Money Management

Do you have a lot of money saved for retirement compared to the average saver? Or a lot less? Read on to find out. 

Finding money for your IRA or 401(k) is not an easy thing to do. After all, you no doubt have bills, from mortgage loan payments to groceries, monopolizing your income. But it’s important to try to consistently fund a retirement savings plan, because if you don’t, you might end up short by the time your senior years roll around.

You may be curious as to how much money the typical American has saved for retirement. And to that end, Northwestern Mutual has some information. In its latest Planning & Progress Study, it found that the average retirement savings balance across savers of all ages is $89,300.

Now, generally speaking, $89,300 is not a lot of money to retire on. But if that’s what your savings balance looks like, you don’t automatically have to panic. And even if you haven’t reached that amount of savings yet, it certainly does not mean all is lost.

Your age matters

If you’re in your 20s or 30s with $89,300 in retirement savings, it can be argued that you’re in pretty good shape. Heck, even a $20,000 or $30,000 IRA or 401(k) balance is something to be proud of at that age. And it doesn’t necessarily mean that you’re in bad shape for retirement.

On the other hand, if you’re within a few years of retirement and $89,300 is the total amount of savings you have, that’s less ideal.

You may have income sources other than your savings to tap once your career wraps up, such as part-time work and Social Security. (Although Social Security is facing its share of financial challenges, those benefits aren’t in danger of going away completely.) But still, the nest egg you build might play a huge role in your retirement finances. And so you may want to go into retirement with more than $89,300 to your name.

Let’s say you withdraw from your $89,300 savings balance at a rate of 4% per year, which is what financial experts recommended for a long time. (That’s actually a somewhat aggressive recommendation these days, but for simplicity purposes, let’s go with it.) That means your $89,300 nest egg will result in $3,572 a year of income. That’s less than $300 a month.

You may need to ramp up, and fast

If you’re a good 20 or 30 years away from retirement, don’t panic if you’re sitting on $89,300 and not a penny more. You still have lots of time to contribute to your IRA or 401(k) and invest your savings so it grows into a larger sum. But if you’re closer to retirement age, you may want to do what you can to boost your nest egg before your career ends.

First, take a look at your spending and aim to cut back on most non-essentials so you can pump more money into your savings. Then, strike the right balance in the course of investing your money.

If you’re close to retirement, going heavy on stocks may not be the best move, since stocks tend to be volatile. You may not have time to ride out losses on stock investments when you’re about to start tapping your nest egg, so a safer bet may be to load up on bonds, even if that means snagging a lower return on your money.

At the same time, it could pay to consider delaying retirement a bit if your savings aren’t looking so robust. Postponing that milestone even a year or two means leaving your nest egg untapped that much longer. Plus, ideally, you’ll be able to add to your savings during that time.

You may find it interesting that the average American has $89,300 in retirement savings. But that figure means different things for people of different ages. It’s important to recognize that as you keep tabs on your own savings progress.

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The Fed’s upcoming fund rate decision could have an impact on CDs. Find out if CD rates could hit 6% in July. 

If you haven’t looked at CD rates in a while, get ready to fall out of your seat. Even after the Fed paused its series of interest rate hikes in June, APYs on CDs are still above 5%, with some inching closer to the 6% line. It’s a good time to be a CD shopper, but will July be the month we see 6% CD rates?

What might change for CDs in July

The biggest change for CDs could happen on July 26, when the Fed concludes its upcoming FOMC meeting and announces its next decision. If the Fed decides to raise the federal funds rate again by another quarter percentage, we could see a slight uptick in CD rates. In fact, even though that decision will come toward the end of the month, banks and financial institutions may decide to raise CD rates beforehand to draw in depositors in anticipation of the Fed’s decision.

To be clear, the federal funds rate doesn’t decide CD rates, but the two typically move in tandem. That’s because banks — especially lesser-known financial institutions — often compete by offering higher CD rates to attract depositors. Currently, short-term CD rates are clustering around 5%, with some lower than this and others higher, depending on terms and the CD issuer. NASA Federal Credit Union, for instance, is offering a 5.65% APY on a 9-month CD, while Bread Financial is offering 5.25% for a 1-year.

Will the Fed hike the fund rate in July?

While anything can change between now and July 26, it’s looking like the Fed will resume its rate-hiking campaign soon.

To recap, it’s been almost 16 months since the Fed began hiking the federal funds rate at its fastest rising pace in 40 years. And though the economy looks quite different today than when inflation hit a 40-year high last June, the Fed still believes it has more fight ahead of it. Reportedly, 12 of the 18 Fed policymakers predict we’ll see at least two more quarter-point hikes in 2023, with four more supporting at least one. That leaves only two policymakers (or roughly 11%) forecasting that rates will stay the same.

