How much you should have Saved by 50 and 3 Steps to take if you’re behind

Originally by: Natalie Wu at CNBC
Summarized by: PV Financial Group

When it comes to retirement, many people feel anxious about whether they’ve saved enough. According to recent data, members of Generation X have saved no more than three times their current annual income for retirement—slightly below the commonly suggested benchmark. Ideally, if you’re aiming to retire at age 67, you should have about six times your annual income saved by the time you reach the age of 50.

While benchmarks offer useful guidance, there’s no one-size-fits-all number for retirement savings. The right amount depends on your personal goals and circumstances.

Key Questions to Ask When Planning for Retirement

To determine how much you should save, start by answering a few important questions:

• How much do you anticipate spending each year in retirement?
  Think about the kind of lifestyle you want—travel, hobbies, housing, and healthcare all play a role.
• When do you plan to retire?
  Your retirement age significantly affects how much you need to save. Retiring earlier means more years of expenses and fewer years to save.
• Where will you retire?
  The cost of living varies widely by state, which can dramatically impact your retirement budget.

Once you’ve thought through these factors, you can begin calculating your savings target by working backward:

1. Calculate how much you need to save each year and the expected growth of your investments.
2. Decide on your desired annual income in retirement.
3. Estimate how many years you’ll need that income.
4. Adjust for inflation and future healthcare costs.

What if You’re Behind?

If you feel like you’re behind on saving, don’t panic, there are still ways to catch up:

• Delay claiming Social Security.
  If you wait beyond your full retirement age (up to age 70), your monthly benefits increase by about 8% per year. That’s a 24% boost after three years.
• Take advantage of catch-up contributions.
  Once you turn 50, you’re allowed to contribute more to retirement accounts. For 401(k) or 403(b) plans, you can add an extra $7,500 annually. For IRAs, you can contribute an additional $1,000.

These contributions not only increase your savings but can also reduce your taxable income.

Adjust your expectations.
While it’s not the ideal solution, reducing your expected lifestyle in retirement may be necessary. This might mean focusing on paying off debt, cutting expenses, or downsizing your home. Continuing to work part-time during retirement is another option that can help bridge the gap.

Source: https://www.cnbc.com/2025/05/31/how-much-money-you-should-have-saved-by-50.html

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