For many Americans in their 50s, retirement is on the horizon.but those people may not have enough savings to do it comfortably.
By the time you’re 50, you should aim to put about six times your salary into retirement savings. According to Fidelity. So, for example, if you earn $100,000, ideally you should keep about $600,000 in your retirement savings account.
But the reality is that most Americans in that age group haven’t reached the recommended milestones.
The average American between the ages of 50 and 59 holds about $189,800 in 401(k) assets, according to Fidelity Investments data. Retirement analysis for Q2 2023 Offered to CNBC Make It.
But most people have less than a third of that amount in savings. The median 401(k) balance for Americans in their 50s is $57,000, meaning half of their 401(k) balances are below this amount and half are above this amount.
These numbers vary significantly as a small number of accounts with huge balances can raise the average. The median account balance is likely a more accurate representation of how much most people actually save for retirement.
Get your retirement savings on track
Many factors can make it difficult for people in their 50s to save for retirement over the years.
A certified financial planner curtis financial planning.she is also a member CNBC Advisory Council.
Rising costs from inflation are also affecting people’s ability to save for retirement, regardless of age. About 25% of working adults say they have reduced their retirement benefits in 2022 because inflation has hit their household budgets, according to 2023 statistics. TIAA Institute-GFLEC Personal Finance Index. Nearly 12% stopped saving altogether.
But even if your retirement savings aren’t quite what you’re comfortable with, it’s never too late to get back on track.
Account balances can be affected by factors outside of your control, such as inflation and market volatility, so it’s a good idea to focus on what you can control. retirement savings rate.
This is the percentage of your income that you contribute annually to your 401(k) or other retirement savings account. Fidelity recommends aiming for the following savings rates: about 15%, including employer agreements. According to Fidelity data provided to CNBC Make It, the average savings rate for people in their 50s is about 15.7%.
The annual 401(k) contribution limit for 2023 is $22,500. However, if you are 50 or older, you can make an additional annual contribution of up to $7,500. This means your 401(k) contribution limit will increase to $30,000 annually.
If you’ve already reached your 401(k) contribution limit and your income is below a certain limit, you can consider other ways to save for retirement, such as contributing to retirement. Ross IRAsays Curtis.
Towards 2023, you too can contribute Up to $6,500 per year For a Roth IRA if you are single and earn less than $138,000 or married and have a joint income of less than $218,000.
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