Data Shows Americans Save $175 a Month on Average for Retirement. Is That Enough?

One of the trickiest aspects of saving for retirement -- aside from finding the money, of course -- is figuring out how much to save. And part of the reason it's hard to determine how much to save is that you may not know what your future expenses will look like. So your best bet in that regard may be to just push yourself to save as much as possible.

Recent data from Equitable finds that workers today are saving $175 a month for retirement. And at first, that might read like a pretty small sum. But actually, you may be able to retire very comfortably on that amount of savings -- under the right circumstances.

Where can $175 a month in savings get you?

If you start saving $175 a month for retirement in your 50s, you may not manage to build up a very large nest egg. Similarly, if you start saving $175 a month at a younger age but you invest your savings very conservatively (meaning, you largely stay away from stocks), then you may end up with an income shortfall later in life.

However, you shouldn't assume that you won't manage to enjoy a nice retirement by saving $175 a month. If you do so over many years and are able to generate strong returns in your IRA or 401(k), then you might retire with plenty of money to accomplish your retirement goals.

In fact, let's say you're able to generate a 10% average annual return in your retirement account, which is in line with the stock market's average return over the past 50 years. Let's also assume you want to retire at age 65. Here's the amount of money you might end up with by saving $175 a month, depending on the age you start saving at.

Northwestern Mutual reports that the average baby boomer today has $120,300 in retirement savings. Even the lowest number in the table above well exceeds that total.

Consistency is key

So you can retire with a nice amount of money, even if you're never able to contribute more than $175 a month to your long-term savings. But if you're going to limit your IRA or 401(k) contributions to $175 a month, then it's important to commit to saving and investing that money consistently.

You should also recognize that in time, you may be able to ramp up your retirement plan contributions as your income increases. If you're earning $50,000 a year right now, by saving $175 a month, you're allocating 4.2% of your income to retirement. If your salary rises to $55,000 and you stick to that percentage, you'll be kicking in about $192 a month instead.

But even so, you're not doomed to a cash-strapped retirement if you stick to a $175 monthly contribution for good. That sum could go a long way if you invest heavily in stocks and contribute to your nest egg for the majority of your career.