Can You Guess The Average Savings Account Balance? Here's A Hint — It's More Than Most People Make In A Year

Understanding the average savings account balance in the U.S. can give us a clearer picture of financial health across different demographics. 

As of April 2024, the average savings account holds $62,410. That number might seem hard to believe, especially since the average annual salary across the United States is $59,428. A more accurate number to look at is the median savings account balance, which is $8,000. This suggests that while some have much higher balances, others sit well below that average.

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Age appears to be a significant factor in how much people save. Older adults, especially those between 65 and 74, have the highest average savings at $100,250. It makes sense — more time in the workforce often means more opportunities to save. Younger adults, under 35 years, average about $20,540, reflecting early adulthood’s financial challenges, like starting careers and paying off student loans.

Education also plays a key role in savings. Those with a bachelor's degree have a median balance of $23,370, significantly higher than the $900 for those without a high school diploma. This gap highlights the financial benefits that can come with higher education.

Income levels paint a similar picture. People in the highest income brackets have a median savings of $111,600, while those earning less show much lower balances, like $900 for the lowest earners. This stark difference underscores how earning power can directly affect one's savings ability.

Interestingly, not all trends are predictable. For example, adults in their late 40s to early 50s show higher savings than those a bit older, possibly due to peak earning years and wise expense management.

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Preparedness for emergencies also varies by age. A recent survey found that only 31% of Gen Zers could handle an unexpected $1,000 expense, compared to 59% of Baby Boomers. However, it isn't entirely age-based since 36% of Gen Xers reported they could cover a $1,000 expense compared to 43% of millennials.

Bank fees are another hurdle, especially for younger adults. Nearly half of Gen Zers and a large portion of Millennials pay monthly bank fees, which can reduce their ability to save.

These insights reflect the economic divisions across age, education, and income and shed light on the challenges and strategies that could help individuals enhance their financial well-being. 

Here are a few tips to help you save:

• Budget Wisely: Create a budget that aligns with your financial goals and stick to it. Track your expenses diligently and identify areas where you can cut back to save more.

• Automate Savings: Set up automatic monthly transfers from your checking account to your savings account. This way, you’ll consistently contribute to your savings without having to think about it.

• Build an Emergency Fund: Aim to build an emergency fund that covers at least three to six months’ worth of living expenses. This fund acts as a safety net during unexpected financial setbacks.

• Invest Wisely: Consider investing your savings in diversified assets like stocks, bonds, or real estate to earn higher returns over the long term. Consult with a financial advisor to understand your risk tolerance and investment options.

• Minimize Debt: Prioritize paying off high-interest debts like credit cards and student loans. The less debt you have, the more you can allocate toward savings and investments.

• Leverage Employer Benefits: Take advantage of employer-sponsored retirement plans like 401(k)s and contribute enough to qualify for employer matching contributions. This is essentially free money that can boost your savings.

• Seek Professional Guidance: Consulting a financial advisor can provide personalized guidance tailored to your specific financial situation and goals. They can offer insights and strategies to help you optimize your savings and investments.

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