How Much Should You Have Saved for Retirement by 60? Most People Are Falling Short

When you turn 60, you might suddenly find yourself realizing that retirement is just around the corner. With many hoping to retire at age 65, if not sooner, 60 is a critical age to see where you stand financially.

Let's explore how much financial experts say you should have saved by 60 and how to catch up if you're behind.

How much should you have in your retirement account at age 60?

The amount of money you need to retire comfortably varies based on your situation. After all, your lifestyle and expectations might look very different from someone else's.

But as a benchmark, Fidelity recommends having at least eight times your annual salary set aside for retirement. That's funds specifically earmarked for retirement, no general savings or home equity.

How much does the average American have saved for retirement at age 60?

On average, 60-year-old Americans have $537,560 tucked away in retirement accounts. But the median amount saved in retirement accounts for this age group is much lower, at $185,000. Notably, 13% of workers age 60 and older have no retirement savings or pension at all, according to the Federal Reserve.

Of course, retirement accounts might not represent a 60-year-old's entire savings picture. For example, the average 60-year-old also has $83,700 in certificates of deposit and $504,420 in home equity.

How to catch up

If you're behind on your retirement savings goal, don't panic. Many are behind on their retirement savings goals. The good news is that it's possible to catch up, even if it requires a bit of cutting back on expenses in the near term.

Check in your Social Security benefit options

Most American seniors will be eligible to claim Social Security benefits when they reach their full retirement age (FRA). As of writing, the average monthly Social Security benefit check is $2,071.

Although the exact amount you can expect to receive will vary based on your income history, it's possible this income stream will provide a meaningful contribution to your retirement expenses.

Take the time to find out how much you can expect to receive and factor it into your retirement planning goals.

Ramp up retirement savings

Start by determining how much you'll need in your retirement accounts. Once you have a general goal, do your best to reach it. 

Since you're over age 50, you'll have the chance to make catch-up contributions to both your 401(k) and your IRAs. If possible, maximize your retirement contributions to beef up your accounts.

Pay down high-interest debt

If you have high-interest debt, it's like trying to row to shore in a leaky boat. Possibly doable. But it's a lot harder than if you plug up the hole. 

If possible, make paying off any high-interest debt a priority. Once you've paid off the debt, you'll likely have more space in your budget to tuck money away for retirement.

Cut back on your biggest expenses

For many, it's easier to cut back on major expenses than it is to earn significantly more money. 

As a starting point, look for big ways to cut back on your costs. For example, you might opt to downsize into a smaller home or trade your way to a more affordable vehicle.

Consider long-term care insurance

Long-term care costs can derail even the most carefully laid retirement plans. If possible, get some quotes for long-term care insurance and consider building this cost into your budget. Although expensive, it could offer a worthwhile safety net later in your retirement years.

Consider working longer

Almost no one wants to work longer than they have to. But if you're very behind on your retirement savings, working longer is one option to consider. If you choose to work longer, make a plan for the money upfront.

Keep in mind that working doesn't have to be an all-or-nothing endeavor. While you could keep working full-time at your current job, you might choose to transition into a lower-stress position. Or you might start working part-time. Or you might offer consulting services on your own terms. The good news is that you likely have many potential ways to work longer, which might come in handy if you need to grow your retirement accounts.

Bottom line

By age 60, it's important to have a substantial amount of money set aside. If you're behind on your savings goals, now is a good time to kick your savings into overdrive because retirement is just around the corner. 

Not sure if you're on track? Consider building a retirement plan with a financial advisor.

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