The amount of cash you should have saved will depend on your income and age, but there are some rough guidelines you can follow.
So if we meet those figures down the middle, it means that by age 45, you should ideally have 4.5 times your salary set aside for retirement. If you earn $90,000 a year, it means you're in good shape if you have $405,000. That said, many people's retirement plans lost money in 2022 due to stock market volatility.
The ASFA Retirement Standard Explainer says a comfortable retirement lifestyle would need $640,000 in super for a couple, or $545,000 for a single person.
Average savings in Australia
According to data from NAB, the average Australian had around $34,000 tucked away in a savings account as of late 2022. The bank surveyed more than 2,000 Australians to make its findings.
And, while life expectancy can be estimated, no one knows for certain how long they will live. As a result, they can only approximate how long their nest egg will need to last. Retiring at age 45 with $3 million is quite feasible if you already have the money and your post-retirement income needs are not excessive.
By age 40: Have three times your salary saved. By age 45: Have four times your salary saved. By age 50: Have six times your salary saved. By age 55: Have seven times your salary saved.
By age 40, you should have three times your annual salary already saved. By age 50, you should have six times your salary in an account.
Americans need at least $2.2 million in assets to be considered rich, according to Charles Schwab's 2023 Modern Wealth Survey. The investment platform surveyed 1,000 Americans to determine the average net worth required to be considered wealthy in America.
American households, on average, have $41,600 in savings, according to data last collected by the Federal Reserve in 2019. The median balance for American households is $5,300, according to the same data. The reality is that the above stats may not accurately reflect the financial situation of many Americans.
The Federal Reserve's most recent data reveals that the average American has $65,000 in retirement savings. By their retirement age, the average is estimated to be $255,200.
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
Can I retire at 50 with $300k? The problem with having a $300,000 nest egg, as opposed to $500,000 or $1 million, is that retiring early isn't as viable an option. At age 50, you'll have to stretch that $300,000 out further, so it will be important to find an investment with a high return.
SmartAsset: Can I Retire at 45 With $1 Million Dollars? Achieving retirement before 50 may seem unreachable, but it's entirely doable if you can save $1 million over your career. The keys to making this happen within a little more than two decades are a rigorous budget and a comprehensive retirement plan.
While so-called "401(k) millionaires" make up only 1.4% of the 21.5 million people with Fidelity accounts, the average value of a Fidelity plan dropped by 20.5% as the S&P 500 (^IN) tumbled 19.4% in 2022 amid a year of everything from war, energy uncertainty and widespread inflation.
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.
There are roughly 5,671,005 households with $3 million or more in America, 4.41% of all US households.
The good news is even if you don't invest your money and generate returns, $5 million is still enough that you could live on $100,000 a year for 50 years. That'll last you until the age of 95, far beyond the average lifespan.
The Bottom Line
If you've saved $5 million, you should be able to retire at 45 without any worries as long as you've made a solid plan.
This does change again when broken down via age and is inclusive of cash savings, not assets. On average, Australians aged under 24 have $10,568 saved, 24-39 year olds saved $22,532, 40-55 year olds have $34,025 and 56-74 year olds save $40,463.
The average annual salary in Australia is $68,900 and $35.30 per hour. It is just the average salary for basic workers but skilled and experienced workers also earn around $108,980 annually. The average salary also varies depending on the field of work and the job role of workers.
You should aim to have at least three months (and ideally six months) worth of living expenses in your savings. This is to ensure you can get by if you were to suddenly lose your job or be out of work for another reason, such as health problems or a change in your personal circumstances.