I'm 50, care for my parents and have $60K for retirement because I drained my 401(k). Too late to catch up?

Josh loved his job, but he wasn’t saving much. He knew he should be putting more aside for retirement, yet everyday life always seemed to take priority.

Then his parents got sick.

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Suddenly, everything he assumed he’d have plenty of time to prepare for was right in front of him — and now he’s afraid he may never be able to retire.

At 50 years old, time isn’t exactly on his side. His entire retirement nest egg amounts to just $60,000.

When he had to quit his job to care for his parents, his savings took a major hit. Leaving before he was fully vested meant losing part of his employer’s 401(k) contributions, and the withdrawals he made from his own account came with costly penalties.

Fortunately, Josh owns his home and is ready to downsize, easing the burden of maintaining an aging house and a large yard. The property needs some updates, so he estimates he’d walk away with about $400,000 if he sold it.

He’s also back in the workforce with a new job earning $40,000 a year, and now he’s focused on finding the best way to rebuild his retirement savings and get his plan back on track.

Do I have to delay retirement?

It’s becoming more commonplace that Americans choose to delay retirement because they are in a situation like Josh’s.

According to a recent survey by F&G Annuities & Life of 2,000 Americans over 50, 23% have already chosen to delay retirement — a jump from 14% in 2024. (1) Reasons people gave for this decision included worries about having enough retirement savings, worries about inflation and fears of a stock market downturn.

The survey also found that 70% of respondents were considering or were delaying when they would leave the workforce.

Another survey by Northwestern Mutual found that 51% of respondents said it’s somewhat or very likely that their retirement savings could run out. (2) When 4,500 Americans over 18 were asked how much they thought they needed to save to retire, the “magic number” was $1.26 million. But for those who have begun saving, 25% say they have a year or less of their annual salary in savings.

How much does the average American actually have saved? The most recent data, from the 2022 Survey of Consumer Finances, found the median retirement savings of Americans to be $87,000. (3) A far cry from $1.26 million, but close to where Josh currently finds himself. Still, his savings are low for his age. According to the Northwestern survey, 52% of gen-Xers say they have three times their current annual income or less saved. (2)

Read More: Are you richer than you think? 5 clear signs you’re punching way above the average American

How can I reach my retirement goals?

Josh’s first move should be contributing enough to his new 401(k) to earn the full employer match. Taking full advantage of that match is crucial — it’s essentially free money that immediately boosts his savings.

Because he’s over 50, Josh is eligible to make catch-up contributions, and he should aim to take full advantage of them. If he decides to sell his home and downsize, he could even use part of the proceeds to help fund those additional contributions.

Since Josh thinks his aging house will end up costing more as time passes, he should strongly consider moving to a smaller home with less maintenance issues. He should also develop a budget with aggressive savings built in, trimming down any non-essentials that he can.

There is hope that Josh could one day retire, but to maximize both the amount he’s able to earn, and the Social Security benefits that he will receive when he does retire, he should strongly consider delaying starting Social Security for as long as possible. Since Josh was born after 1960, the full retirement age for him is 67. However, if he waited until 70 to start his benefits, he would receive 24% more a month, which could go a long way to ensure his retirement is well funded.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

F&G Annuities & Life (1); Northwestern Mutual (2); Survey of Consumer Finance (3)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.