How Much Money Should You Have in Your 401(k) By Age 50
Written by
Ashleigh Ray, AI Editor
Edited by
Ashleigh Ray
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Reaching the half-century mark in life is a major milestone. It’s also a wake-up call to seriously evaluate your retirement savings.
By age 50, you’ve likely been in the workforce for several decades, giving you ample opportunity to contribute to your 401(k). But how much should you actually have saved by now? Let’s break it down.
The Importance of the Big 5-0
First off, why is 50 such an important age for your retirement planning? Well, it’s around this time that retirement stops being a distant event and starts feeling like it’s just around the corner.
It’s also when the IRS allows you to make catch-up contributions, meaning you can put more money into your 401(k) than younger workers.
General Benchmarks To Aim For
Financial experts often use general benchmarks to help gauge whether you’re on track. One popular rule of thumb is to have at least six times your annual salary saved by age 50.
So, for example, if you’re earning $75,000 a year, you should aim to have at least $450,000 in your 401(k).
But remember, these figures are just guidelines. Your actual needs may vary based on your retirement lifestyle, debts and other personal factors.
Factors That Influence Your Target
Your Retirement Lifestyle
Dreaming of globe-trotting or planning a quiet, simple retirement? Your envisioned lifestyle will significantly impact how much you need to save. More lavish retirement dreams require bigger nest eggs.
Healthcare Costs
It’s no secret that healthcare in retirement can be a major expense. Make sure your savings plan accounts for medical costs, including long-term care, something many people overlook.
Other Sources of Income
Will you have other income sources in retirement, like a pension, Social Security or rental income? These can reduce the amount you need to save in your 401(k).
Catching Up If You’re Behind
Feeling like you’re behind? Don’t panic. Here are a few strategies to catch up:
Max Out Contributions
At age 50, you’re eligible to make catch-up contributions to your 401(k). For 2024, this means you can contribute an additional $7,500 on top of the standard $23,000 limit, for a total of $30,500.
If you can, take advantage of the extra tax-free contributions.
Reassess Your Investments
Make sure your 401(k) is invested in a way that aligns with your risk tolerance and retirement timeline. Sometimes, a portfolio adjustment can boost your growth potential.
Consider Delaying Retirement
Working a few extra years can significantly impact your savings, giving you more time to contribute to your 401(k) and delaying the need to start withdrawing from it.
The Takeaway
By age 50, having a robust 401(k) balance is crucial for a comfortable retirement.
While general benchmarks suggest having six times your annual salary saved, it’s important to tailor your savings goal to your personal situation. And if you find yourself falling short, there are strategies to help you catch up.
Remember, it’s never too late to start saving more, and every little bit helps you move closer to the retirement you envision.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
More From GOBankingRates
