People in their 40s may not be saving enough for retirement.
Ideally, you should aim to have around three times your pre-tax salary saved for retirement by the time you enter your 40s in order to maintain your current lifestyle in retirement, according to Fidelity Investments. This means if you’re in your 40s and earn $60,000 annually, you should aim to have around $180,000 already saved for retirement, for example.
However, most people haven’t reached that recommended benchmark.
On average, Americans between the ages of 40 and 49 have $105,500 in their 401(k)s as of the first quarter of 2023, according to Fidelity Investments data provided to CNBC Make It. However, the median account balance is much lower at $34,100, meaning half of accounts hold more money and half hold less. The median is typically considered to be a better measure since the average can be skewed higher by a small number of accounts with larger balances.
For comparison, the median weekly earnings for Americans ages 35 to 44 is $1,223 which comes out to about $58,704 a year as of the first quarter of 2023, according to the Bureau of Labor Statistics. Median weekly earnings for Americans ages 45 to 54 is $1,239 or about $59,472 annually.
People in their 40s may have many competing financial priorities, such as caring for aging parents and saving money for their children to go to college that can complicate their ability to save for retirement, Marguerita Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth, tells CNBC Make It. Cheng is also a member of CNBC’s Advisor Council.
While people in their 40s may think retirement is a long way away, it’s important for them to make saving for their post-work years a priority so that they’ll have enough money to take care of themselves in the future, Cheng says.
Retirement will look different for everyone, and your savings goals will depend on what type of lifestyle you want to live during that period of your life. Here are two retirement…
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