The Savings Gap Is Widening for Americans. Here’s Why, and How to Figure Out How Much Money You Should Save

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American households have a median $5,300 cash in the bank. 

That’s according to data from 2019, the last time the Federal Reserve conducted its national Survey of Consumer Finances. And while the Fed’s survey is the most comprehensive snapshot of how well-secured Americans are financially, it’s only conducted every three years — and a lot has happened since 2019.

For example, we’ve seen evidence of a growing American wealth gap over the past few years, with some people’s personal savings and investment growth skyrocketing, while others faced financial hardship and drained their savings over the pandemic. A worldwide Deloitte study from 2021 found that 17% of Americans reported decreased cash savings over the year prior, while a proportional 17% saw their savings increase. 

This year, people seem to be saving less. A big factor is record levels of rising inflation — which the Federal Reserve is working to combat by raising interest rates, incentivizing banks to increase APYs for savings accounts and more consumers to save. But so far, the personal savings rate has plummeted from highs around 20% in 2020 and 2021 to below 5% this year. And a 2022 study from Northwestern Mutual, too, shows average savings levels have dropped by 15% from last year.

Below, we’ve gathered more information from the most recent federal data about average savings account balances. We also reached out to several financial institutions — including online banks, credit unions, and large national banks —  to ask for data on average customer savings numbers. We did not receive responses at time of publish, but will update this article if we receive more information.

 The Fed’s survey is conducted every three years, which means the 2022 report will be released next year. We will keep this piece updated with the most recent data available.

Average U.S. Savings 

For a more thorough breakdown of average American savings, below is a look at the 2019 Survey of Consumer Finances, based on age, income, housing, education, and work status. The amounts used in the study are balances respondents hold in what the Fed calls “transactional accounts” and includes checking accounts, savings accounts, and money market accounts.  

All in all, the latest savings rate data shows that many Americans may be unprepared to face financial hardship, and there are wide disparities between some groups. For example, younger generations don’t have as much in their bank accounts compared to those 65 and older. And people with a college degree or who own a home have thousands more in cash set aside compared to Americans who don’t.

It’s also important to note that many of the mean (or average) savings balances according to the survey are much higher than the median — indicating that there may be outliers with much higher savings balances across categories. 

No matter where your balance stands, now may be a good time to recession-proof your finances and reconsider the amount you’d feel most comfortable having saved. Here’s a glimpse of what the U.S. transaction accounts look like in each category:  

Average savings by age 

Consumers younger than 35 have significantly lessen their bank accounts compared to those 45 and older. As people get older, the more their bank account balance tends to grow. 

“I think it’s first and foremost a function of life stages. Having less savings is a riskier move, but young people can take more risks,” says Bobbi Rebell, a certified financial planner and author of Launching Financial Grownups. “For somebody under 35, if they have a mainstream skillset and are employable, they’re going to have a very easy time finding a job.” Therefore, they may take more risks financially, resulting in less money compared to those who are older. 

Younger Americans may also land a job easier than someone older, making it easier for them to take financial risks with less money saved, says Raquel Hinman, CFP and president of Hinman Financial Planning. 

Age Median Amount Mean Amount
Less than 35$3,240$11,250
35-44$4,710$27,910
45-54$6,400$48,200
55-64$5,620$55,320
65-74$8,000$57,670
75 or older $9,300$60,410

Average savings by income 

Americans who make less are saving less compared to higher-income earners. 

A lower income level can make it more difficult to save while also affording life expenses and necessities. If you do have a goal to increase your savings balance, you may consider cutting costs such as streaming subscriptions or gym memberships. Another thing to consider is adding another stream of income or dedicating more time to a job search for a higher-paying position to increase your cash flow — even if it’s only temporary, says Hinman. 

Income Median AmountMean Amount
Less than $20,000$810$8,400
$20,000 – $39,900$2,050$11,260
$40,000 – $59,900$4,320$16,390
$60,000 – $79,900$10,000$28,700
$80,000 – $89,900$20,000$51,840
$90,000 – $100,000$70,000$229,030

Average savings by housing 

Right now, there’s a savings gap between renters and homeowners. When comparing finances between homeowners and renters, homeowners have a little over $8,000 more in their accounts compared to renters.

With rent and home prices rising nationwide, the gap between renters and homeowners may get smaller. Reason being, homeowners often need more in emergency savings to cover costs that a landlord might cover for renters, such as repairs and upgrades. But rent and home prices are both rising nationwide with renters seeing double-digit rent hikes this year, and homebuyers are facing fierce competition in a seller’s market

Regardless of whether you’re paying rent or a mortgage, setting aside savings for an emergency is a smart financial move. Following other experts’ recommendations of three to six months’ expenses in an emergency fund, Hinman recommends keeping a few months of rent or mortgage saved at all times in case of a layoff, health issue, or other emergency situation. 

