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How much money should I have saved by 50?

Yahoo Personal Finance· Getty Images
Updated 8 min read

While age might just be a number, 50 is considered an important milestone for many reasons. Many 50-year-olds find themselves in various stages of life: sending kids off to college, becoming grandparents, or paying off the mortgage on a dream home.

But one concern many older adults share as they approach their later years is whether they have enough savings. How much should you have saved by 50? Financial experts share their insights below on how much you should have in your individual retirement account (IRA), plus other retirement goals to consider and how you can catch up if you haven’t saved enough.

By age 50, most financial advisers recommend having five to six times your annual salary saved. While wages fluctuate quarter to quarter, the U.S. Bureau of Labor Statistics indicates the average annual salary is about $61,900.

That means between your retirement accounts, high-yield savings, investments, and other liquid assets, you should have access to around $350,000 saved at 50 years old. However, as Fidelity Investments points out in their retirement guide, you may need to save money more or less aggressively depending on when you plan to retire.

Comparing your retirement plan account balance with your peers’ can be helpful if you’re trying to reassure yourself you have time to catch up. Among 50-to-55-year-olds, the average 401(k) plan has funds that total $161,869 — or half the recommended retirement savings, according to Empower. The good news is that once you hit your 50th calendar year, you’re allowed to contribute more to your retirement and employ some different strategies to get ahead.

But that doesn’t mean taking outsize risks. Brent Weiss, CFP? and head of Financial Wellness for Facet, says older adults feeling the pressure to save money should be careful.

“I wouldn’t recommend people in their 50s try to catch up by being overly aggressive,” he says. “I would recommend they trim expenses to save more and still have an appropriate investment strategy from a risk perspective.”

Read more: More Americans are now 401(k) millionaires

Catch-up contributions are pretty much what they sound like: a way for older employees to take advantage of tax savings now and contribute more money than the standard limit to their 401(k)s and traditional and Roth IRAs.

“Absolutely take advantage of catch up-contributions,” says certified financial planner Lauryn Williams. “You can look at your budget and hopefully redirect money when you’re in your 50s that used to go towards paying expenses for your kids. That’s some easy, low-hanging fruit.”

401(k) contribution limits are increasing by $500 in 2024 to a total of $23,000. The 2023 401(k) contribution limit was $22,500. Catch-up contributions for people 50 and older will remain at $7,500. That means if you’re 50 or over, you can contribute $30,500 to your 401(k)s in 2024, up from $30,000 in 2023.

For IRAs, in 2024, you can contribute up to $7,000 to a traditional IRA, a Roth IRA, or a combination of the two. If you’re 50 or older, you can make an additional $1,000 catch-up contribution or a total of $8,000.

Another clear benefit to catch-up contributions is the tax savings.

Traditional IRA and 401(k) contributions are generally tax deductible, meaning the money you put in them reduces your taxable income in the current year. You’ll pay taxes on the money when you withdraw it in retirement.

You make Roth contributions with money you’ve already been taxed on, so they don’t help you save on taxes immediately — but the withdrawals you make later are tax-free.

Many employers also offer health savings accounts (HSAs) as part of a health plan. These accounts can be used for health care expenses but also have a savings and investment component. You can contribute money to an HSA pre-tax, and it will grow tax-deferred until your retirement. Later when you make withdrawals to cover healthcare expenses during retirement, the money comes out tax-free.

The maximum contribution is $3,850 for individuals and $7,750 for families in 2023. In 2024, those limits take a step up to $4,150 for individuals and $8,300 for families.

There’s a catch-up contribution for these accounts, too: Employees 55 and older can contribute an extra $1,000.

Once you hit the big 5-0, here are a few things you can do to accelerate your savings rate and take advantage of the retirement nest egg you’ve already built.

Keep in mind that when you plan to retire is rarely when you end up retiring, but it can give you a place to start figuring out how much you still need to put in your retirement accounts.

Remember that retirement planning is about more than the bottom line. It’s about holistic financial planning — figuring out the distance between where you are and where you want to end up as a retiree.

Read more: Retirement planning: A step-by-step guide

In your 50s, your money has less time to recover from market volatility. You still want to be invested in stocks so you can earn returns that will keep your money growing. But as the years go by, you’ll want to shift more of your money into those safer assets.

Social Security is another important part of your retirement plan. To see an estimate of your future retirement benefit and verify that the Social Security Administration’s record of your earnings is accurate, create a Social Security account at ssa.gov.

Now for the numbers: Calculate how much of your salary or paycheck you need to put aside to ensure you have enough money in your golden years.

If that sounds like a daunting math problem, you don’t have to solve it alone.

“You’re less than 20 years away from retirement at this point, and you need to be aggressive about saving,” says Williams. “Consider at this point working with a financial professional. ... (They) actually help you take a look at your goals and have some hard conversations about how you need to adjust your lifestyle and what you can do to meet those goals if you’re off track.”

Once you’re 50, there’s less time for compound interest to work its magic on your eventual retirement income. That means sticking to your savings plan while being a disciplined spender. Avoid opening new spending accounts or taking on additional credit card debt.

“There’s three levers that determine what you do. How much you make, how much you spend, and how much you save,” says Weiss. “If you think about that in your 50s, the biggest lever you have control over is how much you spend. You don’t have a lot of time for investments to compound.”

“Saving or cutting expenses is often framed as a negative,” says Peter Lazaroff, CFA, CFP?, and host of the Long Term Investor podcast. “But all you’re doing is more closely aligning spending with your values.” So don’t be afraid to dig deep and find every last wasted penny.

Author, podcaster, and financial wellness advocate Tony Steuer says to think in terms of tradeoffs.

“Maybe you won’t buy a new car for the next five years so you have the money to put towards your retirement,” he says.

Another source: the fees you pay on your retirement accounts. For many retirement accounts, these fees top one percentage point or more. That may not sound like much, but it adds up fast and can siphon thousands away from your retirement fund. Ask your plan administrators what fees you’re paying and see where you can lower them, either by changing providers or choosing lower-cost investment options.

You can start to withdraw a percentage of Social Security benefits as early as 62, but you’ll maximize your payout if you delay until full retirement age, which is 67, or even later.

“There aren’t many places that guarantee you an 8% return on your money, and that’s what Social Security does from full retirement age all the way to 70,” says Weiss. “If you pull Social Security at age 62, you’re at about 70%-75% of the income you could receive at your full retirement age.

“But if you delay it until age 70, you’re at 130% or 135% of the income you would have received at full retirement age.”

As you get into your 50s, Lazaroff, like many financial experts, advises caution and patience with your investments. After all, depending on your longevity, your retirement savings account still has 20 more years to grow and support you.

“I think the most important thing is not to throw a Hail Mary,” says Lazaroff. “If you’re 50, the only thing you can do to make the problem worse is to make a mistake like taking speculative activity to catch up. At the end of the day, the only way to catch up is to do the work. Holistically, at any age, financial success is about minimizing mistakes.”