In this article, we’re going to walk through how much you should save at every age. Not only that, we’re going to go over what some of the biggest goals for every age are and the median net worth by age as well. This article came from a CNBC article I was reading the other day so I decided to do a little bit more research and write an article on it. Let’s get right into it.
Starting With Age 20
Now at the young age of 20, you’re likely still in school and in debt due to student loans especially if you live in the united states. Surprisingly, it’s hard to find the actual net worth of someone aged 20, but according to a resource online, the average net worth of someone at the age of 22 is a whopping negative thirty-nine thousand nine hundred fifteen dollars. We can only assume that at age 20, the net worth is probably quite similar at around negative 40. It will be a negative net worth because of the debt that you are accumulating to get an education.
If you never went to college, or you dropped out, or if you live in one of those fancy European countries where the government subsidizes or pays for your education among other things, then congratulations you’re doing better than the average person in the world at the age of 20.
Things To Focus On
So knowing these facts, what we should be focusing on at the age of 20.
The first one is if you are in school make sure you graduate and find yourself an appropriate income source right out of college that’s going to help you out tremendously. It’ll be even better if you can do some work during college to start earning an income.
Next, I would start prioritizing saving a percentage of that income to put towards your debt. Our goal is to establish good financial habits and also get rid of our debt as quickly as possible in our 20s. Because if you’re able to be debt-free at some point in your 20s, you’re going to be well-positioned to thrive in your 30s.
Now, for some of you guys that might be pursuing an advanced degree like law school, and medical school, the debt that you rack up there is likely going to be a lot larger. So for those of you that are doing that, make sure you have a plan for your debt. It would be pretty unreasonable to assume that you’re going to be getting rid of this debt in your 20s.
Again let me just preface that the information presented in this article is not absolutely a setting stone, but should act as a general guideline for what you should do by your age.
Alright, some other goals for your 20s should be to open up a credit card. You’ll need to establish a good credit score because it can help you get cheaper rates on car loans, home loans, and much more.
Things To Do With A Credit Card
There are three things we want to look for or should be doing with a credit card, they are;
1. The credit card should have no annual fee. That’ll just make it a lot easier to build your credit and you don’t have to worry about it.
2. You should always pay it off on time and in full to build your credit
3. Try to get some type of reward back for your normal everyday spending.
Now, if you just follow the above you will build your credit over time, and by the time you want to buy a house perhaps in your late 20s or early 30s, your credit should be in really good shape.
The last goal in your 20s is to try to start setting aside some money for investing. Good investing actually starts with having an emergency fund, so that all your bases are covered. When it comes to investing, I’d look into investing in a tax-advantaged account. Something like the Roth IRA, traditional IRA, or the employer-sponsored 401k.
By investing in tax-advantaged accounts first, you can save a ton of money for example with the Roth IRA. You can contribute to it with after-tax dollars, but that means all your gains are going to be tax-free by the time you withdraw it at the age of 59 and a half.
In my opinion at the age of 20, if you have a net worth of above zero you’re doing excellent. And if you have any amount of savings and you’re investing in your 20s that’s even better.
So those are the goals of age 20. And while I have all you youngins here, make sure to subscribe to my mail list if you’re enjoying this article so far, for future articles like this in the future. Click here to subscribe.
The next age bracket,
Age 30
According to CNBC, the amount that you should have saved by the age of 30 is equivalent to your annual salary. That means if your annual salary is 50k a year, by your 30th birthday you should have around one extra salary saved or about $50,000. That includes everything in your retirement account, your IRA, company matches, and investments.
The median net worth of someone at the age of 30 according to financial data from CNBC is $14,000. If you have more than $14,000 at the age of 30, you’re doing better than half of the population of the united states.
If you’re comfortable with sharing with me how much you have saved and your age, please let me know in the comments. I personally would love to hear from you guys, and i think the community would find it beneficial.
All right,
It’s important to note that if you don’t have $14,000, or you’re still in debt at the age of 30, do not panic. It’s really not about where you are right now, always know that you should really be looking ahead in life and trying to focus on the positive. Having a positive mindset and optimism will help you make more money in the long run.
The goal of this article is to show you how most people are doing in the united states. If you aren’t in that spot you want to be financially, just know that it’s not too late to get started with investing, saving, and making a plan for your finances.
Things To Focus On
In my opinion, I think there are a few goals at the ripe age of 30 that you should be focusing on,
Number one, you should be systematically investing and saving around 20 to 30 percent of your income if you can afford it. Obviously saving some money is better than nothing, and at the age of 30, you still have a lot of time on your side. You might think “oh my god I’m 30 now I’m so old…” but the truth is that you still have 35 years until retirement age.
Let’s say you could only save and invest around five percent of a fifty thousand dollar a year income, that means every single year you could still invest twenty-five hundred dollars. Even at twenty-five hundred dollars a year, if you get the average returns of the S&P 500 of 8% by the time you’re age 65, you’ll still end up with an ending balance close to half a million dollars.
Now a quick spoiler alert
The median net worth of someone at the age of 65 in the united states is around 266k, so literally, you could start doing this at the age of 30. Invest $208 a month and you will still be doing way above average at the age of 65.
