How Much Money Should You Have in Your Brokerage Account by Age 60?

Here's how to know if you're investing enough in your brokerage account.

By the time you reach the age of 60, you're likely to have your eyes on retirement. Many people aim to leave the workforce at some point during their 60s, especially since it's possible to start collecting Social Security at 62 and Medicare eligibility begins at 65.

But if you want to retire with enough money to comfortably cover your living expenses, then you'll need to save for that period of life accordingly. Fidelity Investments recommends that workers save up enough money by age 67 to replace 10 times the amount of their ending salary. And Fidelity also says that by 60, you should have eight times your salary socked away for the future.

Now, you may have money tucked away in different accounts. Many people have access to a 401(k) plan through work, and those who don't often open an IRA, or individual retirement account, instead.

Both 401(k)s and IRAs are specifically earmarked for retirement, and as such, they come with certain rules. For example, if you take a withdrawal from either account before turning 59 1/2, you'll generally face a costly penalty. On the flipside, both 401(k)s and IRAs offer tax breaks for keeping your money in a more restricted account.

Brokerage accounts, on the other hand, don't impose similar restrictions. You can access the money in your brokerage account at any time and for any reason. The only thing is that brokerage accounts don't offer any tax benefits.

If you're already 60, you may be wondering how much money you should have in your brokerage account. Here's how to figure it out.

Setting yourself up for financial security

If we go with Fidelity's guidance, then the amount of money you should have in a brokerage account by age 60 can be calculated by multiplying your salary by eight, then subtracting your retirement plan balance. So, say you earn $100,000 and have $650,000 in a retirement plan. Since you'd want a total of $800,000, your brokerage account balance should, ideally, be $150,000 ($800,000 – $650,000 = $150,000).

If you feel you don't have enough money in your brokerage account, you could always try cutting back on expenses to free up more cash to pump into it. But remember, once you turn 60, you're allowed to access the money in your 401(k) or IRA without having to worry about penalties. So if you have extra money to invest, it generally pays to max out your retirement plan contributions before putting more cash into your brokerage account since both IRAs and 401(k)s offer tax breaks and brokerage accounts do not.

The amount of money you can put into a retirement plan changes from year to year. This year, if you're 60, you can contribute up to $26,000 to a 401(k) and up to $7,000 to an IRA. Keep in mind that workers under 50 have lower contributions limits.

How to invest your brokerage account at 60

If you're within a few years of retirement, you'll need to be pretty careful about how you invest your money. Though loading up on stocks is a smart idea when retirement is a decade or more away, once that milestone gets closer, it's generally wise to shift some (though not all) of your investments away from stocks and into bonds. (Their value tends to fluctuate less drastically.)

The logic here is that you may need to cash out your investments in the near term to pay your living costs once you're no longer working. So if you keep too much money in stocks, you may run into a situation where you have to liquidate them at a time when their value has dropped. Because bond values tend to be more stable, you won't risk the same type of losses.

This doesn't mean that you shouldn't have any stocks in your brokerage account at 60, though. Take a look at how your retirement plan is invested. It's not a bad idea to divide your total assets (those in both your retirement plan and your brokerage account) so that 50% are in bonds and the remaining 50% are in stocks. If your IRA or 401(k) is more heavily invested in bonds, then you may be able to keep more of your brokerage account in stocks.

It's a good idea to have a healthy amount of money in your brokerage account by the time you turn 60. But remember, it's important to look at the big picture. If you have loads of savings in an IRA or 401(k), you may not need as much in your brokerage account, so keep that in mind before you worry that you haven't socked away enough.