“A Guide to IRA Savings: Are You Keeping Up or Falling Behind?”

Individual Retirement Accounts, or IRAs, are becoming increasingly important for individuals to save money for retirement as traditional pensions become less common. IRAs can help workers accumulate more money for their golden years, and the average IRA balance for all ages at the end of the second quarter of 2024 was $129,200. However, the amount you have saved in your IRA may vary depending on your age and generation.

For example, the average IRA balance for Millennials was $23,400, while for Boomers it was $243,900. It is important to note that IRA balances tend to increase with age, as regular contributions, appreciation, and compounding can help grow the account over time. This means that even a small account balance can eventually add up to a significant nest egg.

To ensure that you are on track to meet your retirement savings goals, Fidelity recommends saving 15% of your income (including any company match) and investing in an IRA after saving enough in your 401(k) to receive the full company matching contribution. IRAs offer tax benefits and a wider range of investment choices than 401(k) plans, making them a valuable tool for retirement savings.

It is also important to consider the annual contribution limits for IRAs, which are lower than those for 401(k) plans. In 2024, the IRS limit on IRA contributions is $7,000, compared to $23,000 for 401(k) plans. However, individuals can still save more by automating contributions to their IRAs and increasing savings gradually over time.

Overall, IRAs can help individuals catch up on their retirement savings and provide flexibility in managing their assets. By understanding average IRA balances by age and generation, individuals can assess their own savings progress and make adjustments as needed to ensure a comfortable retirement.