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How much do you really need to be comfortable in retirement? And what do you do if you aren’t 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’ve managed to save around $250,000 in retirement accounts. On top of that, they’re expecting a $1,100 monthly pension along with $1,800 to $2,300 in combined Social Security benefits when the time comes. They also estimate they’ll have around $200,000 to $300,000 in home equity when they retire.
For years, the couple felt relatively confident in their retirement plan — until a coworker in a similar salary range mentioned that he’d saved $700,000 in his 401(k).
Now, the couple is worried that they’re behind — and exhausted by the thought of having to work for another eight years to catch up.
The average American between the ages of 55 and 64 has saved $537,560 toward retirement, according to the Federal Reserve.
But that figure is heavily impacted by high earners. The median savings rate for that age group, which is less skewed by extremes on both ends, is just $185,000. That means this couple, with $250,000 saved, is actually ahead of most Americans their age.
Still, the couple is also nowhere near the figure the wider population believes is necessary to retire comfortably. According to Northwestern Mutual, Americans think the magic number to retire is $1.26 million (1).
There are also other numbers worth considering in this equation.
First, they are expecting a pension payment of $1,100 per month. Over just 10 years, that’s the equivalent of having another $132,000 in retirement — and if they live longer, that payment just keeps coming, so it could be worth a whole lot more.
Additionally, they have an estimated $1,800 to $2,300 in Social Security benefits, depending on when they start withdrawing benefits. The longer they delay withdrawing it, the higher their monthly payments — up to the age of 70.
This couple should likely work a few more years if they’re able. However, whether they are behind on retirement savings depends heavily on their expenses and, to a certain extent, any additional income they could raise.
For example, if they sell their home and withdraw the $300,000 in equity, that would put them in a great spot. Nevertheless, they will still need to account for housing costs.
Ultimately, retirement savings are personal. The amount you need can vary based on your spending habits, your desired retirement lifestyle and even your medical history.
Once you’ve figured out 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 health care costs and housing.
This is where it might be worthwhile working with a professional advisor to figure out exactly what number is best for your desired lifestyle. With Advisor.com, you can get matched with multiple qualified financial advisors in just minutes.
All you need to do is enter some basic information, such as your ZIP code, and Advisor.com will match you with local fiduciaries that could help you meet your financial needs. All of Advisor.com’s experts are fiduciaries, meaning they’re legally obligated to act in your best interests.
From here, you can then book a free call with no obligation to hire to make sure they’re the right fit for you and your dreams.
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Individuals aged 50 and over can make catch-up contributions to retirement accounts.
In 2025, people in this age group can 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 between 60 and 63 to contribute an extra $3,750 per year, bringing maximum 401(k) contributions in those three years up to $34,750.
But you don’t necessarily have to max out those allowances. Even adding $500 to $1,000 per month now could make a noticeable difference in the next five to seven years.
When it comes to picking an IRA, one of the easiest ways to invest is to open a self-directed trade account with SoFi.
Their DIY approach allows you to invest with no commission fees, plus for a limited time you can get up to $1,000 in stock when you fund a new account. With their rollover IRA, you can move your money from a tax-qualified retirement account – such as an employer-sponsored 401(k) into an IRA that you manage yourself. Typically, you’ll get a broader range of investment options than you would with an employer-sponsored account. Plus, your income keeps growing tax-deferred.
SoFi is designed to help you learn investing 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. Right now, you can get a 1% match when you roll over your 401(k) into a SoFi IRA.
If you’d prefer a more hands-off approach, you could instead invest with Acorns, a robo-advisor.
How it works is simple: Make a purchase on a linked credit or debit card, and Acorns will round it up to the nearest dollar then invest the difference into a diversified portfolio of ETFs.
That $4.25 coffee? It’s now a 75-cent investment in your retirement dreams. Depending on how much time you have to save, this could be an easy way to get started without having to worry about picking stocks.
If you want to up your involvement, you could also set up a recurring direct deposit. The best part? When you do, you’ll snag a $20 bonus investment to get things started.
Another option would be to combine both strategies into one. You could use Acorns to handle automatic, ETF-based investments while using SoFi to carefully curate your own selection of stocks.
If full-time work feels unsustainable, consider exploring options for scaling back hours or transitioning into 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 wouldn’t be alone in making this decision either. All told, 19.5% of Americans over the age of 65 are still participating in the labor force, according to Bureau of Labor Statistics data (2).
A smaller home, fewer cars or selling unused assets, such as land or recreational vehicles, can help unlock cash flow and boost your retirement savings. Every dollar not spent is a dollar that can be invested for retirement.
You don’t have to sell your car or your home to take advantage of cost savings on your monthly expenses though. For instance, one major recurring expense is car insurance, and many people overpay without realizing it. According to Forbes, the national average cost for full-coverage car insurance in 2024 was $2,149 per year (or $179 per month). However, rates can vary widely depending on your state, driving history and vehicle type.
By using OfficialCarInsurance.com, you can easily compare quotes from multiple insurers, such as Progressive, Allstate and GEICO, to ensure you’re getting the best deal.
In just two minutes, you could find rates as low as $29 per month depending on factors like your driving history and type of vehicle.
If you own your house, with home values higher than ever, you can make your home work harder for you by making the most of your equity. The average homeowner sits on roughly $311,000 in equity as of the third quarter of 2024, according to CoreLogic.
Having access to your home equity could help to cover unexpected expenses, pay substantial debt, fund a major purchase like a home renovation or supplement income from your retirement nest egg.
When it comes to downsizing, you could also consider selling your home and moving to a less expensive area, or a new state altogether. The benefits can include more disposable income and less square footage to manage as you age.
However, it’s important to keep in mind the importance of community. Moving away from friends and family might not be worth the cost.
If you do decide to downsize, you’ll need to secure new insurance. This is where OfficialHomeInsurance.com can come in.
All you need to do is enter some basic information, like your new ZIP code, and the platform will track down the best rates available to you from top providers. Even better, the process can be completed entirely online, and you can get offers in under two minutes.
Depending on your situation, you might even be able to save an average of $482 per year, which could help support your month-to-month needs in retirement.
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Northwestern Mutual (1); Bureau of Labor Statistics (2)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.