How Much You Should Have Saved At Every Age?


The way you see money changes as you age. At one point you were little and had no worries about money. However, as you grew older, you became aware of the fact that you need money to do just about anything and as such money became more of a focal point in your life. Then, you hit the age where you realized that in order to actually pay for these things, you must have money set aside otherwise you would be perpetually drowning in debt.

Finally, you had the epiphany that you need to eventually amass a ton of savings if you ever want to be able to kiss your cubicle goodbye and enjoy retirement which is why in this article, I am going to share with you how much money you should have saved at every age!

When it comes to money everyone knows how to spend it but only a few know how to keep it and that’s why many people struggle with money. Now, of course everyone knows that you should save yet many people simply don’t. Perhaps they are unable to control their spending or they barely make enough to cover their bills. Needless to say, there are a ton more people who know they should save money than those who are actually doing so. But, there is a more refined question one must ask themselves and that is how much should you save? Now, I am not talking about how much money to save every month, I am talking about the bigger question of how much one must save over the course of their lifetime in order kiss their 9 to 5 life goodbye and retire comfortably. This is the real question that needs to be answered.

Now, the reality of the situation is that the answer to this question is not as simple as you may think. There are several factors involved when calculating your lifetime needs. For example, if you are married with kids you may need more savings than someone who is not married and has no children. Or, you may want to travel the world during your golden years whereas another person may want to live a more modest life in their old age. Because no two people’s financial situations are identical, I of course cannot give exact numbers of how much you should have saved at every age but I can give you a guide to follow to ensure your future financial success.


This guide starts with calculating how much money you’ll need when you go to retire. This is where the 25 times rule, otherwise known as the 4% rule, comes into play. This rule identifies how much money you must have saved in order to retire. That is, you should save at least 25 times your annual anticipated living costs upon retirement so that your retirement account will out-earn your 4% withdrawal rate over time. Now of course anticipating your future expenses is not the easiest of financial tasks which is why indexing up your multiplier when doing this calculation is recommended. When doing this exercise for yourself, some important factors to keep in mind should income whether you anticipate having a mortgage during your retirement years, whether you will be contributing to your children's education or if you have large-scale plans that would require you to live off much more money down the line than you are right now.


Once you incorporate all of these factors and calculate your target retirement amount, you’ve now identified the major goal you want to achieve however like any good goal pursuit, you need milestones to get you there.


These milestones exist as either activities you must complete or certain financial figures you must achieve and they exist in each decade of your life. As such, I am now going to break down what each milestone consists of which will allow you to better understand how much money you should have saved at every age!


So, how much money should you have saved in your 20s?

Your first milestone exists between ages 20 and 29. Your early 20s are probably when you are just getting out of college and looking for a job. If you are in your early 20s it’s okay if you don’t have any savings because most people at that age don’t. If you have any amount of savings at this age I want you to know that you are doing better than a lot of people. One of the reasons many young adults find themselves without savings at this age is because they’re drowning in student loans. Another reason why it may be difficult for you to save at this stage is that you don’t have a means to -simply put, you may have yet to have started your career, making your income very negligible.


This stage, however, is the best stage to start saving. In your early 20s, you may should aim to be saving anywhere from 5-10% of your income. This is a rather low amount however it should offer you other disposable cash to put towards paying down your students debts which should be a priority during these years. Beyond just saving for the present though, you should also open a retirement account like an Individual Retirement Account (IRA) or Tax-Free Savings Acccount (TFSA) to start saving up for retirement. While contributing to this type of account may seem futile during this age range, your future self will definitely thank you for doing so. Moreover, during your twenties, you should have an emergency fund set up that can cover between 3 to 6 months of living expenses. Finally, from a financial education perspective, you should at the very least have a working budget set up so that you can ensure that you’re allocating your income as wisely as possible.

But what about your 30s?

By this age, you should be entirely on your own and not dependent on others. That means you should have enough money to pay for your living expenses and all your other bills. You should also have cleared off your student loans at this age, as most people report that student loan affects their financial life and makes it difficult to save. However, if you haven’t cleared off your debt yet, then you should at the very least have a robust plan that you can follow to do just that.


