How much you should have saved by age 50, according to financial experts—and 3 steps to take if you’re behind

A significant number of Americans are feeling worried about their savings, especially as they approach retirement age. A study conducted by Northwestern Mutual found that over half of Gen Xers, aged 45 to 60, have saved no more than three times their current annual income for retirement. This falls short of the recommendation by Fidelity, a major retirement plan provider, which suggests saving six times your current annual income by age 50 if you plan to retire at 67.

Financial planner Nathan Sebesta points out that there is no set amount to save for retirement, as factors like retirement age, spending habits, and inflation can all influence the needed savings. Depending on when you plan to retire and your lifestyle choices, you may require less than the suggested benchmarks. Additionally, the amount needed for retirement can vary significantly depending on the state you choose to retire in.

Sebesta advises individuals to calculate their retirement needs by determining their desired annual income during retirement, estimating the length of time they will need that income, adjusting for inflation, and setting savings and investment goals accordingly. For those feeling behind in their retirement savings, Sebesta suggests strategies like delaying Social Security benefits, making catch-up contributions to retirement plans, and adjusting lifestyle expectations.

Delaying Social Security benefits past the full retirement age can result in increased monthly payments, with benefits growing by about 8% for each year of delay up to age 70. Catch-up contributions allowed by the IRS for those aged 50 and above can boost retirement savings and lower taxable income. However, these strategies may not be suitable for everyone, as consistent contributions and financial stability are necessary.

In cases where individuals are significantly lagging in retirement savings, Sebesta recommends considering lowering lifestyle standards, paying off debt, downsizing, or working during retirement. While not ideal, these measures can help individuals better prepare for their financial future.