To be fair, the 12-month inflation rate has been steadily falling and even dropped to 4% in May 2023. But because the Fed wants inflation to fall to 2% — and because the economy is still holding itself together — it might take more drastic action to get what it wants.

CD shoppers: here’s what to do next

If you’re patient, you can wait and see what the Fed decides on July 26.

However, regardless of the Fed’s decisions, today’s CD rates still look really good. In fact, even if the Fed decided on two more quarter-point hikes this year, it’s unlikely CD rates would grow at the same pace that they did over the last 16 months.

Ultimately, if you’re sure a CD is right for you, locking into one at today’s rates would still leave you with a rate higher than May inflation. While I would love to see CD rates hit 6% in July, trying to time CDs at their peak might be a fool’s errand and could result in forfeiting high interest. If anything, consider a short-term CD, like one lasting just three months. This would help you capture today’s rates, while also giving you the potential to snag a different rate later this year.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Whether you live alone by choice or by chance, it’s not cheap. Keep reading for real advice from the trenches of living solo. 

I’ve been living alone for three years now, and I absolutely love it. My apartment is always exactly as clean and as quiet as I want it to be (extremely), which is absolutely crucial to my happiness and sense of well-being (especially as I also work from home). And now that I’m saving to buy a house in the near future, I’m excited I’ll be buying it solo and get final say over every last detail of the process.

Unfortunately, keeping my personal finances solo sure isn’t cheap. A recent survey of more than 1,000 adults by Forbes Advisor and market research company Prolific found that 93% of them acknowledged the higher costs of living alone. These extra expenses are referred to as the “singles tax,” and include the additional money people like me pay in taxes as well as for everyday bills like utilities. Housing costs are a particularly notable part of the singles tax, and data from Zillow found that those living alone pay an average of nearly $7,000 more per year for housing.

If you’re living solo and wondering how you can cut costs, here are some tips that I rely on to get by. And no, I won’t tell you to get a roommate — because if you live alone by choice, that sure isn’t an appealing option.

1. Buy in bulk strategically

Stores like Costco and Sam’s Club are extremely popular with American families, and it’s easy to see why — they offer great deals on bulk groceries. If you live alone, it probably doesn’t make a whole lot of sense to buy most food items in bulk, but it still might be a good idea to buy some things in bulk. I don’t have a warehouse club membership (my closest Costco is 60 miles away; my closest Sam’s Club is 85 miles away), but I do my bulk shopping on Amazon as well as at Target and my local grocery store.

I don’t buy produce or other perishable food items in bulk, but I buy large packages of paper goods (like paper towels, toilet paper, and tissues) and multipacks of toiletries and cleaning products. They don’t go bad, after all. If I spot a good sale on my favorite type of canned soup or pantry staples like canned tomatoes, I’ll load up.

I share my home with three cats, so I also buy their food and supplies in bulk. If you only have one pet and don’t go through a lot of food at a time, it probably doesn’t make sense to buy in bulk — your pet won’t appreciate spoiled food any more than you do.

2. Keep otherwise shared costs down

If you live alone, it’s on you to cover the entirety of expenses that might otherwise be shared, like utility bills, insurance, and maybe even a vehicle. So the lower you can keep your costs in these areas, the better. It’s worth asking your internet service provider about specials available (you might be able to get a lower rate for a year), or consider switching altogether, if you’re lucky enough to have multiple options in your area.

For your heating and cooling costs, consider signing up for budget billing — you’ll be charged a set amount per month. If budget billing isn’t an option for you, you can still be mindful of your utility usage. Consider opening the windows at night instead of running the air conditioner. And yes, what your dad used to say when you were growing up is true — go put on a sweater instead of turning the heat up. Space heaters are also a great appliance if you live alone; you can keep the heat set lower overall and just warm up the room you’re in.

Shop around for your car insurance and homeowners (or renters) insurance. And take it from me, it’s far and away worth it to keep an older paid-off car for as long as you can. Your insurance costs will be lower, and not having a car payment means you can pay off debt, invest, or pad your emergency fund.

3. Make sure you have cash at the ready

If you’re flying solo, a solid emergency fund is even more crucial, because you’re the only one contributing to those unexpected bills, too. Common wisdom for an emergency fund is to save three to six months’ worth of costs in a savings account. But if you’re on your own, you might want an even larger cushion. The same goes for your checking account — I keep mine padded beyond my regular bills, just in case something comes up.

If you don’t have savings at all, I’ve also been there. But saving any amount of money can help, even if you have to start slow. If you can take on a side hustle, having extra cash coming in can help your finances in all kinds of ways — paying off debt, saving that emergency fund, and giving you more breathing room on your bills.

Living alone can be fantastic, if you can manage the costs. Try to keep otherwise shared costs as low as you can, and don’t discount the importance of having emergency savings (in any amount you can manage).

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon.com, Costco Wholesale, Target, and Zillow Group. The Motley Fool has a disclosure policy.

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