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By the time you hit your 70s, you may assume you'll need a large bank account balance as you live out your golden years. But the reality of what is actually in a 70-year-old's bank account is a bit more nuanced. Having money available can help cover both surprise and everyday expenses, but the truth is, the amount people actually keep in their bank accounts often looks different from their retirement accounts.
If you're wondering how your bank balance stacks up, Federal Reserve data offers a useful benchmark. And knowing where you sit from a cash perspective can also be used as a baseline for helping to strengthen your retirement plan.
Here's how much cash the average 70-year-old has in the bank right now, and why the typical retiree's savings may be lower than you expect.
Editor's note: All savings data comes from the Federal Reserve Survey of Consumer Finances (SCF), unless otherwise stated.
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How much cash does the average 70-year-old have in the bank?
The data from the Federal Reserve shows that households between the ages of 65 and 74 hold an average of $100,250 in transaction accounts (bank accounts). Included in this number are readily accessible cash accounts. Retirement accounts are not included.
However, while learning that the average 70-year-old has a cash balance of over $100,000, the arguably more important statistic for many is that the median balance of 70-year-old households is just $13,400.
Why the average is much higher than the median
The inflated average balance gives the impression that most folks in their 70s have more cash than they likely do. And the large gap between the average and the median shows that these cash balances aren't evenly distributed.
The median reflects the middle household, with half holding more and half holding less than $13,400 in bank accounts. The average, on the other hand, is pulled much higher by a smaller number of affluent households that keep larger cash balances in their accounts.
What's included in these cash savings numbers?
The numbers in the data for both the median and average represent liquid assets that are easily accessible for spending. This includes checking accounts, savings accounts, money market deposit accounts, and cash held in brokerage accounts (that isn't invested).
These numbers do not include things like 401(k) plans, IRAs, pensions, home equity, or invested assets like stocks, bonds, and mutual funds.
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Why many retirees keep more money in cash
When looking at the average and median balances of younger age groups, people in their 70s tend to have higher bank balances. Many people around age 70 often prioritize liquidity over maximizing investment returns.
Keeping more cash available makes it easier to pay for large expenses, like medical bills or home repairs, without selling investments. A larger cash cushion can also help retirees prevent dipping into their portfolios during periods of struggle in both the market and in life.
How Social Security and pensions influence cash balances
Many retirees will receive predictable monthly income from pensions, Social Security, or both. Because these payments help cover regular living expenses, some households can comfortably maintain cash reserves for emergencies or planned purchases.
Others may find themselves needing less cash because their monthly income already provides a reliable financial cushion.
Why some 70-year-olds keep much less cash on hand
If you have less than the median in the bank, it doesn't automatically equate to financial struggles in retirement. Some retirees intentionally keep most of their money invested for long-term growth, while only keeping enough cash for short-term expenses (or emergencies).
Others rely on steady retirement income, like Social Security, which reduces the need for a large cash balance.
Cash savings are just one piece of retirement security
Sure, liquid savings are important, but your savings account balance alone doesn't tell the whole story. Retirement accounts, investment portfolios, pensions, Social Security benefits, and home equity all contribute to your overall financial health.
If you have a modest cash balance, you may still have substantial retirement assets that aren't necessarily included in the data.
How your savings compares
While you shouldn't get too wrapped up in comparison, it does pay to compare your cash savings to national averages for some helpful (and healthy) context. Spending needs, income sources, and personal investment strategies will vary from one household to another.
So, the most important measure is whether your available cash supports your lifestyle while also fitting your broader retirement plan.
Bottom line
While the average 70-year-old household may have close to $100,000 in the bank, the median balance of around $13,400 reflects a more practical look into what most households actually keep on hand. This is why it's important to consider the median (not just the average) when gauging where you stand personally.
But most importantly, there isn't a universal "right" amount of cash to have in retirement. Many financial planners recommend keeping one to two years' worth of planned withdrawals in cash or other low-risk assets to help avoid selling off investments.
The ideal bank balance ultimately depends on your retirement goals, spending needs, and income sources, not necessarily how much cash you have in comparison to others.
FAQs
Where should retirees keep their cash reserves?
Retirees generally want their cash in accounts that are safe, liquid, and easy to access quickly. Common choices include high-yield savings accounts, money market accounts, and short-term certificates of deposit. Keeping cash in an account that earns at least as much as the current inflation rate helps protect its purchasing power, so the reserve does not lose ground while it sits untouched.
What is the median retirement savings by age?
Unlike the cash figures above, retirement savings covers accounts like 401(k)s and IRAs, and the balances are much larger. According to the Federal Reserve's 2022 Survey of Consumer Finances, median retirement savings run from about $18,880 for households under 35 up to about $185,000 for households ages 55 to 64, then ease to roughly $130,000 for those 75 and older as retirees spend down what they saved. Figures based only on workplace plans tell a similar story from a different angle: Vanguard's data shows median 401(k) balances of about $78,730 for ages 45 to 54 and about $103,202 for savers 65 and older. As with cash balances, the median sits well below the average in every age group, because a small number of large accounts pull the average up.
Why do financial experts recommend looking at the median instead of the average bank balance?
The median often provides a more realistic benchmark because it represents the middle household, with half of households holding more cash and half holding less. The average can be skewed upward by a relatively small number of households with very large bank balances, making it less representative of what most 70-year-olds actually have in readily available cash.
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