401(k) Savings Reality: How Much Americans in Their 50s Really Have
Hey everyone! I recently came across this interesting article by Cheyenne DeVon that talks about how much Americans in their 50s have managed to save up in their retirement accounts specifically their 401(k)s. If you or someone you know falls into that age group you definitely don't want to miss out on reading this.
The Reality of 401(k) Savings 📉
Here's the deal; According to Fidelity by the time you hit 50 its recommended that you have saved around six times your salary for retirement. So lets say you're making $100k per year ideally your retirement savings should be $600k. But here comes the twist – most Americans in their 50s are far from achieving this target. On average they only have $189,800 stashed away in their 401(k)s.. What's even more surprising? The median balance is $57,000!
So why such a significant difference? Well a few sizable accounts can skew the average upwards. Looking at the median balance gives us a more accurate picture of where most individuals actually stand.
Understanding the Retirement Savings Gap 🤔
There are factors that might explain why it has been challenging for people in their 50s to save adequately for retirement. Think about things like having kids in college or dealing with mortgage debts and supporting parents – these obligations can really put a strain on ones ability to save enough. Additionally financial planning expert Cathy Curtis points out that inflation has had an impact, on eroding savings over time.
Actually around 25% of employed adults reduced their retirement savings in 2022 due to the impact of inflation and 12% completely stopped saving.
Looking on the side it's never too late! If you feel like you're falling behind don't worry! Now is the perfect time to start focusing on your retirement savings. While there may be factors that can cause fluctuations, such as inflation it's important to concentrate on what you have control over – like your retirement savings rate. Aim to save 15% of your annual income into a retirement account like a 401(k). By the way here's a helpful tip; If you're over the age of 50 in 2023 you are allowed to contribute up to $30,000 to your 401(k)!
If you're already doing well with your 401(k) it might be worth considering a Roth IRA if your income falls below certain thresholds.
That's all there is to know about managing your retirement savings when you're in your years. A big thank you goes out to Cheyenne DeVon for providing this information!. If becoming a master of personal finance interests you I highly recommend checking out the full article Here.