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How much money should I have saved by 50?

One suggestion is to have saved five or six times your annual salary by age 50 in order to retire in your mid-60s. For example, if you make $60,000 a year, that would mean having $300,000 to $360,000 in your retirement account. It's important to understand that this is a broad, ballpark, recommended figure.

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If you're like most workers, your savings and investments will be a major source of income once you reach retirement. It's only natural to wonder whether you'll have enough saved by the time you leave the workforce. It can help to track your financial goals at key milestones. So, what's the average retirement savings by 50? Here's what the typical household is saving by that age and what you might aim for.

How much should you have saved by 50?

Social Security will supplement your income once you retire, but for most people, those payments will be far below what you earned while working. Estimates suggest a median wage-earner who was born in 1970 and retires at 67 will have about 32% of their pre-retirement income replaced by Social Security benefits. You may receive income from other sources, such as a pension, but you will probably need to lean on savings or other assets to maintain your lifestyle. One suggestion is to have saved five or six times your annual salary by age 50 in order to retire in your mid-60s. For example, if you make $60,000 a year, that would mean having $300,000 to $360,000 in your retirement account. It's important to understand that this is a broad, ballpark, recommended figure. You may need more or fewer assets depending on your financial situation and goals for retirement. Factors that may lead you to adjust your savings target include these: Retirement age . This five-times benchmark assumes you're retiring no earlier than age 65. People who plan to retire early will need to fund a longer retirement and will need a higher-than-average amount of retirement assets. . This five-times benchmark assumes you're retiring no earlier than age 65. People who plan to retire early will need to fund a longer retirement and will need a higher-than-average amount of retirement assets. Lifestyle. A typical retiree will need to replace about 70% to 80% of their previous income. However, those who plan to travel extensively, pay a family member's college tuition or take on other significant expenses may need to increase their target savings amount. A typical retiree will need to replace about 70% to 80% of their previous income. However, those who plan to travel extensively, pay a family member's college tuition or take on other significant expenses may need to increase their target savings amount. Location. If you plan to move after you retire, you'll want to include the cost of living relative to where you are now. Be sure to factor in the tax implications if you envision living in another state or country.

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If you plan to move after you retire, you'll want to include the cost of living relative to where you are now. Be sure to factor in the tax implications if you envision living in another state or country. Tax status of investments. This savings target assumes that taxes will reduce your investment returns. If most of your retirement money is in a Roth IRA, which won't be taxed in retirement, a smaller balance may be enough. This savings target assumes that taxes will reduce your investment returns. If most of your retirement money is in a Roth IRA, which won't be taxed in retirement, a smaller balance may be enough. Pre-retirement income. People with higher incomes usually get a smaller percentage back from Social Security in retirement and may need more investment assets to maintain their lifestyle. Learn more on this topic best way to save? Let's explore your options. Read now You know saving for retirement is important. But what is theway to save? Let's explore your options.

3 ways to increase your retirement savings

If your current savings aren't close to that ballpark figure, you're not alone. A 2021 study by the Federal Reserve found that among 45- to 59-year-olds, 83% had some retirement savings, but only 40% said they felt that their retirement savings were on track. However, if you're significantly behind your personal target, consider adjusting your savings strategies.

1. Cut back to catch up

You might consider reducing non-discretionary expenses so you can bump up your savings rate. Both employer-based retirement plans and individual retirement accounts (IRAs) have a catch-up provision that allows investors at least 50 years of age to contribute more.

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In 2022, older workers can put up to $27,000 into 401(k) and 403(b) retirement plans versus $20,500 for younger investors. They can also add $7,000 to IRAs compared to the usual $6,000 limit.

2. Delay your retirement

If increasing your contributions isn't a realistic option, you may find that delaying your retirement even by a year or two can dramatically improve your long-term financial picture. Not only are you giving yourself more time to build up your 401(k) or IRA, but you're also shortening the number of years your assets will have to last. Keep in mind that every year you wait to tap your Social Security benefits results in an increased monthly benefit until you reach age 70. (Taking early benefits has the opposite effect.) As a result, you'll have to rely on investment income less the longer you delay your payments. Finally, you may want to modify your post-retirement budget to make your assets last longer. That could mean:

Downsizing your home so you have more manageable housing payments.

your home so you have more manageable housing payments. Moving to an area with a lower overall cost of living. Getting a part-time job (as long as you bring home less than the Social Security earnings limit, working on a limited basis generally does not affect your program benefits).

What's the best way to save for retirement?

Read now Explore these retirement income sources—and how to work them into your financial plan.

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