By age 50, retirement-plan provider Fidelity recommends having at least six times your salary in savings in order to retire comfortably at age 67. By age 55, it recommends having seven times your salary. Are you on track?
According to Fidelity, most 50-something Americans aren't. As of the second quarter of 2018, those between 50 and 59 years old with a 401(k) had an average balance of $174,200 and were contributing 10 percent of their paychecks. On average, employers were matching 4.9 percent, putting the total savings rate for this group at 14.9 percent.
While this group has a high savings rate, by Fidelity's rule, their nest egg may not be big enough: If you earn $50,000 a year, you should have $300,000 in savings by age 50. If you earn $75,000 a year, you should have $450,000 in savings by 50.
On the bright side, Fidelity reports that Americans aged 50 to 59 are saving more in their 401(k)s than they were five years ago: In 2013, they had an average balance of $128,900.
Keep in mind that Fidelity's data only takes into account those Americans with a retirement account and so can't present the full picture. GOBankingRates found in a 2017 report that 40 percent of older Gen Xers (those aged 45-54) and 33 percent of baby boomers (55-64) have nothing at all saved.
Read on to see how much you should be setting aside for retirement and how to get to that savings rate.
How much should you be saving?
The answer to this is highly personal and depends on your lifestyle and spending habits, but there are a few basic guidelines to follow if you want to retire comfortably.
For starters, Fidelity suggests that everyone set aside 15 percent of their income in a retirement account. "We believe if you save 15 percent throughout your career you will have enough to maintain your lifestyle in retirement," Katie Taylor, VP of thought leadership at Fidelity Investments, tells CNBC Make It.
That 15 percent can include any matching contributions from your employer, she says.
Other experts, including co-founder of AE Wealth Management David Bach, say that if you set aside at least 10 percent of your income, you'll set yourself up to be fine. Of course, more is better: Bach adds that if you want to retire "rich," save 15 to 20 percent.
Another rule of thumb, according to Fidelity, is to have 10 times your final salary in savings if you want to retire by age 67. It suggests a timeline in order to get to that magic number:
- By age 30: Have the equivalent of your starting salary saved
- By age 35: Have two times your salary saved
- By age 40: Have three times your salary saved
- By age 45: Have four times your salary saved
- By age 50: Have six times your salary saved
- By age 55: Have seven times your salary saved
- By age 60: Have eight times your salary saved
- By age 67: Have 10 times your salary saved
How do you get on track?
If you're not setting aside 10 to 15 percent of your income or you don't have the equivalent of six times your salary saved by age 50, don't panic.
As Bach tells CNBC Make It: "If you're looking at these charts and it's depressing you ... here's what I can tell you: It's never too late to start investing and the best time to start is now. We've seen many people who look at these charts at 50 and have zero in savings — maybe they've gone through a divorce or they've lost a job or a business or the recession forced them to take a step back. Well, now you've just got to get back up and get going again."
There are strategies you can use that will help you get to, or nearer to, where you need to be.
First things first: "When you are hired with an employer, make sure that you are inquiring about 401(k) benefits," says Taylor. "Find out what kind of 401(k) they have and make sure you get enrolled as soon as you're eligible. A lot of employers will automatically enroll you, but you can always proactively enroll."
Next, find out if your company offers a 401(k) match. If they do, take full advantage of it, says Taylor: "If there is a match that's 3 percent, make sure that you're saving at least 3 percent. Otherwise, you're leaving free money on the table."
Another useful tool you may have access to is "auto-increase," which allows you to choose the percentage you want to raise your contributions by and how often. This way, you won't forget to up your contributions or talk yourself out of setting aside a larger chunk when the time comes.
Most importantly, start setting aside money now. "It's harder to catch up if you don't save," says Taylor. "If you spend the first half of your career not saving, you've got to do a lot of catch up later in your career and you don't have the time in the market to ride out any fluctuations. It's always a good idea to get started as early as possible."
What if you don't have a 401(k)?
If you're one of the many Americans without access to a 401(k), don't stress, and don't use that as an excuse to put off saving for retirement. You have plenty of other options, including a traditional, Roth or SEP IRA, a health savings account (HSA) or a normal investment account.
Read up on all of your options, choose an account to fund and start setting aside money for your future today.
Don't miss: Here's how much money Americans have in their 401(k)s at every age
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