How Much More You'll Have Saved for Retirement If You Start at 50 vs. 60
Many people assume that by age 50, they’re already too far behind to start saving for retirement to make much of a difference. But waiting until age 60 could leave you with significantly less by the time you retire.
That extra time gives you ten more years to save, allow that money to grow and collect an employer 401(k) match. Here’s how much of a difference starting at 50 could make.
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How Much More Could You Have by Starting at 50 Instead of 60?
Adam Chervenak, principal and financial advisor at Edward Jones, explained that the simplest way to view the difference is to focus on contributions alone. Here’s his example:
Saving $250 per month from age 50 to 60 adds $30,000 in contributions.
Saving $500 per month from age 50 to 60 adds $60,000 in contributions.
Saving $1,000 per month from age 50 to 60 adds $120,000 in contributions.
And this is before accounting for investment growth over the decade.
“What many people overlook is that retirement planning isn't necessarily about making dramatic changes,” he added. “Consistent monthly savings over ten years can create meaningful progress, even for someone who feels behind.”
Jennifer Tontillo, executive wealth management advisor at TIAA Wealth Management, also pointed out how much those savings could potentially grow by retirement.
Assuming retirement at age 65 and a 6% average annual return, Tontillo estimated:
Someone saving $300 per month starting at age 50 could accumulate about $87,000 by age 65, compared with about $21,000 if they waited until 60. That’s roughly a $66,000 difference.
At $600 per month, someone starting at 50 could save about $174,000, compared with about $42,000 if they started at 60. A difference of about $132,000.
“Time in the market is one of the most powerful tools an investor has,” Tontillo noted. “The earlier someone starts, and the more consistently they contribute, the more their money can compound over time.”
A 401(k) Match Can Really Help
If your employer offers a 401(k) match, starting at age 50 versus age 60 can make a bigger impact. This would give you an additional 10 years of employer contributions on top of your own.
Chervenak provided an example:
Annual salary: $75,000
Employee contribution: 6% of pay ($4,500 per year)
Employer match: 50% of the first 6% contributed ($2,250 per year)
This adds up to a total annual retirement contribution of $6,750. If the employee starts at age 50 instead of waiting until age 60, here’s what that would look like before investment growth.
Employee contribution: $45,000
Employer match: $22,500
Combined total: $67,500
“From a planning perspective, I often remind clients that employer matching dollars are one of the most valuable benefits available in a workplace retirement plan,” Chervenak explained.
Delaying means missing out on years of not only your personal savings, but on employer contributions that generally can’t be recovered later, he added.
Why 50 Isn’t Too Late To Start Saving for Retirement
Starting at 50 doesn’t mean you’re too late. And starting at 50 is better than postponing retirement savings or never starting at all.
“The key is having a plan,” Tontillo explained. This could be increasing a contribution rate within an employer plan, exploring the possibility of working a few years longer, taking a close look at what a realistic retirement balance can support in terms of income, or delaying Social Security, she added.
“A disciplined, well-structured savings strategy, built around a person’s specific goals and circumstances, is what ultimately helps someone make the most of the years they have left before retirement,” Tontillo emphasized.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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