Key Takeaways
\nYou can start taking penalty-free withdrawals from tax-advantaged retirement accounts.Establish a target savings amount by age 59 for what would suit your retirement goals using one of several strategies.Take advantage of catch-up contributions to maximize savings.<\/p>\n
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From a financial perspective, age 59 isn’t just another birthday.\u00a0At that age, you are a half-step away from 59\u00bd, the point at which the IRS allows you to begin taking penalty-free withdrawals<\/a> from IRA and 401(k) retirement accounts. The half-year matters because as soon as you cross it, retirement savings strategy starts shifting from a focus on how to save enough to how to maximize withdrawals in retirement?\n<\/p>\n Fifty-nine is also peak income for many Americans, and so it may be the last chance you have to make a meaningful difference in your savings rate.\n<\/p>\n Recommended Savings by Age 59\u00a0 <\/p>\n To determine how much you should have saved by a certain age, financial experts have come up with target income multiples. Fidelity, for example, marks this multiple as 8x your income by age 60: you should have about $640,000 saved if you earn $80,000 per year. T. Rowe Price advocates a broader 6x-11x multiple by age 60, depending on your health and lifestyle.\n<\/p>\n Typical Savings for 59-Year-Olds\u00a0 <\/p>\n These rules of thumb assume you\u2019ll retire at 65<\/a> and that your retirement income needs will be roughly similar to your pre-retirement ones. They also anticipate Social Security<\/a> paying for a portion of your golden years. If you plan to retire early, travel extensively, or delay Social Security for several years, your target multiple climbs. If you have a pension, expect a modest lifestyle, or plan to work until 67+, it may fall.\n<\/p>\n Saving a multiple of your income by age 59 is a good goal, but how close does the typical American come to that mark?\n<\/p>\n The Federal Reserve reports that Americans between age 55\u201364 have a median<\/a> retirement account balance of just $185,000 (only about half of American households have retirement account balances that exceed this number). Using the 8x multiplier, that suggests a retirement lifestyle based on a pre-tax income of just $23,125 a year.\n<\/p>\n If we look only at 401(k) plan balances<\/a>, Vanguard collects data covering nearly 5 million such accounts from a representative sample of large employers. The median account holder between ages 55\u201364 had just about $72,000 in their 401(k) in 2024. The good news: many households also hold IRAs, taxable brokerage accounts, non-retirement savings, home equity<\/a>, and in some cases pensions\u2014so total wealth in retirement typically exceeds any single 401(k) balance.\n<\/p>\n How to Know If You’re Truly on Track <\/p>\n Knowing how much you and your peers save doesn\u2019t tell the full story. Knowing how much money you\u2019ll need to withdraw from savings each year to live comfortably in retirement is often a more useful.\n<\/p>\n The rule-of-thumb here? Multiply your savings by 3\u20134%<\/a>. That\u2019s the sustainable withdrawal rate<\/a> many financial planners use. If that figure plus your Social Security (the average monthly SS check is around $2,070 in 2026) and\/or pension income covers your spending plans, you\u2019re probably on track.<\/p>\n Important<\/p>\n Medical expenses<\/a> are often the biggest burden on Americans\u2019 retirement back. According to Fidelity, couples may need around $330,000 saved just to cover healthcare in retirement.<\/p>\n Considerations for Falling Short at Age 59\u00a0 <\/p>\n If you\u2019re behind on savings at age 59, don\u2019t panic. There are still things you can do to catch up:\n<\/p>\n Take advantage of catch-up contributions. Contribution limits rise to a total of $32,500 (inclusive of an $8,000 catch-up contribution<\/a>) for 401(k) participants age 50 and up in 2026. If you\u2019re turning 60\u201363 this year, you may also qualify for a one-time \u201csuper catch-up<\/a>\u201d as well. Don\u2019t forget to maximize IRA contributions<\/a> too ($7,500 +$1,000 catch-up). Tip<\/p>\n There\u2019s generally no need to move your retirement portfolio fully into bonds and cash equivalents at age 59. Historically, some level of equity exposure is appropriate for most investors who plan to retire within 5-10 years. Focus on tax-efficient planning for retirement withdrawals instead.<\/p>\n Guard Against Sequence of Returns Risk\u00a0 <\/p>\n Just as falling behind doesn\u2019t automatically doom your retirement plans, being ahead of the recommended benchmarks isn\u2019t cause to celebrate just yet.\n<\/p>\n
\nPostpone retirement. Even putting off retirement<\/a> by a year or two can make a big difference. Each year you delay means another year of income, another year of contributions, and one less year you\u2019ll need to support yourself with savings.
\nConsider delaying Social Security. You can increase your monthly benefit significantly by waiting until age 70 to claim<\/a>. However, this also means waiting longer until that cash starts coming in, and potentially shortening the number of years you’ll receive it.
\nCut back on expected retirement spending. It\u2019s never too late to adjust your expectations about where and how you\u2019ll spend money in retirement. Even small changes can make a big difference.<\/p>\n