Even if you're willing to lead a relatively low-key lifestyle during retirement, you'll still need some money outside of Social Security to make sure you're able to easily cover your bills. That money could come from a part-time job or an income property. But if you'd rather not take on the former and you don't have access to the latter, then you'll need savings to fall back on.
Now there's no single savings target that guarantees financial security throughout your senior years. One person might retire with $1 million and struggle, while another might do just fine on $500,000. But in general, it may help you to know what near-retirees have socked away so you can see how your savings compare.
So without further ado, Personal Capital recently conducted a survey to see how retirement savers fared in the course of the coronavirus pandemic, and it found that the median savings balance among people in their 50s was $461,779 as of the end of 2020. Now before we unpack that number, let's remember that it's based on a single survey with a limited sample size -- so it's really only a snapshot of what some older Americans have on hand in their retirement plans. But still, it might give you a sense of whether your savings are on track or not.
How did the pandemic affect retirement savings?
Interestingly, 2020 was actually pretty good to retirement plans. Though the stock market crashed in March when news of the coronavirus outbreak first exploded, stocks recovered quite nicely and closed out the year higher than where they started. That could explain why savers in their 50s are looking at a median retirement plan balance that's impressively close to half a million dollars.
It also helps that the people Personal Capital surveyed are adhering to smart practices. A good 53.6% of savers in their 50s are contributing to their 401(k)s out of every paycheck, while 52.5% are collecting their maximum employer match. These habits set the stage for strong retirement plan growth -- both during a pandemic and outside of one.
How to catch up on savings
If your savings balance isn't anywhere close to what the typical 50-something has socked away, try not to stress. If you're in your 50s, it means you could easily have another 10 to 15 years in the workforce ahead of you, which gives you a nice opportunity to catch up.
To get started, rethink your expenses. If you have older children who have already fled the nest, downsize your home now to free up more money for your savings -- don't wait until retirement to take that step. And if you're able to cut back on additional expenses on top of housing, even better. The less you spend, the easier it'll be to pad your savings.
Another good bet is to continue to invest heavily in stocks if you're more than five to seven years away from retirement. Even if the market crashes within the next few years, you'll have time to ride out a downturn -- even a prolonged one -- and come out ahead. Furthermore, not all stock market declines are lengthy -- just look at what happened last year.
Finally, take steps to keep growing your job skills so you're not forced to retire early due to decisions made on your employer's part. Rather, do your best to keep adding value to secure your job -- and your paycheck -- for as long as you want to stay in the workforce.
While the typical 50-something may be sitting on $461,779 in retirement savings, don't sweat it if that's not where you're at. Instead, do your best to boost your savings to a level you're comfortable with so you can retire without having to worry about how your bills will get paid.