Americans are actually saving more than we thought — but it still may not be enough


New revisions to economic data show that Americans did a better job of saving than previously though over the past couple of years.

Yet are you personally doing enough to ensure a comfortable retirement with the quality of life that you’d like to have?

RELATED: Don’t make these 7 common retirement mistakes

The national savings rate is higher than previously reported

The Bureau of Economic Analysis (BEA) reviews numbers on gross domestic product and other economic data every five years, according to Market Watch. During the latest revision, a surprise emerged.

In 2017, it was previously believed that our nation’s saving rate dipped to a new decade low — 3.4%. That was thought to be down from 6.1% in 2015.

Yet the latest revision to BEA data shows that the 2017 saving rate was actually double what the initial estimates said. Americans actually socked away 6.7% of their pay last year — not 3.4%.

That increased savings rate was possible due in part to incomes rising 3.5% annually over the past five years, not 3.1% as was previously estimated.

So that’s the good news: The government says wages actually are on the rise and the rate of savings is, too.

But 6.7% is nowhere near enough to have a comfortable retirement.

Make sure you pick up your full employer match, if there is one

General financial wisdom holds that you want to save a dime out of every dollar you make. That’s an effective savings rate of 10%. But 15% is probably a better goal.


The earlier you start saving, the less you have to save as a percent of your income. Likewise, the opposite is true. If you get a late start on saving, you’ll have to save more to catch-up.

Does 401(k) have an employer match? Make sure you’re putting in at least enough to pick up the match. Otherwise you’re leaving free money on the table!

If you don’t have access to a retirement plan at work, you can open a Roth IRA on your own. Get details on how to do that here.

Take baby steps when raising your personal savings rate

Bumping up your savings rate — whether you do it or your employer does it for you — doesn’t have to be a painful thing. Most people find it pretty comfortable to increase their savings rate by one percentage point every six months.

So if you save nothing currently, start by saving 1% of your pay, then increase to 2% in six months. With automatic withdrawals to a 401(k) or direct deposit into an IRA, the money is gone before you ever see it. You probably won’t miss it!

Have retirement savings benchmarks

By age 35, you should have two times your annual salary saved up for retirement, according to the latest numbers from Fidelity Investments.

Five years later, you should have three times your annual salary. And on and on, until you reach 67 when you should have 10 times your annual salary saved.

Your age Amount you should aim to have saved
35 2x your annual gross salary (AGS)
40 3x your AGS
45 4x your AGS
50 6x your AGS
55 7x your AGS
60 8x your AGS
67 10x your AGS

As a reminder, gross salary is the amount of income you earn before taxes and deductions.

Consider working longer than you expected

In the past, it was very common to retire and take Social Security at 62. But for every year you wait after 62, you have a roughly 8% return per year on your Social Security lifetime benefit. So if you wait from 62 to 70, the amount that Social Security pays climbs dramatically.

If you are physically able and planned to stop working in your early 60s, but you don’t have a lot saved, consider working as long you’re healthy.

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