Saving for retirement is not easy. The cost of living has soared in recent years, and living on Social Security alone will likely be difficult. That’s why most people should start saving as soon as possible. Individual Retirement Accounts (IRAs) or 401(k) accounts are good ways to build your retirement savings because both offer special tax advantages. However, even when using such vehicles, it’s a good idea to keep tabs on how you’re doing at different stages of your life. How much should you have invested for retirement at age 60? Let’s take a look.
Broader trends and guidance
Roughly 71.5 million employees in the U.S. had 401(k)s at the end of 2023, and roughly 55.5 million had IRAs as of mid-2023, according to various studies.
401(k)s let full-time employees contribute a portion of their pretax salary to their employer-sponsored retirement accounts, and employers also have the option to contribute through some kind of match. IRAs are retirement accounts at brokerages that people can contribute to with pretax dollars up to a certain amount, meaning they can deduct those contributions from their annual earnings. However, IRA withdrawals are subject to income taxes. A Roth IRA allows people making up to a certain amount of annual earnings to contribute after-tax dollars, but then future withdrawals are tax-free, provided you meet certain requirements.
Given how many people have 401(k)s and IRAs, there is data for average account balances per age group. Here is data for 401(k) balances:
| Age Range | Average 401(k) Balance |
|---|---|
| < 25 | $7,351 |
| 25-34 | $37,557 |
| 35-44 | $91,281 |
| 45-54 | $168,646 |
| 55-64 | $244,750 |
| > 65 | $272,588 |
Data source: How America Saves, Vanguard.
Here is data for average IRA balances at the end of the third quarter of 2024:
| Age Range | Average IRA Balance |
|---|---|
| 12-27 | $6,588 |
| 28-43 | $24,585 |
| 44-59 | $102,078 |
| 60-78 | $255,000 |
Data source: Fidelity Investments.
While these are the actual averages, many retirement experts also recommend how much you should save by the time you reach various ages. For instance, Fidelity recommends how much you should have saved by certain age milestones in your life, assuming you want to retire at age 67, which is the full retirement age for most Social Security recipients. However, Fidelity bases its recommendations on your salary, so the precise amount will be different for everyone.
- Age 30: 1x salary
- Age 35: 2x salary
- Age 40: 3x salary
- Age 45: 4x salary
- Age 50: 6x salary
- Age 55: 7x salary
- Age 60: 8x salary
- Age 67: 10x salary
The median weekly salary of full-time workers in the U.S. came in at $1,165 in Q3 2024, according to the U.S. Bureau of Labor Statistics, which equates to $60,580 per year. If you wanted eight times that amount by age 60, that would equate to $484,640.
No one-size-fits-all strategy
It’s important to remember that the data and recommendations from financial advisors can only take you so far. Another important consideration is what you want retirement to look like. Some hope to travel and buy second properties. This may require saving more than brokerages like Fidelity recommend. Others may prefer to live a more simple life, requiring less. Where you live and the cost of living in that area is another important consideration.
Regardless, there are several things you can do to maximize your retirement savings. Take advantage of the retirement accounts at your disposal. If you have a 401(k) and your company offers a match, try contributing as much as possible to get the most matching dollars from your employer. If you’re self-employed or don’t have an employer plan, consider choosing the IRA that makes sense for you and contributing the maximum amount allowed each year. A Roth IRA might make sense if your adjusted gross income is below $146,000 for single filers and $230,000 for joint filers.
Finally, start contributing to your retirement account and investing as soon as possible. Compounding over time has a powerful effect. For instance, an initial deposit of $10,000 with an average annual return of 10% (roughly what the S&P 500 index has averaged) and an additional annual contribution of $1,000 will grow to roughly $73,500 over 15 years. However, that same initial amount with the same contributions and returns invested over 30 years will grow to roughly $339,000.
