Here's How Much You Should Have Saved for Retirement by Age 50

More than half of workers 10 to 20 years from retirement (53%) say that determining how much they should save is their biggest retirement question, according to a report from the Empower Institute.

Knowing how much you need to save is crucial when planning for retirement, so you have a goal to aim toward and an idea whether your savings will last the rest of your life. While everyone's savings goals will differ slightly, there's one benchmark to shoot for by the time you reach 50.

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Setting the right savings target

By age 50, you're in the homestretch before retirement. You'll likely be retiring within the next decade or two, so now is the time to ensure your savings are on track or make adjustments as needed.

Exactly how much you need to save depends on a variety of factors. But by 50, you should ideally have around six times your salary saved for retirement, according to research from Fidelity Investments. These calculations assume you'll be retiring at 67 and that you're saving 15% of your salary starting at age 25. So if your retirement age or savings rate is significantly different, your savings goal will likely differ as well.

This benchmark is a good way to determine whether your savings are in the ballpark. But if you're looking for the most accurate estimate of how much you need to save, run the numbers yourself with a retirement calculator.

What to do if your savings are off track

Say you're 50 but have nowhere near six times your salary saved. Does that mean you're destined to struggle financially in retirement?

Once you realize you're behind on your savings, you're able to do something about it because there are ways to catch up. Your next step should be to figure out how much you should be saving each month to reach your goal, which you can determine with a retirement calculator.

Next, comb through your budget to scrape together every spare dollar you can find. The average American spends nearly $500 per month on unnecessary expenses, according to a survey from Charles Schwab, and stashing even a fraction of that amount in your retirement fund can go a long way.

Mature couple looking at documents and a calculator

Image source: Getty Images.

If budget cuts alone aren't enough, you may need to get creative. Consider adjusting your desired retirement age or making more drastic spending cuts, for example. Or think about relocating to a more affordable city once you retire so you can live comfortably on a tighter budget.

In addition, be sure you're investing aggressively enough. At age 50 you likely don't want your entire investment portfolio in stocks in case the market crashes, but investing primarily in bonds is also risky because your savings won't grow as much. If your goal is to save as much as possible in a relatively short period, you'll want to balance risk and reward and not play it too safe.

By knowing how much you should have saved by 50, you can ensure you're on the right track to retire comfortably.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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