How Much Should You Have Saved by Retirement Age 50? Know Details

As you reach the age of 50, retirement looms on the horizon, and it’s a crucial time to assess whether you’re financially prepared for your golden years. But how much should you have saved by now, and how does that compare to what most Americans actually have?

How Much Should You Have Saved by Age 50?

Financial experts like those at Fidelity suggest that by age 50, you should aim to have around six times your current annual salary saved in your retirement accounts.

This benchmark is designed to keep you on track to have about ten times your salary saved by the time you reach 67, the full retirement age for Social Security benefits.

For instance, if you’re earning $60,000 per year, you should ideally have around $360,000 saved by your 50th birthday. This level of savings puts you in a good position to retire comfortably, with enough funds to replace a significant portion of your income.

Are Most Americans on Track?

Unfortunately, many Americans fall short of this target. According to data from the Bureau of Labor Statistics, the median annual earnings for men aged 45 to 54 are about $76,440, while women in the same age group earn a median of $59,852.

Based on these earnings, men should have approximately $458,640 saved, and women should aim for around $359,112 by age 50.

However, the reality is much different. Research by The Motley Fool in 2022 revealed that the median retirement savings for Americans aged 45 to 54 was only $115,000.

This figure is well below the recommended amount, indicating that many people are not on track to replace their income adequately when they retire.

Why Are So Many Behind?

Several factors contribute to this retirement savings gap:

• Late Start: Many people don’t begin saving for retirement until later in life, missing out on the benefits of compound interest.
• Life Expenses: The costs of raising a family, buying a home, and paying off debt can take priority over retirement savings during the prime working years.
• Lack of Financial Literacy: Not everyone fully understands how much they need to save or how to effectively manage their retirement accounts.

What Can You Do If You’re Behind?

If you find yourself behind on your retirement savings at age 50, it’s not too late to take action. Here are a few strategies to help you catch up:

1. Maximize Contributions: Take advantage of catch-up contributions, which allow those over 50 to contribute more to their 401(k) or IRA than younger workers. For 2024, you can contribute an extra $7,500 to your 401(k) on top of the standard $22,500 limit, and an additional $1,000 to your IRA, bringing the total contribution limit to $7,500.
2. Reevaluate Your Budget: Look for areas where you can cut back on spending and redirect those funds into your retirement accounts. Every extra dollar you save can make a significant difference over time.
3. Consider Working Longer: Delaying retirement, even by a few years, can have a substantial impact on your savings. It allows more time for your investments to grow and reduces the number of years you need to draw from your retirement funds.
4. Seek Professional Advice: A financial advisor can help you create a realistic plan to catch up on your savings and manage your investments to maximize returns.

By age 50, aiming to have six times your annual salary saved is a good benchmark, but many Americans fall short of this goal. If your retirement savings aren’t where they should be, now is the time to take action.

Maximizing contributions, reevaluating your budget, and possibly delaying retirement can help you get back on track. The earlier you start addressing any shortfalls, the better positioned you’ll be to enjoy a comfortable retirement.

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