Here's How Much You Should Have Invested for Retirement at Age 67

Do you have a retirement savings goal in mind? You should. Even if you end up not reaching your target, people with clear goals tend to fare better than people without them. That's because it's much easier to turn a specific savings target into an actionable plan than it is to develop a plan that has no clear end goal.

With that in mind, here's a suggestion for how much money the typical 67-year-old -- someone well into normal retirement age -- should have invested for retirement in the U.S.

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The number

To be clear, there is no universal "right" number since everyone's circumstances are different. You may be fine living a relatively modest retirement. Or you may dream of lots of exciting (and expensive) travel in your golden years. What makes sense for you might not for someone else.

But there is a consensus. Investment and insurance firm Northwestern Mutual says the average American believes they'll need $1.46 million in savings to retire comfortably.

That's just an estimate based on individuals' assumptions, of course. However, the figure jibes with the number-crunching done by mutual fund outfit T. Rowe Price. The company says a 65-year-old should have about 11 times their annual salary saved for retirement if they want to maintain the standard of living they enjoyed in their working years. Multiplying the U.S Census Bureau's reported 2023 average household income of $114,500 by 11 would get you in that ballpark with $1.26 million.

And you could be fine with less. T. Rowe Price's suggested retirement savings target actually ranges from 7.5 to 13.5 times your annual salary. That lower figure would put the serviceable number at less than $900,000 for many people, which is still a sizable chunk of income-generating cash.

You'll also receive some Social Security benefits despite the palpable pessimism regarding the program's longevity.

So you're behind. Now what?

Don't beat yourself up too much if you're nowhere near that suggested target range, even if you know you won't be when the time comes to stop working.

Although most people believe $1.46 million is the magic number, they don't actually have anywhere near this amount of money saved up, and probably never will. Data from the Federal Reserve says that as of 2022, the average retirement savings for people between the ages of 65 and 74 living in the U.S. was just a little more than $600,000, and that's an average skewed higher by a small percentage of enormous nest eggs. That year's median figure was only $200,000.

Second, know that most of your retirement savings materializes in the last one-third of your savings and accumulation period, once the annual returns on your invested money eclipse the amount of new money you're able to contribute to your savings every year.

On the flip side, there are a couple of things you'll want to do right away no matter how behind you feel in terms of saving for retirement, and no matter how near you are to that long-awaited day.

First, make a written plan -- with numbers and a goal.

This may be a bit uncomfortable, since it could force you to acknowledge you're not doing enough right now. It may also require lifestyle changes to ensure you've got enough money left over to invest for retirement. But the pain is worth it in the end (and it's never quite as bad as it feels like it could be when you first start doing the math).

And second, do something sensible but constructive with the money you're saving for retirement. If you've got many years to go, you can handle the volatility that comes with growth stocks, as one example. If your expected retirement date is within sight, however, you'll want to hold things with a bit more predictability.

Just start somewhere

Again, don't panic if retirement is within sight for you and you know you're not going to amass the nest egg you hoped you would. You've got options.

One of these options is continuing to work.

That might entail dialing back to part-time hours or switching to a job that better suits your age. Either way, continuing to work not only allows you to tuck away more money for retirement, but it also reduces how much you need in your nest egg while increasing your eventual Social Security payments as well.

Another option is taking an honest, critical look at your current spending and any assets that may actually be liabilities. Big houses are comfortable, for example, but they also tie up a lot of equity that could be producing stronger returns in the stock and bond markets. Larger homes also incur larger tax bills and monthly expenses.

Wherever you are in terms of saving for retirement, taking action is always better than doing nothing, no matter how modest the effort may seem at the time. The earlier these actions are taken, the better.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends T. Rowe Price Group. The Motley Fool has a disclosure policy.