Diana Bocco examines how much money you should have saved by the time you turn 50 and what to do if it’s not enough.
When investing, your capital is at risk. Your investments may appreciate or decrease in value, and you might receive a lower return than what you invested. Read More.
This article’s content is offered purely for informational purposes; it is not meant to be, nor does it constitute, any kind of personal counseling. Currency exchange risk is present for investments made in currencies other than sterling. Because currency exchange rates fluctuate frequently, the investment’s value expressed in sterling terms could be impacted. Even if the stock price increases in the currency of origin, you might still lose money in sterling. Stocks listed on foreign exchanges might not offer the same level of regulatory protection as those listed in the UK, and they might also be subject to additional dealing and exchange rate fees, as well as other tax ramifications.
You probably worry about not having enough money if you’re wondering how much you should have saved by the time you turn 50. Let’s look at the precise amount you need to have saved by the age of 50 to ensure you don’t fall behind on your retirement plans.
Are you worried about not having enough savings by the time you turn 50?
This is a common concern, especially in the UK where the average savings figures are lower than expected. But don’t worry, there are steps you can take to improve your financial situation.
In this article we will answer the following questions:
- How much should you have saved by 50?
- How much should you have in emergency funds by 50?
- How much should you have in retirement savings by 50?
- How can you start to increase your savings?
How much does the typical 50-something have saved?
According to Occam Investing, those between 45 and 54 have average savings of £5,000 to £12,500 In contrast, the 55-64 age group has anywhere between £12,500 and £25,000 stashed away.
Perhaps more worrying is that 25% of those under 54 are in debt or have no savings at all. This means at least a percentage of people in their 50s have no emergency funds.
How much should you have saved in emergency funds by age 50?
Financial experts recommend having the equivalent of at least three months’ salary saved up for emergencies. This means that if your essential monthly expenses are around £1,000 a month, you should aim for £3,000 in emergency savings.
For a better safety net, enough to cover six months of expenses is a better option.
To make the most of your emergency savings, consider putting the money away in a high-yield savings account.
How much should you have in retirement savings by the time you turn 50?
There isn’t a single answer that fits every situation, mainly because this depends on how you want to live in retirement. If you’ll retire with no mortgage and no debt, your expenses will be much lower after retirement. The same is true if you plan a quiet retirement without big purchases or expensive travel plans.
As a general rule, Fidelity Investments recommends having at least six times your pre-retirement income saved by the time you turn 50. This means that if you earn £25,000 a year, you should have at least £150,000 in retirement savings at 50.
If you’re a woman, you might be facing an additional challenge to achieving this. According to The Guardian, the average woman has less than half the income of men saved for retirement.
How can you start to increase your savings?
Starting to save at age 50 isn’t ideal, but it’s certainly better than not starting at all. The state pension age in the UK is now 66, but the average retirement age is currently 65.3 for men and 64.3 for women. This means a lot of people are leaving the workforce earlier.
If you’d like to join the trend, this might be a good time to beef up your savings.
A few things you can do:
- Maximize your pension contributions. At 50, you still have 15 years ahead to work. If you delay your retirement until 70, then that gives you 20 years to save for long-term returns. Make sure you check how much your employer is putting into your pension pot. If it’s just the minimum, find ways to add more. For example, every time you get a raise, crank up your pension contributions.
- Find a financial advisor to guide you. At 50, you shouldn’t be taking big risks with your investments as you might have done at 20.
- Take a new look at your budget and consider ways you can cut expenses. Reroute any ‘found’ money towards savings and investments.
It’s never too late to start saving for your future. Even if you’re starting from scratch at 50, you can still make a significant difference in your financial situation by taking action today.
By following the tips in this article, you can start to build a solid financial foundation for your retirement years.
Frequently Asked Questions
How much should I have saved by 50 if I want to retire early?
If you want to retire early, you’ll need to have saved even more money than if you plan to retire at the state pension age. A good rule of thumb is to have at least 25 times your annual expenses saved by the time you retire.
How can I catch up on my retirement savings if I’m behind?
If you’re behind on your retirement savings, don’t despair. There are still things you can do to catch up. One option is to make extra contributions to your retirement account. You can also consider working part-time in retirement to supplement your income.
What are some good investments for retirement savings?
There are a variety of good investments for retirement savings. Some popular options include stocks, bonds, and mutual funds. It’s important to choose investments that are appropriate for your risk tolerance and time horizon.
How can I make sure my retirement savings will last?
There are a few things you can do to make sure your retirement savings will last. One is to create a retirement budget and stick to it. You should also consider working part-time in retirement to supplement your income. Finally, make sure you review your retirement savings regularly and make adjustments as needed.
Additional Resources
- Moneyfarm: https://blog.moneyfarm.com/en/investing-101/average-savings-by-age-in-the-uk-how-much-should-you-be-saving/
- The Motley Fool: https://www.fool.co.uk/personal-finance/savings/guides/how-much-should-i-have-saved-by-50/
Disclaimer
I am an AI chatbot and cannot provide financial advice. The information provided in this article is for general knowledge and informational purposes only, and does not constitute professional financial advice. It is essential to consult with a qualified financial advisor for any financial decisions or investments.
How much should you have saved in emergency funds by age 50?
Experts in finance advise keeping emergency funds equal to at least three months’ salary on hand. This means that you should aim for £3,000 in emergency savings if your regular monthly expenses are approximately £1,000. It is preferable to have a safety net large enough to cover six months’ worth of expenses. Consider investing your emergency funds in a high-yield savings account to get the most out of them.
But numbers aren’t looking good in general. Finder’s analysis shows that the average British person saved £6,757 in 2020. However, 33% of British people have savings of less than £600. Even worse, 2041% of British people don’t have enough savings to last for a month without a source of income. Furthermore, 10% of us have zero savings.
How much does the typical 50-something have saved?
Even though savings rates generally rise with age, people over 50 don’t appear to have as much money saved as one might think. Occam Investing reports that the average savings of people between 45 and 54 range from £5,000 to £12,500. The 55–64 age group, on the other hand, has anywhere from £12,500 to £25,000 hidden away.
Maybe even more concerning is the fact that 25% of people under the age of forty have debt or no savings at all. It implies that a certain proportion of adults in their 50s do not have emergency savings.