Even as financial markets hit new highs every week, the trend in savings has dropped to 10 year low of just 3.1%, from a recent peak of 6.3% in October 2015. But it has not always been this bad. From 1950 to 2000, it averaged about 9.8%. It peaked in May 1975, hitting 17% before beginning to slide. At its lowest, in July 2005, it was 1.9%. Low unemployment, household optimism and prosperity are likely contributors to consumers spending on big ticket items like cars and refrigerators while neglecting saving for a rainy day.

A recent survey revealed that more than half of Americans (57 percent) have less than $1,000 in their savings accounts. Conventional wisdom suggests that by age 40, one should have three times their annual salary saved, by 45 – four times their annual salary, by 50 – five times and so on. But, recent poll revealed that one-third of Americans have no retirement savings and 23% said they have less than $10,000 saved.

Ethnicity and life stage also plays  role. Millennials were found to be 40% more likely to not have retirement savings than Gen Xers and 50% more likely than people age 55 and over. And Asian Americans were inclined to save more than the average American while Hispanics were found to be lagging behind the average.

The idea of retiring would be much less stressful for most of us if we could somehow pin down the right amount to save. But, what is that amount?

Future Wealth’s View

According to the Social Security Administration, the average 65-year-old man today can expect to live until 84.3, while the average 65-year-old woman can expect to live until 86.6. With the average retirement age at 63, the average American male should plan for a 21.3-year retirement, while the average woman should plan for 23.6 years.

While the old rule of thumb used to be that one could get away with living off 60% to 80% of their previous income in retirement, it is more likely that average retiree would need 100% of their previous income. But if one’s home is completely paid off by the time retirement starts and the person stays healthy, they can probably get away with saving less.

Which brings us back to the savings rate. To be able to live off savings for 20 years is daunting even to those with modest or significant savings. For those who are lagging behind in savings, that Safari vacation planned in retirement will likely be a visit to the local zoo instead.