Savings Benchmarks by Age: A Guide to Financial Health

Saving for the future is a crucial aspect of financial planning. However, knowing how much to save at different stages of life can be challenging. This guide provides age-based savings benchmarks to help you stay on track and achieve your financial goals.

In Your 20s: Building the Foundation

Your 20s are all about laying the groundwork for your financial future. Aim to save at least 15% of your income each year, including any employer contributions to retirement accounts. By the time you reach 30, you should have saved the equivalent of your annual salary. For example, if you earn $50,000 per year, aim to have $50,000 saved by age 30.

In Your 30s: Gaining Momentum

As you move through your 30s, your focus should be on increasing your savings rate and taking advantage of compound interest. By age 35, aim to have saved one to one-and-a-half times your annual salary. By age 40, this should increase to three times your salary. This means if you earn $60,000 annually, you should have between $60,000 and $90,000 saved by 35, and $180,000 by 40.

In Your 40s: Accelerating Savings

Your 40s are a critical time to ramp up your savings efforts. By age 50, aim to have saved six times your annual salary. This is the time to maximize contributions to retirement accounts and take advantage of catch-up contributions if available. For instance, if your annual income is $70,000, you should have $420,000 saved by age 50.

In Your 50s: Preparing for Retirement

As you approach retirement, your focus should be on solidifying your financial foundation. By age 60, aim to have saved eight times your annual salary. This means if you earn $80,000 per year, you should have $640,000 saved by age 60. Continue to prioritize saving and consider consulting a financial advisor to fine-tune your retirement strategy.

In Your 60s: Nearing Retirement

By the time you reach your mid-60s, you should aim to have saved ten times your annual salary. This benchmark helps ensure you have enough to maintain your lifestyle in retirement. For example, if your annual income is $90,000, you should have $900,000 saved by age 67.

Conclusion

These benchmarks provide a general guideline to help you stay on track with your savings goals. Remember, everyone’s financial situation is unique, and it’s important to adjust these benchmarks based on your personal circumstances and retirement goals. Consistently saving and investing wisely will help you build a secure financial future.