Ideal Savings Amount at Age 50 According to Financial Experts, Do You Have It?
Jakarta, CNBC Indonesia - Enjoying a peaceful retirement without financial worries is a dream for everyone. However, to achieve financial freedom in old age, thorough preparation from an early stage is essential.
The age of 50 is often considered a crucial point for someone to re-evaluate the health of their financial portfolio, before actually deciding to stop working. So, what exactly is the ideal amount of savings one should have when reaching this golden age?
According to global retirement plan provider Fidelity, a person should ideally have savings equivalent to six times their annual income by the age of 50. This rule is highly recommended, especially for those targeting retirement at age 67.
As an illustration, if your total net income per year is Rp100 million, then that amount should be multiplied by six. This means the ideal amount of savings you must have at age 50 is Rp600 million.
However, this figure is not an absolute benchmark that applies equally to every individual. Certified financial planner and founder of Access Wealth Strategies, Nathan Sebesta, stated that the actual amount of retirement funds needed is highly personal and depends on several determining factors.
"The amount of savings needed depends on several factors: when you want to retire, how much you will spend in retirement, and where you live," he said.
Beyond cost of living and location factors, the focus of investment allocation at this age also usually begins to shift towards more conservative instruments with low risk to protect the principal value of assets from market fluctuations.
What if current savings are still far from the ideal target? If your financial position is significantly behind, Sebesta advises starting to be realistic and lowering lifestyle and income expectations during retirement.
Focus the remaining productive time, around 10 to 15 years ahead, on taking belt-tightening steps, such as: paying off all remaining debt, cutting non-essential spending, and considering relocating to a city with a lower cost of living (downsizing).
As a last resort, you may need to accept the consequence of continuing to work part-time or building a small business during retirement age to maintain cash flow. "No one dreams of still working during retirement. However, for those who started late and cannot catch up, this might be the only realistic option," Sebesta concluded.