Pro Tip

If you’re a renter, but you want to own a home one day, it’s also important to save for a future down payment or repairs, says Hinman.

HousingMedian AmountMean Amount
Renter $1,640$13,110
Owner $10,000$56,520

Average savings by education level

The Federal Reserve data indicates that education level can also have a big effect on savings —  the higher your education level, the more likely you are to have more money saved. 

Average savings more than doubles for those with a high school diploma compare to those with none, and Americans with college degrees have more than three times the average savings than those without.

Education level Median Amount Mean Amount
No high school diploma $1,020$9,190
High school diploma $2,500$20,100
Some college$3,900$23,550
College degree  $15,400$78,890

Average savings by current work status 

When comparing work status, those who are self-employed tend to have more money saved than working or retired Americans. Given the added expenses of owning a business, along with the financial insecurity it can present, it can make sense for self-employed workers to save more.  

It’s not always, but work status is often tied to age. The older you are, the more you should consider saving, says Hinman. She recommends older Americans, who may find it more difficult to secure a new position if they lose work, or who are preparing for retirement, should try to have up to 24 months of savings set aside. Younger, already-employed generations may be able to save as little as three to six months worth of expenses, while families with only one working parent or who are trying to start a business may instead want to aim for six to 12 months. But the amount that makes you feel most comfortable can vary and change over time. 

Work StatusMedian AmountMean Amount
Employee $5,300$31,160
Self-employed $14,000$99,770
Retired $4,500$41,840
Other, not working $1,730$33,210

Managing Savings Today

As inflation leads to higher prices on everyday items and debt becomes more expensive in today’s rising rate environment, now is a great time to focus on saving.

“When we’re looking at inflation levels at almost 9%, the highest we’ve seen in 40 years, literally every cent counts,” says Ayesha Selden, a certified financial planner and franchise owner of Ameriprise Financial Services Inc, LLC in Philadelphia, PA. 

But the current economy is making wallets tighter for many families across income levels, age, and home status. As a result, it may feel more difficult today to save for the unexpected and build a solid emergency fund while still saving for retirement and meeting everyday expenses.

There are a few ways experts say you can begin to ease financial burdens and stresses. Audit your bills and regular spending for expenses you can reduce. For example, you may be able to save on gas by switching to unleaded if your car doesn’t require premium gas, which costs more. Or taking stock of your refrigerator and cabinets may help you find food you’re not using efficiently and can cut from your grocery list, Rendell says. You may also consider getting a side hustle for some extra money to relieve financial stress, such as tutoring or renting a room in your home, she adds. 

“Savings means flexibility,” says Hinman. “Having cash means you have flexibility in your choices, and that’s really important.”

Pro Tip

It’s best to keep your emergency fund in a high yield savings account to get the best return on your savings plus easy access to your funds. You can also open a CD to save money for a longer term goal, but you may pay a fee if you withdraw early, says Hinman. 

How Much Should You Save?

How much money you need to set aside depends on your lifestyle, financial responsibilities, and goals. Regardless of money held in retirement savings and other investments like stock, cryptocurrency, or real estate, you should still have an emergency fund.

“Having three to six months of your expenses puts you in a position where you can still pay your bills between jobs if you are laid off or downsizing,” Selden says.

To find the exact number to cover several months of expenses, start by calculating what financial expert Tiffany Aliche calls your “noodle budget,” or the bare-bones essentials you still need to cover in times of financial hardship. This may include your rent or mortgage, utility bills, insurance, groceries, and more. You may choose to go without certain expenses when you’re low on funds, such as streaming subscriptions or gym memberships. 

“Nobody was in a pickle and said ‘Oh gosh, I wish I didn’t have so much money saved,” Rendell says. “We’ve learned how unpredictable the economy is and how we can’t take things for granted.”

Your emergency fund should be somewhere secure where you can access it at any time. For example, a high-yield savings account can help you earn a return on your savings over time and allows withdrawals without a penalty. 

If you’re looking for the highest yield, you may choose to incorporate CDs into your savings mix — like putting half of the money you’re saving in a high-yield savings account and the other half in a CD, says Hinman. Or you can put your money in a no-penalty CD to avoid paying a penalty if you withdraw your savings before the term ends. 

A money market account is another savings option that’s similar to high yield savings accounts, though often with checking account features. Right now, the best money market account rates are generally on par with the APYs offered by high yield savings rates. 

After you’ve built up your emergency fund, remember that you don’t need to stockpile every dollar into a low-earning savings account. Instead, start investing your extra money in an account where you’ll earn returns on your deposit. If not, you may miss out on potential returns that high interest savings like index or mutual funds can bring in.