How Much You Should Have in Your Savings Account at Every Stage of Life

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The problem with sizing up how much savings a person should have at 20, 30 or 40 years old is that every 20-, 30- and 40-year-old is different, with different earning capacities, different backgrounds, different expenses and different circumstances.

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“Depending on your lifestyle, your financial goals may vary,” said Amanda Sullivan, research analyst at CreditDonkey. “There’s no clear-cut way to save and income may fluctuate at different chapters of life, but there are always ratios and percentages we can trust.”

Sullivan and several other experts spoke with GOBankingRates about those percentages and ratios, and shared insights about realistic savings goals for every stage of life.

Saving in Your 20s: It’s OK To Get Started Slowly, but Get Started

Unless you’re an athlete or a rock star, you probably won’t look back on your 20s as the years when you earned all your big money. Entry-level wages collide with turbulent lifestyles for many during this time, while things like first cars and first apartments are cobbled together on shoestring budgets.

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For these reasons, saving isn’t easy during these years, but it is necessary. “During the ages of 20 to 29, it might be hard to have proper savings, but it’s best to try to save at least 10-20% of your annual income to get the ball rolling,” Sullivan said.

That may seem like a lofty goal, but experts urge young people get in the habit of saving and start building a surplus to help them endure the unexpected. “In your 20s, you should mostly work toward your emergency fund,” said Imani Francies, a personal finance expert with US Insurance Agents. “If you have room financially to save for more than your emergency fund, go for it.”

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In Your 30s: Get Serious About Saving

Life is different for everyone during this decade too, of course, but for many people, their 30s bring kids, a home, more income and a much greater responsibility to save than ever before.

“The main goal for this stage of life is stability,” said Snigdha Kumar, personal finance expert and head of product operations for the money app Digit. “Emergency funds should have three to six months of expenses at a minimum, and for a more aspirational goal, aim to save for 12 months.”

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Middle Age: The Future You’ve Been Saving for Is Just About Here

If you started saving in your 20s, you’ll be grateful for your early efforts by the time you reach your 40s. However, if you thought it was hard to save when you were young and free, wait until you get to middle age. By this point, many people are planning to pay for their kids’ college at the same time they’re trying to save for retirement. Likewise, plenty of people spend this stage of life sandwiched between the financial rock and a hard place of caring for aging parents while also raising young children.

Without a healthy savings account, the present will be a challenge and the future could be a bust.

“Two to three times the current income is a good benchmark for age 40 and four to five times for age 50-plus,” Kumar said. “If they don’t have enough stacked away for retirement, then this is a good time to play catch up and save in order to prepare for retirement. You can contribute more to a 401(k) as well as IRAs to build your retirement nest egg.”

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In Your 60s: You’re on Deck for Retirement

By the time you enter your seventh decade, you should be putting the finishing touches on a lifetime of saving.

“In your 60s, the prime number to have to account for retirement is eight times your current annual income,” Sullivan said. “Another way to look at it is to have 70% of your pre-retirement income saved up for retirement. To retire by 67, it’s best to save 10 times your annual income.”

The Retirement-Focused Lifetime Saving Strategy

Marco Sison, a financial coach with Nomadic FIRE, believes that savings strategies at every age should be calculated with the same goal in mind: retirement.

“The average cost of retirement is roughly $750,000,” Sison said. “More than the combined cost of university education, raising a child and buying a home. The best way to ensure you are saving enough for retirement is to use a spreadsheet and calculate the present value of your goal at specific ages.”

Sison scratched out the math. “To retire with $750,000 by age 70, you will need to have saved $46,000 before you turn 30, $92,500 before you turn 40, $186,000 before you turn 50, and $373,000 before you turn 60,” Sison said. “For a quick calculation, estimate your nest egg doubles roughly every 10 years, assuming a 7% annual return on your investment.”

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About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street's investment community in New York City.
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