Rosalind Evans
For most people, the retirement period often commences in the mid to late 60s. Thus, if you’re in your 50s, it’s critical to ensure you’ve accumulated a substantial amount in your brokerage account to sustain you once your regular income ceases. But how much should you ideally save per month at 50? Here’s some guidance.
Your Savings Goal by the Age of 50 The monthly savings amount you need at 50 depends on whether you’re on track toward your retirement objectives or whether there’s a risk of depleting your checking account during your retirement years.
By the time you hit 50, you should have amassed around six times your annual income for retirement. This benchmark works if you aim to retire at 67. It is the full retirement age for anyone born in 1960 or later who can access their standard Social Security benefit without early filing penalties.
For instance, if your income aligns with the average annual wage of $61,900, you’d require a retirement fund of approximately $371,400 by your 50s. However, you should continue to save because your ultimate goal should be to have around ten times your final income by the time you retire.
Your Monthly Savings Target at Age 50 The monthly savings you need at 50 depends on the total investment you currently have, your expected retirement age, and the likely returns on your investments, as each factor impacts your savings rate.
For instance:
Suppose you’ve saved $100,000 (the median retirement savings for Americans between 45 and 50). In that case, you plan to retire in 15 years with a target of around $600,000 (roughly ten times the median income for individuals between 55 and 64). You anticipate an average annual return of 10% before inflation (typical for the S&P 500); your monthly investment would need around $478.07. If you’ve saved $350,000 and plan to retire in 15 years with a target of $1 million, you wouldn’t need to make additional contributions as compound interest would increase your investment to $1.4 million. Regardless, it’s prudent to continue saving if possible, as it’s always better to have excess funds during retirement. If you haven’t saved anything, you plan to retire in 15 years with a target of $600,000, you would need to save around $1,573.68 per month. These scenarios are drastically different, so applying generic advice (such as saving 10% or 15% of your income) is only sometimes effective. Your goal should be tailored to your current position and future objectives.
Determining Your Savings and Investment Target
To ascertain the amount you need to invest, project your future income assuming a 2% annual raise from now until your retirement, and plan for ten times this figure to retire comfortably.
Next, use the calculator on Investor.gov to input your current savings, target retirement fund, and estimated returns to approximate your monthly contributions. This will provide a personalized amount you should save each month at 50.
Upon identifying your target savings, try to set up automatic contributions to a tax-advantaged retirement plan, enabling you to enjoy your retirement with sufficient financial support.
Reaching the age of 50 signals a crucial time to take stock of your financial health and retirement savings strategy. Remember, the savings goal you set and the effort you invest today will largely determine the quality of your retirement years. Your monthly savings target is profoundly personal and varies according to your current financial state, anticipated retirement age, and expected investment returns. Therefore, carefully review your financial plans, and seek advice if necessary to ensure you’re on the right path toward a financially secure retirement.
