bank account balances by income percentile:

Many Americans have some form of emergency savings, with 54% having three months' worth of living expenses set aside.

The Federal Reserve collected this data in 2023, and it's a slight drop from 59% in 2021, the first year-over-year decline since 2013.

Experts recommend aiming for three months' worth of living expenses in an emergency fund, but some people may need more to feel secure.

Having six or more months' worth of living costs in the bank can provide a sense of security, and some people may choose to pad their emergency savings for extra peace of mind.

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Having a solid emergency fund is crucial for financial stability. Fifty-four percent of Americans have three months of emergency savings, which is a good starting point.

You might be wondering how to boost your savings. A few simple moves can help your bank account grow, such as opening a high-yield savings account, which can offer interest rates above the national average.

Sticking to a budget is also essential. It will help you see where your money goes each month and identify ways to cut expenses and bank the difference. A budgeting app can help with this.

Automating the process of saving can also be helpful. Arranging for an automatic transfer means you won't have to think about moving money yourself and you'll remove the temptation to spend.

To calculate your savings goal, total your necessary monthly expenses and multiply this number by three to six to determine how much you need in your emergency fund. This fund should cover essential bills, such as housing, utilities, and groceries, in case of job loss or other financial disruptions.

The average household spends $6,081, but the median balance across transaction accounts is $8,000. This highlights the need for many people to pad their emergency savings for extra peace of mind.

Here are some key savings goals to keep in mind: