This is a continuation of our evaluation of how others are planning and saving for retirement. When it comes to retirement savings, having an idea of what others do can be good information. It can be hard to determine exactly how much you’ll need for your own post-career days, but finding out how others are planning—or not—can offer a benchmark for setting goals and milestones.
Fiftysomethings (Age 50–59)
Average 401(k) balance: $174,100
Median 401(k) balance: $60,900
Contribution rate (% of income): 10.1%
The jump in the contribution rate for this group suggests that many are taking advantage of the catch-up provision for 401(k)s, which allows people age 50 and over to deposit more (an extra $6,000 in 2019 and $6,500 in 2020) than the standard amount.3
Sixtysomethings (Age 60–69)
Average 401(k) balance: $195,500
Median 401(k) balance: $62,000
Contribution rate (% of income): 11.2%
Savings-wise, it’s now or never for this group. The fact that the contribution rate is as high as it is suggests that many baby boomers are continuing to work during this decade of their lives.
Retirement Savings Goals
What should you aim for, savings-wise? Fidelity has some pretty concrete ideas. By the time you’re 30, the company calculates you should have saved half of your annual salary. If you are earning $50,000 by age 30, you should have $25,000 banked for retirement. By age 40, you should have twice your annual salary. By age 50, four times your salary; by age 60, six times, and by age 67, eight times. If you reach 67 years old and are earning $75,000 per year, you should have $600,000 saved.
8.8%
The average employee 401(k) contribution rate (as a percentage of salary).
There’s also the tried-and-true, what some might call old-school, 80% rule: Save as much as you would need to have the equivalent 80% of your salary for about 20 years.
That would require about $1.2 million for that same person making $75,000 if you don’t factor inflation into the mix. That number goes up to between $1.5 million and $1.8 million depending on how you do try to factor it in.
However you choose to calculate it, everyone agrees that’s a lot of money.
How to Turn It Around
Sad but true: Most Americans don’t have nearly enough savings to sustain them through retirement.
How do you avoid that fate? First, become a student of the retirement savings process. Learn how Social Security and Medicare work, and what you might expect from them in terms of savings and benefits.
Then, figure out how much you think you’ll need to live comfortably after your nine-five days are past. Based on that, arrive at a savings goal and develop a plan to get to the sum you need by the time you need it.
Start as early as possible. Retirement may seem a long way away, but when it comes to saving for it, the days dwindle down to a precious few, and any delay costs more in the long run.
AND- Call me for assistance in developing YOUR PLAN!
Article Sources
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Fidelity Investments. “Fidelity 2019 Retirement Analysis: A Record Number of People Boost Their Savings Rate in Q2 as Average Account Balances Continue to Increase,” Page 1. Accessed Sept. 27, 2019.
Fidelity Investments. “Fidelity 2019 Retirement Analysis: A Record Number of People Boost Their Savings Rate in Q2 as Average Account Balances Continue to Increase,” Page 2. Accessed Sept. 27, 2019.
Internal Revenue Service. “Retirement Topics: Catch-up Contributions.” Accessed Sept. 27, 2019.
Economic Policy Institute. “The State of American Retirement.” Accessed Sept. 27, 2019.