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By age 75, most Americans have been retired for years and have begun drawing down the money accumulated during their working lives. Federal Reserve data suggest that those who still have retirement accounts typically have about $130,000 remaining.

However, that figure requires some explanation.

The Federal Reserve’s latest Survey of Consumer Finances, conducted in 2022, groups together households headed by people age 75 and older. Among households in that category that still owned an IRA, 401(k), 403(b), or similar account, the median balance was $130,000.

The median is usually a better measure of what is “typical” than the average because half of account owners have more and half have less.

The average retirement account balance for the same age group was about $462,410. That number is much higher because averages are pushed upward by households with extremely large portfolios.

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Most don’t have a retirement account

Another important detail is that only about 42% of households headed by someone 75 or older had money in a retirement account.

That means the $130,000 median applies only to account holders, not to everyone in the age group. Because fewer than half of these households have a retirement account, the median retirement account balance across the entire 75-and-older population is effectively zero.

That does not necessarily mean most people in this age group have no financial resources. Some receive traditional pensions, hold money in bank accounts or taxable investments, or own homes with substantial equity. Social Security also provides income to the overwhelming majority of older Americans.

Still, the figures show why describing the “average” retiree as having nearly half a million dollars can create a misleading picture.

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Savings decline after age 74

Retirement balances generally reach their peak immediately before or during the early retirement years. Among households ages 65 to 74 that owned retirement accounts, the median balance was $200,000, compared with $130,000 among those 75 and older.

The decline is not surprising. Retirees commonly withdraw money to cover housing, food, insurance, medical care, and other expenses. Most 75-year-olds with tax-deferred accounts are also subject to required minimum distributions, which force them to withdraw — and pay taxes on — part of the balance each year.

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Is $130,000 enough?

How long $130,000 lasts depends heavily on a retiree’s other income and expenses.

At a 4% annual withdrawal rate, the account would initially produce about $5,200 a year, or roughly $433 a month, before taxes. That may be manageable for someone with Social Security, a pension, a paid-off home, and limited debt. It could be inadequate for a renter or someone facing high medical or long-term-care costs.

The most useful comparison may not be with the national median. Retirees should consider whether their guaranteed monthly income covers essential expenses and how much of their remaining savings may be needed for emergencies, medical bills, and care later in life.