Yahoo Finance How Much Americans Have Saved in Their IRAs in 2024
Think you can guess the amount of money in a typical IRA balance? On May 15, 2024, Vanguard shared figures as they relate to the median IRA balances of Americans. These retirement plan figures outlined median balances for men and women across four generations: Gen Z, millennials, Gen X and baby boomers.
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Let’s take a closer look at the median IRA balances for each generation and explore the growing gap between men’s and women’s retirement savings balances.
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How Much Does Each Generation Have Saved in Their IRAs?
The chart provided by Vanguard starts at $0 and goes up to $200,000.
Not surprisingly, Gen Zers have the smallest amount of money saved in their IRAs. Millennials pace slightly ahead, although not by much, with Gen Xers have less than six figures in their IRA balances.
Baby boomers have substantially more in savings. In particular, male baby boomers have a median IRA balance that is quickly ascending to hit $200,000. Female baby boomers, however, hover around the $100,000 mark in retirement savings.
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Inside the Growing IRA Balance Gap
As every generation gets older, a gap is growing between the median IRA balances of men and women. Here’s a look at the women’s median balance as a percentage of men’s for every generation:
Gen Z: 98%
Millennials: 88%
Gen X: 81%
Baby boomers: 63%
The older female investors are, the larger the gap between them and their male counterparts grows.
Why does this gap exist? Maria Bruno, CFP and senior financial planning strategist at Vanguard, told GOBankingRates that the gap may be explained by differences in savings behaviors.
Bruno said that women often start their investing journeys later than men. This information is also cited in the context of Vanguard’s research. Using a sample size of 74,000 qualifying male and female IRA holders, key findings reveal that the median age is 32 for women opening an IRA account in 2015. This is compared to men with a median age of 30 that same year, meaning women are opening IRA accounts two years later than men.
Bruno also said that women may be contributing less as investors. When considering the eight-year period of 2015 to 2022, men made more contributions (six years’ worth) than women (five years’ worth).
How Women Can Close the Investing Gap
Many women may read this and feel frustrated by this gap or overwhelmed thinking how they can catch up. The good news, according to Bruno, is women can control their savings, asset allocation and costs, which is the key principle for investing success.
Below are some of Bruno’s tips that can help women work toward better investment outcomes.
Keep an Emergency Savings
Many women know the importance of having and setting aside an emergency fund: keeping three to six months’ worth of funds readily available to pay for unexpected expenses. However, Bruno doesn’t want women to overcompensate with cash.
“Consider household liquidity as a framework for emergency savings,” Bruno said. “Maintain at least $2,000 in cash for spending shocks. Then have about three to six months’ worth of expenses in accessible accounts, like a Roth IRA (where the contributions can be tapped income tax- and penalty-free) or nonretirement brokerage assets, to cover contingencies like short-term job loss.”
Max Out Tax-Advantaged Retirement Accounts
Try to max out accounts like your IRA or your employer-sponsored 401(k). If you’re unable to fully max out, Bruno recommended allocating 12%-15% of your income to these accounts including your employer match.
What about women investors who are struggling financially? Bruno said to contribute what you can to these accounts and increase contributions by 1%-2% each year until you’ve reached the threshold. To stay on track, Bruno recommended opting for automatic investments.
Keep a Broadly Diversified Portfolio
Not sure what to add to your investment portfolio to diversify it? Bruno recommended seeking out the help of a financial advisor.
“You can choose from a human advisor or digital advisor based on your preference and needs to customize a plan that works for you.”
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This article originally appeared on GOBankingRates.com: How Much Americans Have Saved in Their IRAs in 2024
