As Americans edge closer to retirement, the anxiety surrounding savings grows, especially among Gen Xers aged 45 to 60. A recent study commissioned by Northwestern Mutual reveals that over half of this demographic reports having no more than three times their current annual income saved for retirement. This figure is significantly lower than the benchmark suggested by Fidelity, a leading retirement plan provider in the U.S., which advises having six times your current annual income by age 50 if planning to retire at 67.
Yet, the concept of a universal savings benchmark is contested among experts. Nathan Sebesta, a certified financial planner and owner of Artesia-based Access Wealth Strategies, emphasizes that retirement savings should be personalized. The amount one needs to save is heavily dependent on anticipated annual spending during retirement and the chosen retirement age. Those who plan to retire later, downsize, and adopt a more frugal lifestyle may find Fidelity’s benchmark unnecessary for their situation.
An analysis by GOBankingRates earlier this year highlighted how the baseline amount required for retirement can vary significantly across different states, with potential differences reaching up to $1.49 million.
To determine an appropriate savings goal, Sebesta suggests a backward planning approach. Start by deciding on the desired annual income in retirement and estimate the duration for which this income will be needed. Adjusting this total for inflation allows for the calculation of necessary annual savings and the growth required from investments to achieve the goal.
For those feeling behind in their savings journey, Sebesta offers several strategies to help catch up and retire comfortably.
Consider delaying Social Security
Claiming Social Security benefits at the earliest age of 62 results in a permanently reduced benefit. However, delaying claims beyond the full retirement age of 67, especially up to age 70, can significantly increase monthly payments. This delay results in an approximate 8% increase in benefits for each year beyond 67.
Leverage catch-up contributions
Turning 50 opens the door to enhanced savings opportunities through catch-up contributions. The IRS allows additional contributions to retirement plans, such as a 401(k) or 403(b), up to $31,000 in 2025, including the standard limit and extra catch-up contributions. Individual retirement accounts offer an additional $1,000 for those 50 and older, on top of the $7,000 contribution limit.
These catch-up contributions not only strengthen retirement savings but can also lower taxable income, offering significant advantages during peak earning years.
Adjust income expectations
In cases of significant savings shortfalls, Sebesta advises considering a reduction in expected retirement lifestyle. With 10 to 15 years left to plan, the focus might need to shift towards debt repayment and preparing to live on less. This could involve reducing expenses, downsizing, or relocating to more affordable areas.
Continuing to work during retirement remains a last resort but a realistic option if catching up on savings proves challenging.
Note: This article is inspired by content from https://www.cnbc.com/2025/05/31/how-much-money-you-should-have-saved-by-50.html. It has been rephrased for originality. Images are credited to the original source.