Our second goal by the age of 30 is to be completely debt-free or at least have a plan to become debt-free by the age of 35. If you are struggling with debt, I would suggest the Avalanche method of paying off your debt. That’s where you make the minimum payments on all of your debt, and then use any extra money that you have leftover to pay off the debt with the highest interest rate. That should save you the most money in the long run when it comes to paying off your debt.
Thirdly, I think your income should be stably sustainable and have opportunities for growth. I really want to emphasize the opportunity for growth point. Ideally, you are increasing your income over time in your 30s so that you can be doing better than the average person in the United States.
Age 40
Now we’re at the grand old point of 40 which is probably the middle point of this article, but there are some really interesting points here and at the age of 50 and 60 that you should definitely keep watching for.
So the median net worth of someone aged 40 is about $80,000. If you are reading this and you’re younger than the age of 30, if you start investing now this target of the median net worth of $80,000 should be pretty easy to achieve. Most experts agree that by the age of 40 you should have around three times your salary saved up for retirement, which is just a goal by the way. You can modify that as you see fit, maybe it’s only two times your salary, or maybe it’s four times your salary it just really depends on your financial situation.
Having three times your salary saved up means that it’ll be a lot easier to compound and invest your savings so that you can easily live off your investments in retirement.
Things To Focus On
At the age of 40, I think there are a few goals you should be shooting for.
First, you should have a number in mind for how much you want to retire with. You’re likely more than two decades away from retirement, but a good rule of thumb is that you want to be able to live off of three to four percent of your total investable assets in retirement.
I always like to use a million dollars as a benchmark, if you have one million dollars invested generating you four percent a year, that means you are getting forty thousand dollars every single year. If you know your lifestyle costs forty thousand dollars a year, then one million dollars should be your target in 25 years.
Let’s say you have 100k invested in your retirement accounts at the age of 40, your target would be a million dollars. You need to figure out how to make 900k by the time you’re 65. That seems a little bit scary, but if you consistently add to your investment just around seven thousand dollars a year, and you get seven percent back on your money which is around the average return of the S&P 500, you’ll actually be just fine.
Our second goal should be to have big expenses planned for. If you’re saving for a college fund this might be your next biggest goal in your 40s, it could also be managing your finances to the point where you know you’ll be able to pay off your mortgage if you bought a house.
Overall at the age of 40, you should have your finances together and know exactly what to prioritize, and what not to.
Lastly, at the age of 40, I think you should at this point have pretty excellent credit. An excellent credit would be a score higher than 750 or 760. If you do have excellent credit you can take advantage of that and possibly refinance at favorable rates, thus saving you even more money.
Regardless of your age, if you do not have a good credit score, I’ll recommend that you seek the help of Credit Pro or CreditFirm. Credit Pro and CreditFirm are credit repair companies, they’ll help you fix your credit score for you.
So that was the age of 40, let’s talk about the age of 50.
Age 50
50 is finally here
The median net worth for someone who is the age of 50 is around 168k, and the amount that experts think that you should have saved by this age is five to six times your salary. If by the time you’re age 50 you make 60k a year, you should have roughly 300 to 360k saved up and invested. Personally, I think that’s a healthy number that we can all aspire to achieve.
Things To Focus On
I think there are two big goals here in your 50s.
First of all, if you have a mortgage, your 30-year mortgage is likely going to be almost done. I prioritize paying off your home as quickly as possible so that you can live a life without any debt burden.
Secondly, diversify your investments even further, perhaps invest in businesses, and real estate, or shift your allocation towards more safe holdings for retirement.
Number three I know I said there were two goals, but there are actually three goals. Gotcha! The third one is knowing how much you want to spend in retirement. It’s likely that your kids are out of the house, now so you can really get a good sense of how much you’re spending on a monthly and yearly basis to plan even further for the next 10 years.
And speaking of the next 10 years,
Age 60
Let’s say you hit the age of 60, the median net worth of someone at the age of 60 is around $213,000 according to CNBC, and it’s at this age you should have saved roughly eight times your income. By now the average salary in America of someone that’s age 60 is between 55k and 60k, so you should be really looking to have saved up at least 450k if not more by the age of 60.
If you’re still going for the one million dollars at retirement, you’ll need a bit more than eight times the national average salary saved up.
The other thing we need to consider is how much that one million dollar number will change adjusted for inflation in the future. If you’re reading this article now and you’re age 25, you might have to save for even a higher number by the time you retire. Hopefully, all of it will be relative and I’m hoping that by reading my articles, you’ll outperform the average individual in the United States.
Things To Focus On
I think the main goals at 60 are the following;
1. Have your house paid off. That should be a no-brainer.
2. Your retirement is teed up, as in there’s no more guessing about how much you’ll need. You’ll know exactly how much you’ll need, how close you are to getting there and have a really solid understanding of your financials.
3. You should be enjoying your life to the fullest. Time is your most important resource, so if you have a lot of finances taken care of by the age of 60 or earlier, you should be really examining how you spend your time and what you want to do with your life.
Alright, so that wraps it up for the age of 60. I hope that you guys enjoyed this article, if you are comfortable sharing your finances drop them below. I’d love to hear from you guys and I hope that you guys check out my other articles. PEACE!
Recommended: How To Invest $100 | 6 Most Profitable Ways
Recommended: 10 Things to do to Retire Early
One thought on “How Much You Need To Save – By Age”