If You're 60 Years Old and Have This 401(k) Balance, You're Ahead of Your Peers
Key Points
The average 60-year-old has a pretty modest 401(k) balance.
If your balance is smaller, there are steps you can take to catch up.
If your balance is comparable to the average, it's important to know what that might mean for your retirement.
The tricky thing about saving for retirement is that what looks like a lot of money on paper may not be a lot of money in practice. For example, $100,000 in savings is a lot of money. But in the context of what could be a 20-year retirement or longer, it's actually not a particularly large sum.
By the time you turn 60, you may have spent years funding a 401(k) plan for retirement. And you may be curious to know how your balance stacks up.
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If you're 60 with more than $257,400 saved for retirement, it means your 401(k) balance is larger than the typical person your age, at least based on Fidelity's data. But if your balance isn't that much larger, it doesn't necessarily mean your work is done.
Why you might need more savings than you think
It's easy to argue that $257,400 is a very respectable sum of money. But remember, you might need to stretch that sum over a few decades.
If you use the popular 4% rule to manage your savings, a $257,400 balance gives you an annual income of about $10,300 per year. That's not a huge sum of money, even when you factor in Social Security. (For context, the average benefit today would add about another $25,000 a year to your income, bringing your total to roughly $35,000.)
What this means is that if you have, say, a $275,000 retirement savings balance at 60, you may want to continue trying to sock money away for your senior years -- even if you've saved more than the average person your age.
How to boost retirement savings later in life
If your 401(k) balance is below $257,400, or it's a number you feel isn't adequate, the good news is that you may be able to eke out more savings before your time in the workforce comes to an end.
Start by assessing your spending. Are there subscriptions you can cancel or a cable package you can downgrade? Small changes can help.
Next, think about bigger changes. Have you toyed with downsizing? If you have equity in your home, selling a larger place and buying a smaller one could lower your housing costs while giving you a sum of money to add to your nest egg.
Finally, consider changing your retirement date. If your initial plan was to end your career at 62, which is the earliest age to start collecting Social Security benefits, you may want to consider waiting until 65, 67, or even longer, depending on your health and other circumstances.
Remember, too, that the longer you wait to start tapping your 401(k), or wherever you're housing your savings, the more that money can grow. So, if you aren't thrilled with the amount you've accumulated thus far, working longer and holding off on touching your money could be one of the most effective tools at your disposal.
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