You may have heard that it's a good idea to save about five to six times your salary by age 50 and seven times your salary by age 55, achieving key retirement milestones. These benchmarks align with the average retirement savings by age 50, providing a valuable gauge for financial preparedness. While there are no one-size-fits-all rules to follow, a nest egg of this size, along with Social Security, allows many people to maintain their current lifestyle throughout retirement.
Planning for Retirement Milestones
Understanding the significance of retirement milestones is crucial no matter how much you've saved or how old you are today. Whether you're striving to meet the average retirement savings by age 50 or looking to achieve financial security at various stages of life, here are a few things to keep in mind.
Contributions to Tax-Advantaged Retirement Plans
Are you saving at least 15% of your income for retirement? If not, you might aim to gradually increase your contributions by 1% annually.
Once you're 50, the IRS lets you make larger retirement plan contributions. You can contribute an extra $1,000 to your IRA for a total of $7,500 in 2023 and an extra $7,500 to your 401(k) for a total of $30,000.
Calculating Spending for Retirement
Look at what you spend each month on things like groceries, gas, and entertainment. Multiply each figure by 12. Your calculations can help you understand the long-term effects of your choices.
It can also help you see how much retirement income you might need to support your lifestyle and whether early retirement could be an option.
Balancing Debt, Investments, and Savings
If you have debt, should you pay it off as soon as possible? How should you balance debt with investments and contributions to tax-advantaged accounts, especially when reaching key retirement milestones? The answers will all depend on the interest rate, amount of debt, and probably several other factors. It's essential to align your debt management strategy with your broader retirement goals and financial objectives.
Tailoring Strategies to Your Unique Situation and Aligning with Average Retirement Savings by Age 50
We can help you manage your expectations based on your unique circumstances, ensuring that your retirement planning aligns with your financial goals and the average retirement savings by age 50. Whether you have specific questions or need personalized guidance, contact our team today. Your financial future deserves the attention and expertise that can make a significant difference.
Check out our Cash Flow Hacks podcast to learn more about Why a Checkbook IRA could be the answer for your retirement account.
Check out related content: