As you move through your 40s and 50s, retirement becomes a more immediate prospect. Many people in this age group start to evaluate their financial readiness for life after work. If you're feeling behind, don't worry—there are strategies you can implement to accelerate your retirement savings and achieve a comfortable retirement.
Financial experts often suggest benchmarks based on your annual salary and age to gauge your retirement preparedness. For instance, it's recommended to have one times your salary by age 30, three times by age 40, six times by age 50, eight times by age 60, and ten times by age 67. Comparing your savings to these benchmarks and the median savings of your generation can help you determine if you're on the right path. For example, Gen Xers often fall short, with a median retirement savings of $93,000. If you earn $60,000 annually, you should aim to have $360,000 saved by age 50.
If you're over 50, you can take advantage of catch-up contributions, which allow you to save more in tax-advantaged retirement accounts like 401(k)s and IRAs. In 2024, the standard contribution limit for a 401(k) is $23,000, with an additional $7,500 catch-up contribution. For 2025, these limits increase slightly, with a standard contribution limit of $23,500 and a catch-up contribution of $7,500 for those aged 50 to 59, and $11,250 for those aged 60 to 63.
Health savings accounts (HSAs) offer a triple tax benefit: pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. If you have a high-deductible health plan (HDHP), consider maximizing your HSA contributions. In 2025, the maximum contribution is $4,300 for self-only coverage or $8,550 for family coverage, with an additional $1,000 catch-up contribution for those 55 and older.
Converting a traditional IRA to a Roth IRA can be beneficial, especially if you anticipate being in a higher tax bracket during retirement. While you'll pay taxes on the converted amount in the year of conversion, your withdrawals in retirement will be tax-free. Consider converting during a year when your income is lower than usual.
Technology can be a powerful ally in managing your finances. Take advantage of retirement calculators and budgeting apps to track your progress and stay on track. Investing apps make it easier than ever to invest from anywhere.
To further boost your savings, consider diversifying your investments across different asset classes to reduce risk. Don't leave money on the table by maximizing employer-matching contributions. Working a few extra years can also help you save more and delay drawing from retirement accounts. Finally, automating your savings by setting up automatic transfers to your savings and investment accounts can ensure consistent progress.
It's never too late to take control of your retirement savings. By maximizing catch-up contributions, utilizing HSAs, considering Roth IRA conversions, and leveraging technology, you can supercharge your savings and work toward a comfortable retirement. Don't hesitate to consult a financial advisor for personalized guidance.
