Many Americans in their 50s may not have enough saved up for a comfortable retirement, according to a CNBC Make It article. Fidelity suggests that by the time someone turns 50, they should aim to have around six times their salary saved for retirement. However, the reality is that most Americans in this age group haven’t reached that milestone. On average, Americans between the ages of 50 and 59 have approximately $189,800 in their 401(k)s, but the median balance is much lower at $57,000. These numbers indicate that a handful of accounts with large balances can skew the average, and the median balance is considered a more accurate representation of what most people have saved for retirement.
There are several factors that may have hindered someone in their 50s from saving for retirement over the years. For instance, financial responsibilities like college tuition for children, high mortgage debt, and the need to care for ailing parents who also didn’t save enough for retirement can make it challenging to save. Inflation has also affected people’s ability to save, with some individuals decreasing or completely stopping their retirement contributions due to inflated costs. Despite these obstacles, it’s not too late for individuals to get their retirement savings on track. Focusing on a controllable factor, such as the retirement savings rate, can be beneficial. By aiming for a rate of around 15% and taking advantage of catch-up contributions, individuals can boost their retirement savings.
For those who have already maximized their 401(k) contributions or have a lower income, exploring other retirement saving options like a Roth IRA can be helpful. Contributing up to $6,500 annually toward a Roth IRA is possible for individuals who meet certain income requirements. It’s important for individuals in their 50s to take proactive steps to improve their retirement savings, even if they haven’t reached their desired level thus far.