How Much Should You Have Saved? (By Age)

There is no how-to guide when it comes to saving. Every individual financial situation is different from the next but there are some basic guidelines when it comes to finance. For instance, there are certain goals you should strive for financially that have been the “norm.” So, how much should you have saved?

Who Saves Anymore?

Who saves anymore? Well, when it comes to saving money, most people are falling short. In fact, nearly 70 percent of Americans don’t even have $1,000 saved for an emergency. Similarly, about half of American families have $0 saved for retirement.

This is due to a number of factors, including the mindset that there is always more time to save. As young adults, many people think “I’ll save more when I’m making more” or “Why save for retirement? I’m only 25.” The only problem is is that when the day comes, you’re not saving.

How Much Should You Have Saved?

So, how much should you have saved? While everyone’s finances are different, there are certain benchmarks you should reach in order to eventually achieve financial freedom (or at least comfort). Below you’ll find a basic guideline on how much you should have saved up until retirement.

• 20s: Most people are in college or just starting their lives in their 20s. It is oftentimes a difficult time to save. After all, you’re only young once. However, you should strive to put 25% of your earnings into savings. This can include cash savings, 401K and matching funds, as well as debt repayment.
• Age 30: By the time you are 30 you should have saved at least one year’s salary. So, if you are making $75,000 per year you should strive to have $75,000 saved by the time you are 30. (This also includes any retirement funds, 401K, savings, etc.)
• Age 35: Five years later you should strive to have twice your annual salary saved. So, if you make $60,000 a year, you’ll want to have saved $120,000 by the time you are 35.
• Age 40: People age 40 should aim to have about three times their annual salary saved. If you have an annual salary of $30,000 that means you’ll have $90,000 saved by the time you are 40.
• Age 45: Forty-five year olds should have the goal of saving four times their annual salary. If you are making $100,000 per year this will mean you’ll have saved $400,000 by now.
• Age 50: At age 50 most people begin to realize they will be retiring soon. By now, you should have five times your annual salary saved ($250,000 saved on a $50,000 annual salary).
• Age 55: Now there are only 10 years left of working until standard retirement age (65). By age 50, you should have saved six times your annual salary. If you’re making $85,000 a year then you will have $510,000 saved.
• Age 60: In another five years you’ll want to have saved another year’s salary (making for a total of seven times your annual salary).
• Age 65: Age 65 is retirement age for most people, however, there are people that are never able to retire because they never saved. By the time you are 65 you should have saved eight times your annual salary.

Looking at your savings plan in five-year increments like this gives you a good idea of where you need to be financially to retire at 65. It should also be taken into consideration that you will receive bonuses, promotions, pay raises and even career changes so your savings goal may change based on your financial situation at the time. However, the above guide is a good reference point for how much you should have saved.

When it comes to saving, the earlier you start the better. Those who put their money to work for them in their 20s are able to live comfortably in their old age. So, what are you waiting for? Start saving!

If you are looking for a fun way to save, check out the Original 52 Week Money Challenge. Also, don’t forget to check out the Saving Advice forums.

Photo: US News & World Report