How much money should you have in your brokerage account at age 50?

Here’s how to know if you’re investing enough.

Many seniors learn the hard way that Social Security alone won’t cover their bills. In fact, it’s a good idea to save for retirement during your working years so that you have enough money to pay for your living expenses once you stop bringing home a salary.

There is no set rule that you must have a certain amount of money on hand at the end of your career. But as a general rule, Fidelity Investments says that by the time you hit 50, you should aim to have six times your current salary set aside for the future. And that’s a good guideline to follow.

Now, this may have you wondering how much money you should have in your brokerage account specifically by the time you turn 50. And the answer is that it depends on your retirement plan balance and earnings.

Cover your future needs

It’s hard to predict how much money you might need in retirement, so it’s wise to follow Fidelity’s guidelines to ensure your savings efforts stay on track. Assuming that you should have six times your salary saved by age 50, you can determine how much money you should have in your brokerage account. First, multiply your salary by six, then subtract your pension plan balance.

Say you currently earn $80,000 a year and have $300,000 in an employer-sponsored 401(k) plan. If you’re unfamiliar with a 401(k), it’s a savings plan designed specifically for retirement.

If we follow Fidelity’s rule, this means that at age 50 you should ideally have $480,000 in retirement assets ($80,000 x 6 = $480,000). Say your 401(k) — or another retirement account — has a balance of $300,000. In this case, you would be fine with $180,000 in your brokerage account. And if you have more than that in your brokerage account, you’re in really Good shape.

How to invest at 50

Many 50-year-olds still have many years of work ahead of them. If so, feel free to bet heavily on the stocks in your brokerage account.

As retirement approaches, it will make sense to transfer some of your assets to safer alternatives, such as bonds. But for now, if you’re very action-heavy, you might not need to make too many changes.

Increase your brokerage account balance

If your brokerage account balance isn’t where you want it to be, you can work on making lifestyle changes that will allow you to pump more money into it. This could mean following a stricter budget, cutting back on leisure expenses, or even taking on a side job to boost your income.

Keep in mind that you don’t necessarily want to hijack all of your extra money in a brokerage account. If you have access to a 401(k), you may first want to make sure that you are contributing as much as you are allowed on that account. This is because 401(k) contributions have certain tax benefits that regular brokerage account contributions do not, such as tax-free contributions and tax-deferred investment growth (in the case of a 401(k) plan). (k) traditional).

At the same time, you get more flexibility with money in your brokerage account, while you’ll face a penalty if you withdraw funds from a 401(k) before age 59. and half. So while it pays to get the most out of your 401(k), you should make an effort to squeeze in some regular money in your brokerage account.