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Are You on Track? A Look at the Average 58-Year-Old’s Retirement Savings
As you approach 58, the idea of retirement shifts from a distant dream to a tangible goal. This pivotal age often prompts a serious look at your 401(k) and whether your savings are where they need to be. While there’s still time for significant adjustments, many find themselves asking: “Am I truly prepared?”
Let’s dive into what the “average” 58-year-old has saved for retirement and see how your own progress stacks up.
What’s the Average 401(k) Balance for 58-Year-Olds?
According to reports from financial giants Vanguard and Fidelity, the average 401(k) or workplace retirement savings balance for Americans aged 55 to 59 hovers around $258,110. Specifically, Vanguard notes an average of $271,320 for those 55 to 64, while Fidelity’s data shows $244,900 for the 55-59 age bracket.
The Truth Behind the “Average”
It’s important to remember that averages can sometimes paint a rosier picture than reality. The Congressional Research Service (CRS) indicates that most 58-year-olds have considerably less saved than the average. In fact, among all Americans aged 55 to 64:
- **43% have no retirement savings whatsoever. **
- **88.6% have less than $100,000 saved. **
This stark reality highlights a significant gap for many as they near retirement age.
Why Age 58 is a Critical Juncture
Age 58 isn’t just another birthday; it’s a strategic point in retirement planning. For some, it’s a stepping stone towards the “Rule of 55,” which allows penalty-free withdrawals from 401(k)s or 403(b)s if you leave your job the year you turn 55 or later (or 50 for public safety employees). This flexibility can influence early retirement decisions.
Conversely, for many, 58 is the age when the realization hits: they might need to work longer than anticipated, possibly even into their 70s, especially if savings are minimal.
How Much Should You Have Saved?
While there’s no universal magic number, Fidelity’s retirement guidelines offer a helpful benchmark. They suggest aiming for 6 times your annual income by age 50 and 8 times by age 60. At 58, most financial experts would advise targeting somewhere in between these figures to maintain your current lifestyle in retirement.
Based on these guidelines and the average yearly wages for Americans aged 55-64 ($68,744, per the BLS), the average 58-year-old should ideally have around $412,464 saved (6 times their average income). If we consider the 8x benchmark for 60-year-olds, that figure jumps to over half a million.
Comparing this target to the average actual savings of $258,110 reveals a significant shortfall of over $154,000 for many. And with nearly 90% having less than $100,000, it’s clear that a substantial number of 58-year-olds have some serious catching up to do.
Why Are So Many Falling Behind?
It’s not usually due to reckless spending. Many simply aren’t aware of how much they should be saving. Financial experts often recommend setting aside at least 15% of your pre-tax income annually for retirement.
The 58-year-old demographic often faces unique financial pressures. Many are part of the “sandwich generation,” simultaneously supporting aging parents, raising older children, or helping their adult kids get established. Previous financial hardships may have also led to pauses in contributions, hindering the power of compound interest during crucial years.
What If You’ve Saved Nothing at 58?
While not ideal, it’s a more common scenario than you might think. Personal finance experts emphasize that starting late doesn’t mean your financial future is doomed.
It simply demands a more focused and accelerated strategy. This can involve aggressive contributions, downsizing, or delaying retirement to maximize Social Security benefits.
The most crucial step is taking action: reassess your expenses, maximize any employer matches, choose sustainable investment options, and consider consulting a financial planner.
Accelerating Your Retirement Savings
If you’re a 58-year-old looking to close the gap, here are some actionable strategies:
- Catch-Up Contributions: Take advantage of these special provisions that allow workers 50 and older to contribute extra money to 401(k)s and IRAs annually.
- Increase Automated Contributions: Gradually boost your savings rate every few months.
- Generate Extra Income: Consider part-time work or consulting gigs.
- Reduce Expenses: Look for areas where you can trim your budget.
- Refinance High-Interest Debt: Lowering debt payments can free up more money for savings.
The goal is to maximize your retirement contributions during these peak earning years.
The Bottom Line
At 58, your 401(k) balance is just one piece of the puzzle. Whether you’re ahead, behind, or starting from scratch, you still have meaningful choices available.
Average savings numbers provide a benchmark, but they don’t dictate your future. With strategic planning, catch-up contributions, and a flexible mindset, you can still build a secure and sustainable retirement plan.
And for those fortunate enough to be ahead of the curve, now’s an excellent time to discuss other smart money strategies, like tax-sheltered savings or annuities, with a financial advisor.