How much should you invest for retirement at age 50?
Ideally, you should have about six times your annual salary saved for retirement by age 50. However, the amount you need will vary depending on your retirement goals.
When you turn 50, you’re approaching retirement. This is a critical time in your life to prepare for a future when your salary will no longer exist and you will have to survive on your savings.
So how much should you have saved by age 50? Are most Americans on track? Let’s take a look at expert recommendations and data on how much most people have saved in their retirement plans by their 50th birthday.
How much should you have saved by age 50? According to Fidelity, you should aim to have saved about six times your current annual salary by age 50. This will allow you to have saved 10 times your final salary by age 67, the full retirement age for Social Security benefits (a good time to retire because you can claim unreduced retirement benefits). So, if you earn $60,000 a year, you should ideally have about $360,000 saved up in a 401(k) or other retirement plan by the time you turn 50.
Unfortunately, many people fall far short of achieving the goal of saving six times their salary by that age. According to the Bureau of Labor Statistics, the average annual income for men ages 45-54 is $76,440 and for women, $59,852. This means that men should have around $458,640 and women around $359,112.
In fact, according to a Motley Fool survey, the median retirement savings for Americans ages 45-54 in 2022 was $115,000. This is much less than the recommended amount for both men and women. Many people simply aren’t saving enough money for the future and aren’t on track to make up for the income they need as seniors.
How should I set my savings goal?
Fidelity’s estimates are a good guideline intended to make it easier to set savings goals, but they don’t necessarily apply to everyone. First, while it’s true that women often earn less than men and have less income to supplement, they also tend to live longer, which means they may need more retirement savings than men, rather than much less, as Fidelity’s formula suggests.
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