Here’s how much you should have saved for retirement at age 50

When you turn 50, retirement may still be a decade or more away. But at the same time, you’re probably aware that you don’t have all the time in the world to save for retirement.

Wondering how much you should have saved for retirement by age 50? Read on for some common guidelines, as well as information on how you compare to your peers in terms of savings.

How much should you have saved by age 50?

By age 50, you typically want to save six times your annual salary, according to Fidelity’s Age Retirement Savings Guidelines. The US Bureau of Labor Statistics reported that the average weekly earnings for a full-time worker were $1,143 in the second quarter of 2024, which translates to an annual salary of $59,436. That means if you make a relatively average salary, you’d like to have close to $360,000 saved for retirement by age 50.

Fidelity assumes the following in its age-based savings recommendations:

• You started saving 15% (including any company 401(k) matching) of your annual income for retirement at age 25.

• Your goal is to retire at age 67, which is the full Social Security retirement age for anyone born after 1959, and maintain your pre-retirement lifestyle.

• You’ll limit your annual retirement withdrawals to 4% to 5% of your initial savings balance.

What is the average retirement savings at age 50?

According to Vanguard’s “How America Saves 2024 Report,” the average 401(k) balance for workers ages 45 to 54 was $168,646. But a relatively small number of high savers could increase the average balance. The average balance for savers ages 45 to 54 was significantly lower at $60,763.

Not surprisingly, savings balances tend to grow over time due to compounding power, along with the fact that earnings tend to increase with age. For example, workers 65 and older had average savings of $272,588 and an average savings balance of $88,488.

What if my savings run low?

As you can see from the numbers above, many Americans are nowhere near the recommended level of savings. But here are some things you can do in your 50s to recoup your savings:

• Consider working an extra year or two. You don’t have to work forever, but delaying retirement by just a year or two can make a big difference to your financial security in your golden years. Because you’ll still be earning a salary, you won’t have to start taking money out of your retirement accounts, which can continue to grow. You may also be able to hold out for a higher Social Security benefit.

• Take advantage of catch-up contributions. Once you turn 50, you can make additional catch-up contributions to many retirement accounts above the usual annual limits.

• Think about where you want to retire. Moving to a cheaper state for retirement or even retiring abroad can help stretch your savings further.

The story continues

You can’t go back in time for your twenty-something self to start investing. But at 50, you still have time to save for a comfortable retirement.

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Here’s How Much You Should Have Saved for Retirement at 50 was originally published by The Motley Fool