America’s retirement savings balances continue to be alarming. In a 2014 study, the Employee Benefit Research Institute (EBRI) estimated that 40 percent of us would not be able to cover basic expenses once we are no longer earning a paycheck. The situation has not improved.

The following table shows average and median retirement savings by age from the Vanguard How America Saves 2018 study.

Age Range	Average Balance	Median Balance
Less than 25	$4,773	$1,509
25 to 34	$24,728	$9,227
35 to 44	$68,935	$25,800
45 to 54	$129,051	$46,837
55 to 64	$190,505	$71,105
65 and over	$209,984	$64,811

Average balances are skewed high by a small number of large accounts. The median balance indicates that half of near retirees have $71,000 or less in savings.

Of course there are issues with these numbers. Vanguard’s study is based on participant balances in Vanguard retirement saving plans. It is possible that participants have balances elsewhere in prior employer savings plans or in individual retirement accounts. Participants who have worked at their jobs longer do tend to have higher balances. But the EBRI’s study indicates missing accounts probably isn’t the primary reason for the low balances.

Using the 4 percent rule, with the average balance for the 55 to 64 set of $190,505, you could reasonably withdraw about $635 per month and have your savings last through your retirement. At the median balance you could withdraw about $216 per month.

Social security will provide some help. The average Social Security check after the recent cost of living increase is $1,461 per month. Between the average savings and the average social security check, you would have just over $2,096 per month to live on. With the median savings you would have $1,677.

If you are a couple, and you are both getting the average Social Security check and you each have the average in retirement savings, your monthly income would be around $4,200. That might be reasonably comfortable if you’ve paid off your mortgage. The Massachusetts Institute of Technology Living Wage Calculator indicates that amount covers basic living expenses in Portland, Oregon, is generous in Cleveland, Ohio, and not nearly enough in San Francisco, California. If you’re both at the median savings, of these three cities, you’d only be OK in Cleveland.

But savings balances for women tend to be only two thirds that of men, and women’s Social Security benefit is also lower on average. Women often work in lower paying jobs, and many have periods with no earnings, because they stayed home to take care of children or other family members. These factors lower both their savings and their benefits. So an average or median couple’s available income may be lower than double the individual average or median.

How do these numbers stack up to what you’re currently spending? According to University of Minnesota data, median household income in 2017 was about $5,167 per month before taxes. At the median savings rate, with Social Security (assuming both you and your spouse have the same savings and Social Security benefit), your retirement income would be about two thirds of your current income.

Of course you are neither average or median. Your situation is unique, but poverty in retirement is becoming more and more common. If your savings are falling short of what you need, what can you do?

The first step is to get a handle on what you have.

• Understand your total savings balances for retirement and how that stacks up to the cost of your current lifestyle.
• Find out what your other sources of income will be. You can estimate your Social Security benefit at www.ssa.gov with either their quick calculator or by setting up your own account.

The next step is to develop a strategy for closing any gap you may have.

• Can you save more money? If you can, you’ve already taken a step closer, because you’ve reduced the cost of your lifestyle.
• Can you reduce your cost of living in retirement, by making changes in your lifestyle or changing where you live?

The key to ensuring you have a comfortable life when you stop working for pay is to know what you need to do. Even if you have work to do and limited time, your confidence will rise simply by making a plan. There is no time like the present to get started. Wherever you are, you will have the most options for a better future if you start today.

Photo by Matthew Bennett on Unsplash

Save Yourself; Your Guide to Saving for Retirement and Building Financial Security, is available on Amazon.