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How Much Money Should You Really Have Saved?

By Adam Levy – Oct 9, 2021 at 6:16AM

Key Points

  • Everyone's savings journey starts off differently.
  • Not everyone needs to save the same amount if they don't have the same big expenses.
  • Follow these simple guideposts to see if you're on track for a successful retirement.

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Here are some guidelines to help you evaluate your financial position.

Regardless of how you choose to save or what you're saving for, everyone agrees you should save some money. Most advice says to save between 15% and 20% of your salary. But everyone's path to saving will be different, and saving in the early years of your career can be difficult. Here are some guidelines to show you how much you should have saved at various ages.

A person stacking coins next to a wooden cutout of an alarm clock.

Image source: Getty Images.

Age 30 and younger

This is where there's the most variance in circumstances. Some people start their career in their teens, others go to college and don't start until their early 20s, and some people spend additional years getting an advanced degree. 

Each case comes with various levels of student loan debt, which can significantly curb savings in the early part of a career.

Regardless, everyone in their 20s should build up a few thousand dollars in savings as soon as possible. A few thousand in the bank can prevent you from going into unnecessary debt from an unexpected expense like a health emergency or your friend's bachelor party. Just be sure to work to keep that savings balance where you need it to be after you tap those funds.

If your employer offers a 401(k) and a company match, it's one of the best ways to build wealth. Otherwise, an individual retirement account (IRA) is a good option for retirement savings.

You should aim to have between half and one times your salary saved for retirement by the time you're 30. 

Granted, that'll be easier for someone who graduates college in four years with a higher than average salary than it would be for a medical doctor who finishes their residency at 29 and is suddenly making $180,000 per year. The former can easily get there, even if saving less than 10% of their income, but the latter should be able to save a higher percentage of their income in the future to catch up.

31 through 40

If you started your career with student loan debt, you should be paying it down to $0 at some point in your 30s, if not earlier. But your 30s may also come with additional expenses like buying a house, getting married, and having kids.

The average home price in the U.S. is more than $285,000, which means you need a minimum of $10,000 for a down payment. Ideally, you'll have closer to 20%, or $57,000. And if you buy a home, you'll also want some additional cash on hand for property maintenance you didn't have to pay for as a renter. So, pad your savings.

The average wedding costs $19,000. While you might get some nice gifts from friends and family, don't expect to recoup the cost of your special day.

The average family spends $12,000 to $14,000 per year on their children, and newborns are even more expensive. If you don't have some extra savings for child-related expenses, you may find your financial plan suffering in other aspects.

Depending on your plans, you may want to grow your cash savings significantly in your 30s to pay for those big expenses. Meanwhile, you should be regularly contributing to your retirement savings and investments. 

By the time you're 35, aim to have 1.25 times to two times your salary saved for retirement; and by the time you're 40 you should have two times to 3.5 times saved.

41 through 50

You'll enter your peak earning years in your 40s and 50s, and this is your opportunity to supercharge your savings. Most of your big expenses will be behind you, with the possible exception of paying for your children's college education.

College tuition prices are getting more and more expensive every year. You may be able to get a state tax deduction by saving in a 529 plan. And be sure to apply for financial aid. Even if you have a big balance in your retirement accounts or a lot of home equity, the FAFSA doesn't count those as assets, so you may still qualify for aid.

Be sure you don't neglect your retirement savings during these years. You should exit your 40s with at least five times your salary in your investment accounts for retirement.

51 through 60

This is your last chance to really catch up if you've fallen behind. The kids are wrapping up college and becoming independent, you're in your peak earning years, and you (hopefully) still have good health.

If your job has a 401(k) plan, you can start making catch-up contributions at age 50. That will allow you to contribute as much as $27,000 starting in 2022.

Another perk of the 401(k) is that if you're ahead of schedule, you can retire early and start taking distributions from the plan in the year you turn 55 without penalty.

Most people will be diligently saving for retirement through their 50s. Those people should aim to have about eight times their salary saved by 55 and 12 times by 60. Remember, compound earnings on your investments will be doing most of the work by this point.

60 through retirement

As you work toward retirement, your goal should be to reach about 17 times your final salary.

This number comes from the idea that if you're saving 15% of your income, 17 times your salary is equal to about 20 times your annual spending. Combined with Social Security income in retirement, you should be able to stay below the 4% safe withdrawal rate from your retirement savings.

If you end up with more money than you need in retirement, you have lots of options for how to spend it: extra vacations, bigger charitable donations, pass it on to your grandchildren, or just save it for a rainy day. It's a good problem to have.

How much you should have saved at every age

Decade

Retirement Savings by End of Decade

Other Considerations

20s

Half to one times salary

Small cash savings for unexpected expenses.

30s

2x to 3.5x salary

Savings for a house down payment, wedding, children.

40s

More than 5x salary

Savings for children's education.

50s

12x salary

Paying for children's education. Catch-up contributions for 401(k).

60s

17x salary

Social security will supplement retirement savings.

Table source: Author.

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