Retirement is a big milestone but getting there doesn’t happen overnight. Financially preparing yourself to leave the workforce requires some forward thinking. If you’re asking yourself, “How much should I have in my 401(k) by age 60?” you’re not alone.

A general rule is to have six to eight times your salary saved by that point, though more conservative estimates may skew higher. The truth is that your retirement savings plan hinges on your individual goals and financial situation, not some magic number. Here are a few ways to measure whether you’re on the right track.

How does a 401(k) work?

A 401(k) is an employer-sponsored account that’s specifically built to help you save for retirement. The contributions you make during your working years are typically made via automatic payroll deductions. That money may then grow over time — and if your employer offers any sort of match, all the better.

When it comes to using your 401(k) in retirement, you’ll typically have to wait until age 59½ to make withdrawals in order to avoid a 10 percent penalty. Of course, you certainly don’t have to begin taking 401(k) distributions at this age. Letting that money continue to grow can help you shore up your nest egg and avoid additional taxes. However, you will need to begin taking required minimum distributions (RMDs) starting at age 72.

In retirement, you’ll be taxed on 401(k) distributions as if it were ordinary income. Therefore, it’s important to remember that a portion of what you’ve saved will go to Uncle Sam. Being strategic about how much you withdraw each year can help prevent you from paying more income taxes than necessary.

Keep in mind, a 401(k) represents just one source of retirement income. You can lean on other qualified investment accounts, such as traditional or Roth IRAs, to generate additional income during this chapter of your life. You may also be able to turn to pensions and annuities, Social Security, or cash value you’ve accumulated in a whole life insurance policy. Taken together, these financial tools provide multiple sources of retirement income with different tax treatments and different exposure to the markets, helping you build a more durable, consistent income machine.

How much should I have in my 401(K) by age 60?

Your 401(k) savings target should be tailored to your unique financial situation and goals. With that said, the average retirement savings for 55- to 64-year-olds with a 401(k) is a little more than $408,000, according to recent data from the Federal Reserve.

One factor to consider here is how long you (and your spouse, if applicable) plan to be out of the workforce. If you plan to retire early, you’ll have to factor in additional health care costs as you won’t be eligible for Medicare until age 65. Meanwhile, the minimum age to begin collecting Social Security is 62, but the longer you can wait, the higher your payment will be. You’ll also need to factor in expenses and the lifestyle you want to live in retirement.

How to boost your 401(k) retirement savings

401(k)s come with contribution limits. For 2021, you can contribute up to $19,500. If you feel behind and want to put more muscle behind your savings efforts, the IRS allows folks who are 50 or older to kick in an additional $6,500. If it’s offered by an employer, you may be able to make after-tax contributions to help with savings. Beyond your 401(k), you can leverage other retirement savings vehicles outside of what your workplace offers, such as a traditional or Roth IRA, to bolster your nest egg.

There are several factors to consider here: Longevity, medical costs, your lifestyle, taxes and more. This can be rather complex for many people, but a financial advisor has the tools and expertise to build realistic financial projections to help you match your goals with your savings so you can live life with less stress. This may include delaying Social Security or exploring other financial tools, such as whole life insurance, to provide flexibility in retirement.

This publication is not intended as legal or tax advice. Consult with a tax professional for tax advice that is specific to your situation.

The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.

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