Here's How Much Cash the Average 80-Year-Old Has in the Bank Right Now (How Do You Compare?)

If you're building a retirement plan to see you well into your 80s or 90s, you probably wonder just how much money you'll need at that point. One metric to consider is how much others at that age have saved up — specifically, what an 80-year-old's bank account balance would be.

While the Federal Reserve has data for broader age brackets, and not specifically 80, you can use this information to see where you stand financially. Just take it with a grain of salt. Financial health is often more than a number.

The typical bank account balance for an 80-year-old

Federal Reserve data show that households whose reference person was age 75 or older had a median of around $10,000 in readily accessible transaction accounts. The average, calculated as the total balances held by households in the group divided by the number of households with transaction accounts, was much higher, at about $82,800.

The figures don't specifically share data for someone aged 80, but you can assume that the bracket of 75+ isn't far off from what an older retiree might have. 

The bigger gap isn't in age, it's in average vs. median, with median a more likely number for the average American to compare to. It looks at the bank account balance in the middle of the pack, with half of the accounts having higher balances and half having lower. Unlike the average, it's not skewed as much by unusually high balances.

Which accounts are included in the data?

The Federal Reserve data specifically calls out transaction accounts, which are accounts where the money is easily accessible. They include:

• Checking and savings accounts
• Money market deposit accounts and money market funds
• Call accounts
• Prepaid debit cards

The data doesn't include 401(k)s, 403(b)s, traditional or Roth IRAs, pensions, stocks, mutual funds, bonds, home equity, real estate, or total net worth. Certificates of deposit may be FDIC-insured bank deposits, but they are not included in the Federal Reserve's transaction-account category used for these figures.

Why bank account balances don't tell the whole story

Because the data only includes some types of accounts, and not others, it's not a measurement of wealth or financial stability. Someone could have a paid-off home and a large IRA but keep very little cash in a savings or checking account.

Likewise, you could keep most everything you own in a money market account and have significant high-interest debt and no retirement accounts or pension. The bank account figures are a useful metric, but they can't be relied upon alone to know if you're "on track" for your age.

Can less cash in retirement be a good thing?

There's another angle to consider, and it's that it may be better if you don't have as much in the bank. Lower liquid cash balances at this stage of life can be reasonable if you have enough coming in from Social Security, pensions, annuities, required distributions, or withdrawals from other retirement accounts. Some may even have income from a rental property or business at age 80.

If you have a paid-off home or land, this asset value is in something steady and predictable, even if it's not as liquid. If you're able to make your monthly bills, have a healthy cash cushion, and don't scramble to pay for unexpected health expenses, the modest cash balance can be fine. 

Depending on the account and investment chosen, money held outside a low-yield transaction account may have greater long-term return potential, but it can also involve market risk, loss of principal, or reduced access to cash.

The national number isn't a rule

Instead of comparing yourself to aggregate data from households not in your geographic area or with the same lifestyle values, consider what you need to be "well off." Calculate the number of months your liquid cash could cover, if needed. Factor in housing, property taxes, insurance, utilities, food, medical bills, transportation, and repairs.

For example, a retiree with $24,000 in the bank and $3,000 in essential monthly expenses has around 8 months of basic needs covered. But someone with that same amount and $6,000 in monthly expenses would only have 4 months covered. There's a big difference in financial stability with the same bank account balance at play.

When more cash makes sense

Having a higher liquid balance may be beneficial for those with higher out-of-pocket medical expenses, a large insurance deductible, or long-term care expenses not covered by insurance. It may be a wise move for those with irregular, unpredictable monthly income.

Those with substantial debt payments or who need cash to avoid selling investments after a market decline should consider more of a cash cushion as well. You may consider two buckets: one for regular bills and one for unexpected expenses, to make sure you have enough on hand for what you need and don't have to sell assets if something goes wrong.

Bottom line

The $10,000 median transaction account balance is for an entire household with a reporting 75+ member, not just a single earner, and it's much lower than the national average of $82,800 for this age group. But these numbers have less meaning than your own budget and income realities.

If you do need to open a new bank account, be sure it's held in an FDIC-insured bank so it's protected. It generally covers deposits up to $250,000 per depositor for each ownership category.

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