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HOW MUCH SHOULD I SAVE FOR RETIREMENT IN MY 50s?

The countdown to retirement has begun, and the financial moves you make in your 50s can shape your comfort, confidence, and freedom in the decades ahead.

Your 50s are a defining decade for retirement planning. With peak earning potential and fewer years left before retirement, the choices you make now can have a major impact on your future lifestyle.

At Davis Capital Management, we help individuals in this stage of life evaluate their savings, optimize contributions, and develop strategies designed to protect and grow their wealth. Whether you’re catching up or refining your long-term plan, here’s how to ensure your retirement goals stay within reach.

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We help you make the most of your peak earning years with strategies that strengthen your savings and secure your retirement future.

Reaching your 50s is a pivotal time to assess your retirement savings. With retirement potentially 10-15 years away, it’s critical to fine-tune your financial strategy. This guide explores how much you should aim to save, key factors to consider, and actionable steps to secure your financial future.

Why Your 50s Are Crucial for Retirement Planning

Your 50s are often a high-earning period, offering a prime opportunity to boost retirement savings. However, you may also face competing financial priorities, such as supporting children, paying off a mortgage, or managing healthcare costs. At this stage, time is still on your side, but the window to leverage compound interest is narrowing. Acting now can significantly impact your retirement lifestyle.

How Much Should You Save?

There’s no one-size-fits-all answer, but financial experts often use rules of thumb to estimate retirement savings goals. By your 50s, you should aim to have saved 6-8 times your annual salary for retirement. For example:

  • If you earn $100,000 annually, target $600,000-$800,000 in retirement savings by age 55.
  • By age 60, aim for 8-10 times your salary, or $800,000-$1,000,000 for a $100,000 income.

 

These figures assume you’ll need 70-80% of your pre-retirement income annually to maintain your lifestyle. For a more precise estimate, consider these factors:

  1. Expected Retirement Age: Retiring at 65 versus 70 affects how long your savings need to last.
  2. Lifestyle Goals: Do you plan to travel extensively, downsize, or maintain your current lifestyle?
  3. Income Sources: Factor in Social Security, pensions, or part-time work. In 2025, the average Social Security benefit is about $1,900/month, but this varies based on your earnings history.
  4. Healthcare Costs: Medicare kicks in at 65, but out-of-pocket costs (e.g., premiums, supplemental plans) can average $5,000-$10,000 annually.
  5. Inflation: Assume a 2-3% annual inflation rate, which erodes purchasing power over time.

Calculating Your Retirement Number

To estimate your savings goal, use the 4% rule as a starting point. This rule suggests withdrawing 4% of your savings annually to sustain a 30-year retirement. For example:

  • If you need $60,000/year (in addition to Social Security), multiply by 25: $60,000 × 25 = $1.5 million.

 

Online retirement calculators, like those from Vanguard or Fidelity, can refine this estimate by factoring in your specific circumstances.

Strategies to Boost Savings in Your 50s

  1. Max Out Retirement Accounts:
    • 401(k): In 2025, the contribution limit is $23,000, with a $7,500 catch-up contribution for those 50+, totaling $30,500.
    • IRA: Contribute up to $7,000, with a $1,000 catch-up, totaling $8,000.
    • Example: Maxing out both a 401(k) and IRA could save $38,500 annually, reducing taxable income.
  2. Leverage Tax-Advantaged Accounts:
    • Consider Roth IRAs for tax-free withdrawals in retirement, especially if you expect to be in a higher tax bracket later.
    • Health Savings Accounts (HSAs) offer triple tax benefits for medical expenses.
  3. Reduce Expenses:
    • Pay off high-interest debt (e.g., credit cards) to free up funds for savings.
    • Downsize your home or cut discretionary spending to redirect money to retirement accounts.
  4. Invest Wisely:
    • Shift toward a balanced portfolio (e.g., 60% stocks, 40% bonds) to manage risk while seeking growth.
    • Avoid overly conservative investments, as you’ll need growth to outpace inflation.
  5. Work Longer or Part-Time:
    • Delaying retirement to 67 or 70 extends saving years and reduces the time your savings must last.
    • Part-time work in early retirement can bridge income gaps.

Common Pitfalls to Avoid

  • Underestimating Costs: Many underestimate healthcare or leisure expenses. Plan for unexpected costs like long-term care.
  • Neglecting Catch-Up Contributions: Failing to use catch-up limits misses a key opportunity to accelerate savings.
  • Over-Reliance on Social Security: Benefits may not cover your needs, especially if reduced by future policy changes.

Action Plan

  1. Assess Your Current Savings: Review 401(k), IRA, and other investment balances.
  2. Run a Retirement Calculator: Input your income, expenses, and goals to estimate your target.
  3. Consult a Financial Advisor: A professional can tailor a plan, especially for complex situations like business ownership or divorce.
  4. Automate Savings: Set up automatic contributions to retirement accounts to stay consistent.
  5. Reevaluate Annually: Adjust your plan as income, expenses, or goals change.

Conclusion

Your 50s are a make-or-break decade for retirement savings. By targeting 6-8 times your salary, maxing out contributions, and avoiding common pitfalls, you can build a secure financial future. Start today—every dollar saved now grows exponentially by retirement.

Your 50s are the time to take control of your retirement strategy.

Our team can help you maximize contributions, reduce taxes, and create a plan built around your goals.

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Davis Capital Management is a fiduciary wealth management firm located in Jacksonville, Florida which is committed to customer service, governed by ethics, and driven by results. Davis Capital Management’s primary objective is to help our client’s meet their financial and retirement goals by providing discretionary account management and custom financial planning.
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