How Much Money Should I Have Saved by Age 50?
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Maybe you’re thinking of retiring by age 50, or shortly thereafter. Or maybe you’re just trying to make sure that you’re on track with your savings. Thinking ahead is smart, and it’s important to start saving as early as possible. Article Sponsored by: Concrete Staining Houston, Texas
But how much should you have saved by the time you hit 50? It turns out the answer to that question is a little complicated.
The underlying fact and thing to keep in mind is that everyone is different. While many financial experts will give you a rule of thumb to go by, just remember that that’s what it is—a rule of thumb.
Most experts will tell you that starting in your 20s, you should be saving at least 15% of your annual income. What usually happens, however, is a little bit different. Usually, people in their 20s start saving about 5% of their annual earnings. This is entirely normal for people of this age group. Once you hit your 30s, you should bump that up to about 15% percent, and stay at 15% for the rest of your life.
When it comes to goal markers, by the time you’re 30, experts say you should have the same amount of your current salary.
However, remember at this point in your life that you’re still young! These benchmarks can put a lot of pressure on young people, who might be stressed seeing the number they “should” be saving.
As people enter their 30s, a lot of them have debt. Cars, school, and houses will all add up. The most important thing during this time is to focus on paying this debt off and maintaining a good credit score. If you’re able to save on top of paying off your debt, then that’s great. But don’t beat yourself up if you have to spend your 30s focusing on the debt side of your financial situation.
Just remember that ideally, by the end of your 30s, you’re saving about 15% of your income.
What about your 40s? Experts will tell you that during your 40s, you should have three times your current salary sitting in your savings. Your 40s should be spent establishing yourself in your career, and gaining power. If you have a family, you should also be thinking about saving for a college fund for your kids.
Your 40s is the time to really sit down and look at your finances. It’ll be a time of growth for you, and the opportunity to take a look and make sure that your savings are at where you want them to be.
By the time you hit 50, you should have six times your salary in savings. So, for example, if your annual salary is $90,000, you’ll want to have $540,000 in your savings.
Now, what do you do if you’re off course? Maybe you’re in your 30s and you’re only saving 10% as opposed to the 15% that’s recommended by experts. If this is the case, it wouldn’t be wise to immediately jump up the preferred 15%. This could be too much of a shock to your financial situation. Instead, you should gradually bump your savings up by 1% every year until you’ve hit your savings goal. This incremental adjustment will be much easier on your finances, and it will be easier for you to adjust to your new savings amount.
So what about after you hit 50? If your goal is to retire around the time you’re 65, and you’ve been sticking to your savings milestones, then you should plan to have eight times your annual salary by the time you turn 60.
Be prepared to start saving aggressively at this point in your life. This is the stage that will really define first of all what you’ll have saved up, and it will also define how you’re going to be spending your retirement years.
By the time you reach the age of 65-67, plan to have about ten times your annual salary saved up in your retirement fund.
Most people plan to retire by the time they reach 65. Setting milestones for yourself for each decade of your life is a great way to keep your savings on track. In short, aim to save 15% of your annual salary each year. By the time you’re 30, you should have your current annual salary sitting in your savings. By the time you reach 50, you should have six times your annual salary saved.
But also remember to keep in mind that these are just guidelines. If you’re 30 and not saving 15% of your annual salary, there’s still plenty of time to catch up. Also keep in mind that everyone’s situation is different and that if you’re not following these benchmarks exactly, that’s okay. You can use them as general guidelines and set your own goals based on them.
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