Key Takeaways
\nMany workers\u2019 retirement balances trail the value of their vehicles.On average, no age group has reached even 25% of common retirement savings targets.Small contribution increases and spending shifts can help close the gap over time.<\/p>\n
Get personalized, AI-powered answers built on 27+ years of trusted expertise.<\/p>\n
A new analysis from the National Institute on Retirement Security (NIRS) highlights a stark reality: For many Americans, their car is worth more than their retirement savings. The comparison lands because it swaps abstract percentages with something tangible\u2014a vehicle sitting in the driveway.\n<\/p>\n
The report, based on U.S. Census data of workers ages 21 to 64, highlights how far typical retirement balances lag behind what experts say workers should aim to accumulate over time.<\/p>\n
For Younger Workers, Their Car Is Worth More Than Their Retirement Account <\/p>\n
The NIRS analysis compares defined contribution (DC) retirement account balances to the average value of vehicles owned by households in different age groups. The takeaway: For workers ages 21 to 44, their car is worth more.\n<\/p>\n
Retirement assets are designed to grow and compound over decades\u2014particularly in workplace plans like a 401(k). Cars<\/a>, by contrast, typically lose value over time due to wear and tear.\n<\/p>\n That\u2019s what makes the comparison so striking: The asset that\u2019s expected to shrink is often larger than the one meant to grow.\n<\/p>\n Why This Matters<\/p>\n When retirement shortfalls are framed in dollars instead of percentages, the gap feels more real\u2014and more urgent. Fortunately, small adjustments today can meaningfully change long-term outcomes.<\/p>\n No Age Group Is Close to Hitting Common Retirement Benchmarks <\/p>\n NIRS didn\u2019t just look at people who actively participate in retirement plans<\/a>. Instead, the researchers included all working-age individuals, whether they have a retirement account or not. That approach produces a more comprehensive\u2014and sobering\u2014snapshot than studies that only analyze account holders.\n<\/p>\n To frame the gap, the report compares actual savings to widely cited age-based benchmarks from Fidelity. These guidelines suggest aiming for savings equal to:<\/p>\n Age 30: About equal to your annual incomeAge 35: Twice your annual incomeAge 40: Three times your annual incomeAge 45: Four times your annual incomeAge 50: Six times your annual incomeAge 55: Seven times your annual incomeAge 60: Eight times your annual incomeAge 67: 10 times your annual income<\/p>\n These benchmarks are general targets, but they are often used as a rule of thumb for retirement planning. According to Census-based calculations in the NIRS report, workers are nowhere near those targets.\n<\/p>\n In other words, no age group has reached even one-quarter of the recommended savings levels. For workers in their 40s and 50s\u2014prime earning years\u2014that shortfall is especially concerning. Those years often come with peak expenses: mortgages, child care, student loans, and even the cost of caring for aging parents. Retirement contributions can become secondary to immediate financial needs.\n<\/p>\n Why Falling Behind Early Can Be So Costly<\/p>\n Retirement shortfalls aren\u2019t static. Missing savings targets in your 30s or 40s reduces the years your money has to grow through compounding\u2014making later catch-up efforts more expensive and more difficult.<\/p>\n How to Start Closing the Retirement Gap <\/p>\n If your retirement balance lags behind where you think it should be, incremental changes can still make a meaningful difference.\n<\/p>\n Increase contributions gradually: Workplace retirement plans allow automatic annual increases, raising contributions by 1% per year. That small adjustment can compound over time<\/a>, especially in a tax-advantaged account like a traditional 401(k). The reality is that many Americans are balancing immediate needs with long-term goals. But the NIRS findings suggest that prioritizing retirement\u2014even modestly more than before\u2014could make a measurable difference over time.\n<\/p>\n How an Emergency Fund Can Help Safeguard Your Retirement<\/p>\n Building even a modest emergency fund can reduce the odds that you\u2019ll pause contributions or withdraw from retirement accounts when unexpected expenses hit. Protecting your short-term finances can help preserve long-term growth.<\/p>\n","protected":false},"excerpt":{"rendered":"Key Takeaways Many workers\u2019 retirement balances trail the value of their vehicles.On average, no age group has reached…\n","protected":false},"author":2,"featured_media":307384,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[114,268,85,46,266,267],"class_list":["post-307383","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-il","tag-israel","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/307383","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=307383"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/307383\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/307384"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=307383"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=307383"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=307383"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nCapture the full employer match: If your employer offers matching contributions, failing to contribute enough to receive the full match effectively leaves compensation on the table.
\nReevaluate high fixed expenses: Driving your car longer, refinancing a high-interest auto loan, or choosing a less expensive vehicle next time can free up cash for retirement contributions.
\nAutomate savings beyond the workplace plan: Workers without employer-sponsored plans may consider options like an IRA<\/a> or state-sponsored auto-IRA programs, which have expanded access to retirement savings in several states.
\nAvoid lifestyle creep: When income rises, directing at least a portion of the increase to retirement before expanding discretionary spending can help close the gap faster.<\/p>\n