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How much should you have saved for retirement by 50?

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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.
  • 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.
  • 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.
  • 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.
  • 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.
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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.

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.

3. Adjust your retirement lifestyle

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.
  • 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).
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It's important to keep in mind that no two financial situations are exactly alike. While there are suggested figures out there for average retirement savings by 50, we all have unique circumstances. If you need help creating a customized retirement strategy, a Thrivent financial advisor can guide you.

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Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.

Thrivent financial advisors and professionals have general knowledge of the Social Security tenets. For complete details on your situation, contact the Social Security Administration.