In the earlier years of this decade, you should have at least half of a year’s gross salary set aside for retirement and a full year’s worth by the end of the decade. Now, maybe this doesn’t seem like a lot to have set aside by this time however you have to keep in mind that typically people’s expenses spike in their 30s due to an increase in financial obligations like having kids and taking on a mortgage. Regardless of the expenses you have at this stage of your life, it’s essential to reach this milestone because it will allow you to have the power of compound interest on your side. For example, if you have $100,000 invested in your retirement account, without every contributing to it, at a 7% return over 30 years, you’d have over $750,000 set to enjoy in your golden years. Now of course you will still be contributing to this account over time but this is just an example of how powerful compound interest can be!


Moreover, at this point, you should have an emergency fund that contains one year’s worth of living expenses to cover any unforeseen events. That way you can focus on investing more and building your retirement account. You should consider investing in an HSA and 401k and setting up a savings plan for your children’s education and also have aiming to have a credit score between 700 and 750. This is the age where you should invest more and diversify your portfolio while learning in order to stand out and make more money.


But what about your 40s?

At this stage, you are getting closer to the peak of your career and your salary should increase too. You should also focus on increasing your savings and investment as your income increases at this stage. You should have at least 3 times your annual income saved up for retirement. So if you’re making $100,000 a year then aim to have at least $300,000 stashed away. While focusing on saving for retirement, you should still continue to cultivate your skills at work in order to stay relevant in your field and ensure that your salary continues to increase in your older age.


Now, let’s talk about your 50s.

If you started saving early then this is the milestone where the results of compounding are very noticeable. Your money begins to grow more quickly than before because of compound interest. At this stage, you are expected to have at least 6 times the amount of your annual income in your retirement savings and the expectation is that you continue to earn more and more money every year as you get raises and promotions at work. You should also still maintain that healthy emergency fund containing one year’s worth of expenses.


But, how much money should you have saved at 60 years?

This milestone can be rewarding if you have diligently followed your savings plan. If you started saving very early you would have increased your total savings because of the effect of compound interest. You are getting closer to the age of retirement and you need to clear off your debt to enjoy your retirement. If you bought a home with a mortgage loan you should have paid off everything at this age. You should also have at least 8 times your annual income saved for retirement. Remember, if you want to retire you should have at least 25 times your annual expenses stashed away at in this age bracket you should be earning at the peak of your potential.

Finally, how much money should you have saved at retirement?

At this stage, you are now ready to call it quits and enjoy your golden years, however that will only be possible if you have been diligent in saving over the course of your lifetime. At this stage, you have access to your money and you can withdraw from your retirement accounts without facing any penalty. You will also get some retirement benefits and social security but you should have 10x your annual income saved up for this stage.

Now that you know how much you need to set apart for each financial milestone it is also necessary to know how to work towards it. The first step in achieving each milestone is to budget your money. You will need to cut out unnecessary spending. This will help you to save more money.


If you have any debt, make plans to pay them off as quick as possible. Debts can really affect your savings as it is difficult to save money when you still have debts to pay. It is also important to have an emergency fund in case any unexpected financial situation arises. The emergency fund should be at least 3 months of your monthly living expenses and more depending on your age and risk tolerance.


Finally, think about your savings as a long term goal rather than a short term goal. This will help you remain focused and disciplined to keep saving money. Make plans to save enough money at each milestone. There may be times where you won’t meet your milestone goals for some reason. It may be due to you not starting to save early enough or having made some large impulse purchases. Luckily, by seeing this ultimate milestone as a worthwhile journey, you can remain focused and take the necessary actions to succeed!


In fact, setting up these financial milestones will offer you many benefits. First, it helps you achieve financial freedom early. It becomes easier to save towards your retirement when you have a financial milestone. It breaks down your savings goals into smaller, more manageable targets. You will know how much you need to save at each milestone and this makes it easier to work towards it. It also makes you think of savings in percentages and not some number that may appear to be impossible to achieve. Not to mention, it’s not feasible to set one number for everyone therefore the percentage method simply makes more sense. And with that said, you now know how much you should have saved at every age!