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Savings-to-income ratio at 35
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Savings-to-income ratio at 35

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.


 

 

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