Savings-to-income ratio at 352 of 8One might be the loneliest number, according to the rock band Three Dog Night. But if you are in your 30s, you want to strive for a one-to-one ratio when you add up your liquid assets and compare them to your annual income. Liquid assets include a 401(k), an IRA or a brokerage account and savings. But leave your home off the list; it can't be converted easily to cash. In other words, a 35-year-old making $50,000 should have $50,000 in savings.The ratio, according to standard wisdom, increases with age. For a couple aged 40, it should be around 1.5 or higher. At age 45, it should be around 3, and at age 50, it should be around 4.5, says Tom Orecchio, principal of Modera Wealth Management in Westwood, N.J. "This ratio will give you a good idea if you are saving enough of your income to reach your retirement goals," he says. Related Articles:Credit reports topic pageCredit cards topic pageCreating an emergency fundFICO score calculatorRelated Links:30s retirement planningEmergency savings calculatorHome sale capital gainsBoost your retirement advertisement
One might be the loneliest number, according to the rock band Three Dog Night. But if you are in your 30s, you want to strive for a one-to-one ratio when you add up your liquid assets and compare them to your annual income. Liquid assets include a 401(k), an IRA or a brokerage account and savings. But leave your home off the list; it can't be converted easily to cash. In other words, a 35-year-old making $50,000 should have $50,000 in savings.
The ratio, according to standard wisdom, increases with age. For a couple aged 40, it should be around 1.5 or higher. At age 45, it should be around 3, and at age 50, it should be around 4.5, says Tom Orecchio, principal of Modera Wealth Management in Westwood, N.J. "This ratio will give you a good idea if you are saving enough of your income to reach your retirement goals," he says.
Bankrate wants to hear from you and encourages thoughtful and constructive comments. We ask that you stay focused on the story topic, respect other people's opinions, and avoid profanity, offensive statements, illegal contents and advertisement posts. Comments are not reviewed before they are posted. Bankrate reserves the right (but is not obligated) to edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.
By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.