Understanding the Benchmarks for Age 60
When planning for retirement, benchmarks based on multiples of your annual income offer a useful starting point. Financial institutions like T. Rowe Price suggest that by age 60, you should aim to have saved six to 11 times your salary. The wide range accounts for differences in personal income levels, with higher earners often needing a larger multiple. For example, a person earning $75,000 per year might target savings between $450,000 and $825,000 by 60.
Another common guideline, offered by Fidelity, recommends having eight times your salary saved by age 60 if you plan to retire at 67. These benchmarks, however, are simply guideposts. They assume a consistent savings rate and investment growth over many decades. Life is rarely so linear, and it's essential to understand that your personal circumstances are the most significant factor.
Why the "Rule of Thumb" Isn't for Everyone
The six to 11 times salary rule is a generalization. Many factors influence your actual needs, including:
- Desired Retirement Lifestyle: A modest, home-based retirement requires less capital than a retirement filled with extensive travel and hobbies.
- Planned Retirement Age: Retiring earlier means you'll need more savings to cover a longer period without a paycheck. The opposite is true if you plan to work longer.
- Health and Long-Term Care: Healthcare costs can be a massive expense in retirement. Estimates suggest the average couple will need hundreds of thousands just for healthcare (not including long-term care). Your personal health and longevity can dramatically alter this figure.
- Other Income Sources: Income from sources like Social Security, pensions, or rental properties will supplement your savings, reducing the amount you need to generate from your personal investments.
- Location: The cost of living varies significantly. Retiring in a low-cost state can stretch your savings much further than staying in a high-cost area.
Key Financial Milestones in Your 60s
As you approach retirement, your financial focus shifts from aggressive growth to preservation and income generation. At 60, you should actively address the following areas:
Creating a Retirement Budget
Move beyond simply tracking your current expenses to projecting your future ones. Some costs, like commuting and payroll taxes, may disappear, but others, especially healthcare and leisure, could increase. Create a detailed budget that includes housing, utilities, food, transportation, and discretionary spending. This realistic picture is the most accurate way to determine your personal savings target.
Evaluating Your Investment Strategy
While you still need some growth to combat inflation, it's wise to de-risk your portfolio. This means shifting assets from more volatile stocks into more stable options like bonds and fixed-income assets. This is typically a gradual process, starting 10-15 years before retirement. Income-generating investments like dividend-paying stocks, bonds, and annuities become more important. Many 401(k) plans offer target-date funds that automate this transition for you.
Maximizing Income and Savings
Your 60s are often your peak earning years. If you are behind on your savings goals, use this time to accelerate your contributions. One powerful tool at your disposal is catch-up contributions. As of 2025, those aged 50 and over can contribute an additional $7,500 to their 401(k) and an additional $1,000 to their IRA. For those aged 60-63, a special provision allows for an even larger catch-up contribution to 401(k)s. Working just a few extra years can dramatically increase your savings and delay when you need to start drawing from your nest egg.
Comparison of Retirement Planning Approaches
To help you visualize different strategies, here is a comparison of two common retirement planning methods:
| Feature | Salary Multiples Approach | Income Replacement Approach |
|---|---|---|
| Core Idea | Target a final savings amount as a multiple of your pre-retirement salary (e.g., 8-10x). | Aim to replace a certain percentage of your pre-retirement income (e.g., 75-85%). |
| Best For | Gauging your progress against a clear, defined benchmark throughout your career. | Creating a precise, needs-based budget for retirement spending. |
| Considerations | The target multiple varies by income level and lifestyle. Assumes a specific retirement age. | Requires a detailed budget of projected retirement expenses and income sources. |
| Flexibility | Less flexible for highly individualized situations or major life changes. | Highly flexible and can be adjusted based on personal spending habits, location, and health. |
| Key Insight | Focuses on a single savings number as a milestone. | Prioritizes a sustainable annual income stream. |
What to Do if You're Behind
If your current savings don't align with these benchmarks, do not panic. It is not too late to take control of your financial future. Consider these actionable steps:
- Maximize Catch-Up Contributions: As mentioned, these extra contributions can significantly boost your savings in a short period.
- Create a Detailed Budget: Identify areas where you can reduce discretionary spending. Every dollar saved now will have a greater impact than when you were younger, thanks to the shorter time horizon.
- Delay Social Security: While you can claim benefits as early as 62, waiting until your full retirement age (or even 70) can permanently increase your monthly payout. This is one of the most effective ways to boost your guaranteed income.
- Explore Working Longer: Even working a few years past your planned retirement date can make a significant difference. It gives you more time to save, allows your existing investments to grow, and delays the need to draw down your savings.
- Consult a Professional: For personalized advice and a comprehensive plan, consider working with a financial advisor.
Conclusion: Your Path Forward
Ultimately, the question of how much should you have at age 60 is personal. While benchmarks provide a helpful roadmap, the most accurate answer comes from a thoughtful assessment of your individual needs, goals, and risk tolerance. By focusing on smart, strategic financial decisions in your 60s—leveraging catch-up contributions, refining your investment strategy, and planning for healthcare costs—you can build a more secure and confident future. Use resources like the Social Security Administration's website to get an estimate of your benefits and incorporate this into your overall financial plan.
For more resources on planning your retirement, visit the official Social Security Administration website to estimate your future benefits and explore other planning tools available: Social Security Administration
Finalizing Your Plan
Creating a realistic plan in your early 60s is one of the most important steps you can take toward a comfortable retirement. It involves more than just a number; it requires a detailed understanding of your future needs and all potential sources of income. Remember, small, strategic adjustments now can have a profound impact on your financial well-being throughout your golden years. Prioritize paying off high-interest debt and be cautious about large, early retirement account withdrawals. By taking these steps, you can feel confident and secure in your transition to retirement.
