Editor's Note: "Retirement Savings on Track? How Much You Should Have by 50 and 55" is part of an ongoing series on getting your retirement on track by age. The second story is "Retirement on Track? How Much You Should Have by 55 and 60."
Building solid retirement savings takes years, even decades, for good reason. You can easily spend twenty-plus years without a paycheck. That’s why financial advisers encourage everybody to save early and often. But for millions of people, they are falling short on that front.
That’s particularly true of Americans aged 50 and older, as an AARP survey from last spring revealed.
The non-profit advocate for older adults found that one in five or 20% of Americans 50+ have no retirement savings at all. Even among those who are saving, 61% expressed concern that they won’t have enough money to support their lifestyle in retirement.
A retirement shortfall could force you to work longer, downsize or drastically change your lifestyle to make ends meet.
Pre-retiree retirement savings check-up
If you are in the 50 to 55 age range, now is the time to start thinking about the retirement you envision for yourself. Sure, it may be 10, 15 or 20 years away, but between 50 and 55 is a good time to take stock of your retirement savings and make adjustments if needed.
“You are close to pre-retirement time,” in your early 50s, says Sharon Carson, executive director of J.P. Morgan Asset Management. “You have ten to fifteen more years to save. Take advantage of catch-up contributions, get the employer match and if you have a relatively low savings rate increase that.”
Are your retirement savings on track?
Not sure if you are on track with your retirement savings? In what may be a wake-up call or elicit a sigh of relief, JPMorgan crunched the numbers to determine how much adults should have saved based on age and income.
The Wall Street bank’s model assumes a 5% annual gross savings rate, a pre-retirement portfolio of 60% equities and 40% bonds, a post-retirement portfolio of 40% stocks and 60% bonds, an inflation rate of 2.4%, a retirement age of 65 and 35 years in retirement.
For all you 50 to 55-year-olds out there, check to see if you are on track based on JPMorgan’s figures. Keep in mind that these amounts are a general guide. Everyone’s financial situation is different, and some may need more or less in retirement.
Age: 50
Income: $80,000
How much you should have saved: $330,000
Age: 50
Income: $100,000
How much should you have saved: $415,000
Age: 50
Income: $150,000
How much should you have saved: $590,000
Age: 50
Income: $200,000
How much should you have saved: $745,000
Age: 50
Income: $250,000
How much should you have saved: $940,000
Age: 50
Income: $300,000
How much should you have saved: $1.24 million
Age: 55
Income: $80,000
How much should you have saved: $420,000
Age: 55
Income: $100,000
How much should you have saved: $565,000
Age: 55
Income: $150,000
How much should you have saved: $805,000
Age: 55
Income: $200,000
How much should you have saved: $1.025 million
Age: 55
Income: $250,000
How much should you have saved: $1.295 million
Age: 55
Income: $300,000
How much should you have saved: $1.69 million
Feeling good or falling short? Time to act
If you are on track based on JPMorgan’s calculations, now is not the time to slow down. If possible, increase your savings rate by more than 5%.
By upping it to 10% of your income, Carson says you can make up a lot of ground in a decade or more. Use this time to start thinking about when you want to retire and the type of life you envision. Between 50 and 55, Carson says to start thinking about how you’ll pay for any long-term care needs in the future.
Off track?
If you are facing a shortfall based on JPMorgan’s guide or your own assessment, don’t despair; you still have time to save more in your early 50s and, if need be, work longer than you anticipated.
Even an extra year in the workforce will boost your income, and it will be one less year you spend drawing down on your retirement savings.
Plus, you’ll benefit from compounding. Let’s say you have $3 million in your retirement account, earning a 10% return. After one extra year of working and saving, you’ll have $3.3 million for retirement instead of $3 million.
At 50, you can also begin taking advantage of catch-up contributions that will allow you to save more in your tax-advantaged company-sponsored retirement account.
For 2025, you can contribute an extra $7,500 to your 401(k) and $1,000 to your IRA. That’s a total of $31,000 and $8,000 respectively for 2025. In essence, your early to mid 50’s should be about positioning yourself for retirement, including saving, paying down debt and planning and plotting.
“It's starting to be crunch time when you get to 55,” says Carson. “In the pre-retiree phase you need to start to think about what you're going to do in retirement.”
