Deciding to retire is a big life milestone. It marks the start of a new financial chapter, where you’ll transition from earning income to drawing down from your savings.

If you’re approaching the age of 60, you likely have retirement on your mind. Have you saved enough? Just how much does the average 60-year-old have in retirement savings? According to Federal Reserve data, for 55- to 64-year-olds, that number is little more than $408,000.

However, this benchmark is merely an average. The amount of savings you’ll actually need to retire comfortably will depend on your expenses, your lifestyle and your individual financial goals. Let’s dig into how taking a big-picture approach to your retirement can help you determine a savings target that works for you.


As you get closer to your 60s, you’ll want to start thinking about what your life is going to look like in retirement. Let’s say you see yourself working until you’re 65. In this scenario, you’ll be eligible for Medicare — a detail that could significantly reduce your health care expenses in retirement. But if you plan on exiting the workforce before you turn 65, you’ll be on the hook until you qualify for Medicare, which will increase your expenses.

There are additional considerations to think through: For instance, if you anticipate downsizing to a smaller home or moving to a town with a lower cost of living, you probably won’t need as much savings than if you plan to stay put. Or, if you’re planning to retire early, that’s going to require a larger nest egg to fund your remaining years.

Ultimately, you’ll need to get a sense of what you might need to fund your lifestyle on a monthly basis. In addition, you’ll need to know how many years your nest egg might have to last.


You’ll likely generate retirement income from multiple sources, but retirement accounts, like 401(k)s and IRAs, probably come to mind first. These accounts allow you to set aside money specifically earmarked for retirement. With traditional 401(k)s and IRAs, contributions are often made on a pre-tax basis. Once you reach age 59 ½, you can begin taking money out of these accounts with zero penalty (though you’ll still have to pay tax on these distributions). On the other hand, Roth 401(k)s and Roth IRAs are funded with after-tax dollars, meaning you’ll generally be able to take your distributions tax-free. You may also want to have some money outside of your dedicated retirement accounts, such as nonqualified investments or brokerage accounts, to help diversify your portfolio.

While retirement accounts are ideal for growing your wealth over time, they’re also susceptible to market volatility. So it’s a good idea to set aside a portion of your savings in more stable places. As you work toward building a cash reserve (two years’ worth is typically recommended), you might fund this with accumulated value in life insurance, cash or cash equivalents, money market accounts or CDs.


In addition to your liquid savings, there are other forms of retirement income that can shield you from market ups and downs and protect your nest egg. While pensions are less common today than with previous generations, they do provide a regular benefit. If you’re concerned about outliving your savings, an income annuity can be a good option, as you’ll receive a monthly payout for the rest of your life. A whole life insurance policy, which has accumulated value that's guaranteed to grow and is not tied to the market, can be another way to supplement your income.

You’ll also want to factor when you plan to start taking Social Security. While you're eligible to begin collecting at age 62, waiting can mean receiving a larger benefit each month. But doing so will also require that you have enough income to support yourself until then. A financial advisor can help you decide when it makes the most sense for you to take Social Security.


At age 60, you may find that you’re a bit shy of your retirement savings target. The good news is that there are ways to catch up. For 2021, if you’re 50 or older, you’re allowed to make up to $6,500 in extra 401(k) contributions and $1,000 in additional IRA contributions. Or, depending on your financial situation, you may choose to work a bit longer until you hit your target goal.

What does the average 60-year-old have saved for retirement? A better question may be, how much do you need to save to support your unique vision for retirement? An experienced financial advisor can help you create both short- and long-term plans for achieving that goal.

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