Here’s how much you should have invested for retirement at age 60

How much savings do you need to fund a comfortable retirement? The number is obviously different for everyone because everyone’s definition of “comfortable” is different. However, Northwestern Mutual’s average investor reported target of $1.46M seems to be a reasonable estimate. This amount of money could produce annual dividends and interest income on the order of $60,000. Any Social Security benefits you end up getting should help bridge any gap. So this will work as a starting goal.

Problem? That’s a lot of money for the average investor to save, especially in light of the high cost of living these days. Indeed, it’s such a daunting number that some investors may be too discouraged to even bother trying.

It doesn’t have to be you! The key is just to break your savings and investment plan into smaller, manageable chunks with milestone goals. You’ll probably find that a seven-figure savings isn’t as far away as you might think.

With that as background, here’s a rough estimate of how much money you’ll ideally have saved by age 60 — close to retirement age, but with a few years left to make up for any shortfall.

Your magic number

Again, there is no absolute number. Everyone is different. So is their financial situation.

If your goal is simply to maintain your current standard of living, you should have about nine times your annual salary hidden for retirement when you turn 60. For example, if you earn $100,000 a year now, ideally you’ll have $900,000 in a retirement savings account when you’re 60.

That’s the word from the asset management outfit T Rowe Price anyway, although it matches the suggestions of several other financial firms.

But what if you’re nowhere near that number or know you won’t be until then? Don’t sweat. Most people are not. The Federal Reserve’s most recent analysis of the matter shows that people ages 55 to 64 have just over $500,000 saved for retirement. T Rowe Price’s earnings-multiple target is also in the middle of a fairly wide range. You’re doing pretty well with just six times your current annual income in savings, and 60-year-olds with 11 times their annual wages saved by now may be struggling to get by. Again, everyone is different.

You get the point though (rough).

Action plan

Are you behind? Well, good news — you’re still out of luck. There are some actions you can take right now to catch up. One of those actions, in fact, is using what the IRS calls “catch-up” contributions to individual retirement accounts.

Details: While anyone under age 50 can only contribute up to $23,000 of income to a work-sponsored retirement account this year, participants age 50 or older can contribute $7,500 in addition to these plans. And for most eligible participants, next year’s catch-up cap will be raised to $10,000. (While this allowance won’t go away next year, it will change dramatically for higher earners in 2025. Anyone with wages above $145,000 a year will only be able to make catch-up contributions to an employer-sponsored Roth retirement account .)

Meanwhile, remember that anyone over 50 can also contribute an additional $1,000 to a traditional or Roth IRA outer of a workplace plan, raising the cap to $8,000. Income-based contribution rules still apply, of course.

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Putting more money into a retirement account is, of course, easier said than done. As mentioned, the cost of living is just expensive right now. Your total tax bill is likely one of those rising expenses.

However, you still have options that can help reduce your overall living expenses. Maybe it’s time to finally ditch conventional cable TV and indulge in cheaper streaming options. Embrace the idea of ​​going out to restaurants less and cooking at home more often, which can actually be a lot of fun. A little price shopping might reveal that not all grocery stores have identical prices, especially when you can apply coupons.

That said, perhaps the smartest move you can make right now is not to free up money to contribute more to a retirement account, but to invest the money you’ve saved more effectively.

Are any of them currently idle cash? If so, consider moving it into a cash-like money market fund that pays 4% to 5%. Just as importantly, while conservative investing is certainly needed this close to retirement, it’s not as if the average 60-year-old couldn’t use at least a little growth in their portfolio. Just be smart and avoid the “swinging for the guards” types of jobs. Consider reliable long-term growth names such as Microsoft. Maybe avoid less predictable stocks such as Intel.

The nickels and dimes add up over time

But if you still know you’ll never reach $1.4 million by retirement or 11 times your annual income, T Rowe Price says you need it by age 65. That’s ok. Most people won’t. That doesn’t mean these people can’t still enjoy retirement with much less money saved. That’s why you should do what you can when you can with everything you can.

The only thing you don’t want to do, on the contrary, is nothing.

Contrary to common assumption, most retirement wealth is not built overnight. They are the result of years of saving, sometimes seemingly small amounts of money.

Most retired millionaires don’t expect to hit seven figures when they start saving or even when they’re in the middle of their working years. It often only happens when people aren’t looking, time and earnings combined do most of the heavy lifting in the latter part of the savings years.

The earlier you start, the better. This is true even if you are 60 years old. You’ll just want to think differently than the typical 30-year-old investor.