Don't worry about what other people have saved for retirement. Here's how to find your perfect number.

By Kurt Supe

Don't compare your nest-egg balance to a number that doesn't actually mean anything

Don't focus so much on other people's numbers. Instead, do this calculation to see if you're on track for retirement.

The median American household between the ages of 55 and 64 has $185,000 in retirement accounts.

For those between 65 and 74 years old, the median amount is $200,000. Between 45 and 54 years old, it's $115,000. Those figures come from the Federal Reserve's Survey of Consumer Finances, the most reliable snapshot we have of what Americans actually hold.

You just did the math on yourself. Everyone does. Depending on how you compare to those numbers, you felt either relief or a knot in your stomach.

Both reactions are wrong because they don't actually reflect how well (or not) Americans are doing when preparing for retirement. Let me give you the number you should be calculating instead.

The benchmark is worse than useless

Those medians are missing some vital information. For instance, they only count households that have retirement accounts at all. Roughly 54% of American households do. The other 46% have nothing in a 401(k) or IRA, so they don't appear in the table. Include them and Americans' average level of preparation for retirement darkens considerably.

That cuts both ways for you. If you're above the median, you're being compared against a group that excludes tens of millions of households with zero saved. Beating that benchmark is a low bar. Fewer than one in 10 households age 55 to 64 have even $1 million in retirement assets. If you're in that group, congratulations: You've won a comparison that tells you almost nothing about whether you can retire.

The deeper problem is that these numbers are simply that - numbers - and they provide very little context as to how retirees actually spend or live. The median household in that table isn't planning to live on its portfolio alone. Retirees often have other sources of retirement income to fall back on, such as Social Security, maybe a pension, maybe part-time work. Retirement plans are not created equally, which means comparing your account balance to someone else's will give you no real winner or loser.

I've spent almost 30 years doing retirement and tax planning. I've never once seen a plan succeed or fail because of where someone ranked against a national median. I've seen plenty fail because the household never calculated its own number.

The number that actually matters

Your retirement readiness isn't determined by your balance. It is measured by the gap between what you'll spend and the income you have that is guaranteed. Multiply by time and adjust for taxes. You can calculate it in three steps.

Step 1: Your real annual spending. Not a budget. Not what you think you spend. Look through 12 months of your actual spending, such as by going line by line through your checking-account or credit-card statements, then add it all up. Most people who do this exercise for the first time discover they spend 15% to 25% more than they estimated. Use the real figure.

This process can be automated. Your bank or financial institution may have a tool on its online portal that breaks down how you're spending by category. If you have a trusted artificial-intelligence program, you could strip your statements of any personally identifiable information and drop them into the program.

Step 2: Subtract guaranteed income. Social Security is the big one, and it's smaller than most people assume at higher incomes. The Social Security Administration's own 2026 figures show that benefits claimed at full retirement age replace about 79% of pre-retirement earnings for very low earners, about 43% for medium earners and only about 28% for maximum earners. The system is progressive by design. The more you earned, the less of your lifestyle it covers. You can find what the agency estimates you'll receive in benefits at different claiming ages by creating an account on the Social Security Administration website.

If you have any other guaranteed sources of income, such as a pension or annuity, add that under income. The difference between what you'll actually spend in retirement and the money you'll be receiving is your annual gap.

Step 3: Multiply and adjust for taxes. Multiply the gap by the years you need to fund. A 62-year-old couple in good health should plan for 30 or more years. Then apply the adjustment almost everyone skips: taxes. If your savings sit in traditional IRAs and 401(k)s, you'll be paying taxes on your distributions at ordinary income rates. If you don't touch that money right away, you'll eventually be forced to do so because of required minimum distributions.

Now you've got your number. Not the median. Not your neighbor's. Yours.

Where to go from here

A smaller portfolio can be just as powerful as a larger one, depending on how people plan for their futures. Consider these tasks depending on where you are on your journey to retirement.

In your 40s: This is the decade to build the tax structure, not just the balance. If everything you save goes into pretax accounts, you're building a future tax problem alongside your future income. Add Roth contributions or a taxable brokerage account so you retire with more than one lever to pull. Pretax money saves you tax today and gets taxed when you spend it. Roth money is taxed today and comes out tax-free later. Most savers put nearly everything in pretax because they assume they'll be in a lower bracket in retirement. Save well enough and you won't be. A mix of both lets you manage what you pay now and still have tax-free money waiting when the IRS starts forcing withdrawals later.

In your 50s: Run the 3-step calculation above for the first time. Catch-up contributions become available at age 50. If your number shows a gap, this is the decade with the most earning power left to close it, and the decade when working two or three extra years can change everything: more contributions, more compounding, fewer years to fund, and a larger Social Security benefit.

In your 60s and beyond: The question shifts from how much you have to what order you spend it in. Withdrawal sequence among your taxable and nontaxable accounts, Roth conversion windows before required distributions begin, and Social Security claiming age now matter more than investment selection. These decisions are worth more than most people's last five years of saving.

The comparison you should actually make

Focus on one thing only: the life you actually intend to fund, priced honestly, taxed correctly, measured in years. That means comparing your current financial situation to the one you want, which is harder because it requires knowing what you want your retirement to be. The median asks nothing of you. Your own number asks everything.

Kurt Supe is a CPA and retirement planner with CFD Investments, Inc., Registered Broker Dealer, and Creative Financial Designs, Inc., Registered Investment Adviser. Follow him on X and YouTube at @KurtSupeCPA. For additional information and disclosures, visit www.creativefinancialgrp.com.

-Kurt Supe

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08-10-26 0736ET