Saving money is an important aspect of financial planning, and knowing how much you should have saved at different ages can help you stay on track toward your financial goals. Here is a breakdown of how much money you should have saved at every age.
In Your 20s
During your 20s, you should focus on establishing a strong financial foundation. This means building an emergency fund and starting to save for retirement. Experts recommend having at least three to six months’ worth of living expenses in an emergency fund, which can be used to cover unexpected expenses or job loss.
In terms of retirement savings, a good rule of thumb is to have one year’s worth of salary saved by age 30. This may sound daunting, but starting early and contributing regularly to a retirement account, such as a 401(k) or IRA, can help you reach this goal.
In Your 30s
Your 30s are when you have more financial responsibilities, such as a mortgage, children, or other dependents. This means you must keep building your emergency fund and retirement savings while paying off any debts.
Experts recommend having the equivalent of your annual salary saved for retirement by age 35 and twice your annual salary saved by age 40. To achieve these goals, consider increasing your retirement contributions and finding ways to save on expenses.
In Your 40s
In your early to mid-40s, you may be in the prime of your career and earning a higher salary. However, it’s important not to get complacent and continue saving for the future. You should have three times your annual salary saved for retirement by age 45 and four times your annual salary saved by age 50.
This will give you a comfortable cushion for retirement that you can draw on when you’re older. It’s also important to start thinking about long-term care and estate planning at this age. This may include setting up a will or trust, establishing a power of attorney, and considering long-term care insurance.
In Your 50s
During your 50s, retirement may be just around the corner, so it’s important to ensure you’re on track with your savings goals. Many expert financial planners suggest that you have six times your annual salary saved for retirement by age 55 and seven times your annual salary saved by age 60.
At this age, it’s also important to start thinking about when you want to retire and how much money you’ll need to support your lifestyle. Working with a financial advisor to develop a comprehensive retirement plan may be beneficial and ensure you’re on track to meet your goals.
In Your 60s and Beyond
In your 60s and beyond, you may think about retirement. Experts recommend having 10 to 12 times your annual salary saved for retirement by age 67.
At this age, it’s essential to consider how you’ll withdraw money from your retirement accounts and manage your assets. You may also want to consider how to cover healthcare expenses and long-term care needs.