How Much Money Should You Have in Your Brokerage Account by Age 50?

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Here's how to know if you're investing enough.

Many older adults learn the hard way that Social Security alone won't cover their bills. In fact, it's a smart idea to save for retirement during your working years so you have enough money to pay your living costs once you're no longer bringing home a paycheck.

There's no preset rule stating you must have a certain sum of money on hand when your career comes to an end. But as a general rule, Fidelity Investments says that by the time you reach 50, you should aim to have six times your current salary socked away for the future. And that's a good guideline to follow.

Now, that may have you wondering how much money you should have in your brokerage account specifically by the time you turn 50. And the answer is, it depends on what your retirement plan balance and income look like.

Covering your future needs

It's hard to anticipate how much money you might need during retirement, so it's wise to follow Fidelity's guidelines to help ensure that your savings efforts stay on track. Going with the assumption that you should have six times your salary saved by age 50, you can figure out how much money you should have in your brokerage account. First, multiply your salary by six -- and then subtract your retirement plan balance.

Say you currently earn $80,000 a year and have $300,000 in a 401(k) plan sponsored by your employer. If you're not familiar with a 401(k), it's a savings plan earmarked specifically for retirement.

If we follow Fidelity's rule, that means that by 50, you should, ideally, have $480,000 in assets earmarked for retirement ($80,000 x 6 = $480,000). Say your 401(k) -- or other retirement account -- has a $300,000 balance. In that case, you'd be in good shape with $180,000 in your brokerage account. And if you have more than that in your brokerage account, you're in really good shape.

How to invest at age 50

Many people who are 50 years old have many more working years ahead of them. If that's the case, don't hesitate to go heavy on stocks in your brokerage account.

As you get closer to retirement, it will make sense to shift some of your assets into safer alternatives, like bonds. But for now, if you're heavily loaded with stocks, you may not need to make too many changes.

Boosting your brokerage account balance

If your brokerage account balance isn't where you want it to be, you can work on making some lifestyle changes that allow you to pump more money into it. That could mean following a stricter budget, cutting back on leisure spending, or even taking on a side job to boost your income.

Keep in mind that you don't necessarily want to divert all of your extra money into a brokerage account. If you have access to a 401(k), you may first want to make sure you're contributing as much as you're allowed into that account. That's because 401(k) contributions enjoy certain tax benefits that regular brokerage account contributions don't, such as tax-free contributions and tax-deferred investment growth (in the case of a traditional 401(k) plan).

At the same time, you get more flexibility with the money in your brokerage account, whereas you'll face a penalty if you withdraw funds from a 401(k) prior to age 59 1/2. So while it pays to make the most of your 401(k), you should make an effort to sneak some money into your brokerage account on a regular basis, too.

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