How Much You Should Save Every Paycheck on a $100K Salary, According to Experts
Written by
Cindy Lamothe
Edited by
Heather Taylor
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If you’re making $100,000 a year, you’re in a pretty solid financial spot. In fact, 58% of people say that making that income is the bare minimum to avoid the financial stress of daily life, according to Edelman Financial Engines.
But the real question is this: How much should you be putting aside from each paycheck? Figuring out the right amount to put away can be tricky, especially with all the expenses that pop up.
Whether you’re saving for retirement, preparing for a rainy day or just trying to build up that emergency fund, knowing how much to save can help you make the most of your salary.
Here are a few approaches to saving on a six-figure income.
Save at Least 20%
Edward Piazza, president of Titan Funding, suggested a set percentage of at least 20%. “Opting for a more practical approach, I’d recommend anyone earning a $100,000 salary to save at least 20% of each paycheck,” he said.
He said this means setting aside around $1,666 a month, which helps build a solid foundation for future investments and unexpected expenses.
Similarly, Chris Heerlein, CEO of REAP Financial, said that many earning $100,000 seek a set savings percentage, but the right amount depends on lifestyle and goals.
For a 20% rate, he explained that about 15% should go into retirement accounts like a 401(k) or IRA, while the remaining 5% should go toward liquid savings for emergencies or short-term goals.
However, this assumes a traditional retirement timeline and a stable career. “A client of mine followed this rule for years but later realized they wanted to retire early,” he said. By adjusting their plan to increase their savings rate to 30% and investing more in taxable brokerage accounts, he said they gained financial independence a decade ahead of schedule.
Both experts similarly believe that in today’s unpredictable world, it’s essential to keep a healthy balance between spending and saving.
Save for Financial Flexibility, Not Just Long-Term Security
Saving for financial flexibility is a wise approach even beyond retirement.
“Many professionals tie up all their savings in tax-advantaged accounts, only to find they lack funds for major life events like career changes or business ventures,” Heerlein said.
He worked with a client who wanted to leave their corporate job and start a business but had most of his money locked in a 401(k). Heerlein shifted part of the client’s savings toward liquid investments, giving him the financial cushion he needed to take that leap without penalties or early withdrawals.
Balance Retirement, Liquid Savings and Investment Growth
Balancing savings between retirement, liquid savings and investment growth is best for ensuring that savings align with both long-term security and short-term flexibility.
A $100,000 salary can stretch further when every dollar is saved with a purpose.
“Creating a saving habit is important because it provides financial security and allows for growth,” Piazza said.
If you consistently save according to your plan, you’ll be better equipped to handle life’s surprises, ultimately making your financial journey smoother.
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