At 59, my husband and I have $250K saved for retirement. But my friend says he’s got $700K. Are we unprepared?
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How much do you need to be truly comfortable in retirement? So what do you do if you’re not even close? Let’s look at a specific situation and break down the numbers.
A 59-year-old career nurse and her husband have been working hard for decades. Together they managed to save about $250,000 in their retirement accounts. On top of that, they also expect a monthly pension of $1,100, as well as Social Security benefits of $1,800 to $2,300 when the time comes. They also estimate that they will have approximately $200,000 to $300,000 in home equity when they retire.
For years, the couple was relatively confident about their retirement plans; until a co-worker in a similar salary range told me he had $700,000 saved in his 401(k).
The couple now fears they are falling behind and are exhausted by the thought of having to work another eight years to catch up.
According to the Federal Reserve, the average American between the ages of 55 and 64 has $537,560 saved for retirement.
However, this figure is heavily influenced by high-income earners. The average savings rate for this age group, less affected by extremes at either extreme, is just $185,000. That means this couple, who saved $250,000, is actually ahead of most Americans.
Still, the couple is nowhere near the figure the broader population believes is needed to retire comfortably. According to Northwestern Mutual, Americans think the magic number for retirement is $1.26 million (1).
There are other numbers in this equation worth considering.
First of all, they expect a pension of $1,100 per month. In just 10 years, this is the equivalent of earning $132,000 more in retirement; And if they live longer, that payout will keep coming, so it could be worth a lot more.
Additionally, they have an estimated Social Security benefit of $1,800 to $2,300, depending on when they begin withdrawing benefits. The longer they delay withdrawals, the higher their monthly payments until age 70.
This couple should probably work for a few more years if possible. But whether they fall behind on retirement savings depends largely on their spending and, to some extent, the additional income they can generate.
For example, if they sell their home and pull out $300,000 in equity, that will put them in a great position. But they will still need to factor in housing costs.
After all, retirement savings are personal. The amount you need may vary depending on your spending habits, your desired retirement lifestyle, and even your medical history.
After accounting for costs, the rule of thumb to calculate your retirement number is to take 80% to 90% of your current expenses and multiply them by 25. This is back-of-the-napkin math. You’ll also need to consider more personal factors, such as healthcare costs and housing.
This is where it can be helpful to work with a professional advisor to figure out exactly which number is best for your desired lifestyle. With advisor.comWith , you can be matched with multiple qualified financial advisors in minutes.
All you have to do is enter some basic information like your zip code; Advisor.com will match you with local trusted organizations that can help you meet your financial needs. All of Advisor.com’s experts are fiduciaries, meaning they are legally obligated to act in your best interest.
Individuals aged 50 and over can make contributions to their retirement accounts.
In 2025, people in this age group will be able to contribute up to $31,000 per year in a 401(k) and $8,000 per year in an individual retirement account (IRA). Some 401(k) plans also allow individuals ages 60 to 63 to contribute an extra $3,750 per year, bringing the maximum 401(k) contribution to $34,750 over three years.
But you don’t necessarily need to maximize these allowances. Even adding $500 to $1,000 a month now can make a noticeable difference over the next five to seven years.
When it comes to choosing an IRA, one of the easiest ways to invest is to open a self-directed trading account. SoFi.
The DIY approach allows you to invest without commission fees, plus you can get up to $1,000 in stock for a limited time when you fund a new account. With rollover IRAs, you can move your money from a taxable retirement account, such as an employer-sponsored 401(k), to a self-directed IRA. Typically, you’ll have a broader range of investment options than an employer-sponsored account. Additionally, your income continues to grow due to tax deferred.
SoFi is designed to help you learn to invest as you go with real-time investing news, curated content, and the data you need to make smart decisions about the stocks that matter most to you. Currently, you can get a 1% match when you roll. Converting 401(k) to SoFi IRA.
If you prefer a more hands-off approach, here’s how you can invest instead: acorna robot advisor.
How it works is simple: Make a purchase with a linked credit or debit card; Acorns will round this to the nearest dollar. invest in the difference We turn it into a diversified ETF portfolio.
That $4.25 coffee? Now it’s a 75 cent investment in your retirement dreams. Depending on how much time you need to save, this could be an easy way to get started without having to worry about picking stocks.
If you want to increase your participation, you can also set up recurring direct deposit. The best part? When you do this, you’ll catch one $20 bonus investment to get things started.
Another option would be to combine both strategies into one. While you can use Acorns to execute automated, ETF-based investments, you can use SoFi to carefully curate your own stock selection.
If you find working full-time is unsustainable, consider exploring options to reduce work hours or switch to a less demanding (but still income-generating) role.
Working part-time from 62 to 67 can delay Social Security benefits, allowing your investments to grow. You won’t be alone in making this decision. According to Bureau of Labor Statistics data, 19.5% of Americans over age 65 are still participating in the workforce (2).
Selling unused assets like a smaller home, fewer cars, or land or recreational vehicles can help free up cash flow and increase your retirement savings. Every dollar not spent is a dollar that can be invested for retirement.
You don’t need to sell your car or home to benefit from cost savings on your monthly expenses. For example, one major recurring expense is car insurance, and many people overpay without realizing it. According to Forbes, the national average cost of full coverage car insurance in 2024 was $2,149 per year (or $179 per month). But fees can vary widely depending on your state, driving history, and vehicle type.
Using OfficialCarInsurance.comWith , you can easily compare quotes from multiple insurance companies like Progressive, Allstate, and GEICO to make sure you’re getting the best deal.
Find rates in just two minutes As low as $29/month depending on factors such as your driving history and vehicle type.
If you own your home and home values are higher than ever, Make your home work harder for you by making the most of your equity. The average homeowner has about $311,000 in equity as of the third quarter of 2024, according to CoreLogic.
Having access to your home’s equity can help you cover unexpected expenses, pay off significant debt, finance a major purchase like a home improvement, or increase your income from your retirement nest egg.
When it comes to downsizing, you may also consider selling your home and moving to a cheaper area or a completely new state. Benefits can include more disposable income and less space to manage as you age.
But it’s important to keep in mind the importance of community. Getting away from friends and family may not be worth the cost.
If you decide to downsize, you will need to get new insurance. here OfficialEvSigorta.com can get in.
All you have to do is enter some basic information like your new zip code; the platform will find the best prices available to you from the best providers. Even better, the process can be completed entirely online and Get a quote in less than two minutes.
Depending on your situation, you can even: save an average of $482 This can help you meet your monthly needs in retirement.
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