How much should you have in savings at each age?

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One question that people find themselves struggling with is how much they should be saving. While it will certainly depend on your situation, there are general guidelines.

Aim to have at least your salary saved for retirement by your 30th birthday, three times your salary by your 40th birthday, six times your salary by your 50th birthday and eight times your salary on your 60th birthday, according to Fidelity.

While it will certainly depend on your situation, here’s a look at what experts suggest you save based on your age, income and monthly expenditure.

Age Retirement saving goal Emergency saving goal
30 $74,082 $14,114 to $28,228
40 $289,743 $17,800 to $35,599
50 $656,196 $18,847 to $37,694
60 $706,736 $16,553 to $33,106

Note: Retirement savings goals are based on Fidelity’s recommendations above using data in the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, 2018. Emergency savings goals are calculated using the average annual expenditure mean for that age group in the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, 2018. The monthly average is multiplied by three and six months to get the range.

Think of these savings targets as less of an exact number and more of a general guide. It will show you how your personal savings and retirement account balances stack up to the averages. Below you’ll find a full savings guide that estimates how much you should have in savings and your retirement accounts right now, and at different age milestones over the course of your life.

How much do I need in an emergency fund?

Let’s start with your emergency fund. Standard financial advice says you should aim for three to six months’ worth of essential expenses, kept in some combination of high-yield savings accounts and shorter-term CDs.

“For a working individual earning income, the goal should be to have just enough cash to provide an emergency buffer to protect against any pitfalls that could hinder financial well-being,” says Sergio Garcia, a certified financial planner at Brennan Financial Services.

Broadly speaking, there are six key costs to focus on: housing, transportation, food, health care/insurance, utilities and other household expenses, with the first two typically carrying the largest monthly payment.

How much you need to save to survive an adverse life event comes down to you and your family’s financial situation.

A two-income family, for example, may only need to cover three months’ worth of expenses. But if there is only one income, or wages are largely commission-based, “the amount held in cash should be closer to six months of expenses, or even longer,” Garcia says.

An easy formula for figuring out what your suggested emergency savings range may look like is by multiplying your monthly expenses by three and then by six.

You can also get a sense of what your savings’ burden looks like by age by looking at data from the Bureau of Labor Statistics (BLS) and Federal Reserve.

How much do I need to save in my 20s?

Households led by someone between the ages of 25 and 34 earn an average of $74,082 a year, according to the BLS’s 2018 Consumer Expenditure Survey. If you take conventional wisdom, this household, which has one child, on average, should have about that much (one times their salary) socked away in retirement accounts.

Check out our retirement calculator to get an in-depth look into your specific retirement needs.

As for your emergency fund, these households spend a monthly average of about $1,636 on housing, $859 on transportation, $612 on food, $256 on health care and $281 on utilities. Toss in an estimated $64 per month on other household expenses and that monthly essential spending costs $3,708.

Saving anything may seem like a challenge after graduating. But the important thing is to start saving, and to start small, such as putting aside a few hundred dollars into an emergency fund.

Consider taking on a side gig or second job to generate a little extra income for your savings.

As you gain work experience and move onto a career track, you can amp up your contributions to your emergency fund and to your retirement account as well.

Here’s what you should plan on saving by the time you reach age 30:

Retirement savings goal: $74,082

Emergency savings goal: $14,114 to $28,228

How much do I need to save in my 30s?

Those aged 35 to 44 earn an average income of $96,581, according to BLS data. Conventional wisdom states this couple should have three times that amount saved for retirement.

Their estimated average monthly spending consists of $1,978 on housing, $987 on transportation, $818 on food, $360 on health care, $374 on utilities and another $83 on other household expenses. That comes to a total of $4,496 a month.

Retirement savings goal: $289,743

Emergency savings goal: $17,800 to $35,599

How much do I need to save in my 40s?

This is the time you hit your peak earnings. It’s also when you’ll spend the most money in your life.

Those aged 45 to 54 earn an average yearly income of $109,366. Experts tell these stressed-out folks they need six times earnings in their retirement accounts.

That might be difficult due to their increased spending. Housing costs actually go down slightly to $1,964 a month, $960 on transportation, $794 on food, $428 on health care, $403 on utilities and $103 on other household expenses That totals $4,652 a month.

Retirement savings goal: $656,196

Emergency savings goal: $18,857 to $37,694

How much do I need to save in my 50s?

Time to wind down. You’ve probably moved on from the most stressful period of your career, either voluntarily or not, and now you’re preparing for the last third of your life and retirement. That’s why earnings and spending start to fall.

Those aged 55 to 64 earn an average yearly income of $88,342. You’ll want to have saved at least eight times that for retirement.

Thankfully you may need less in your savings account during this time. You spend $1,742 on housing, $870 on transportation, $669 on food, $479 on health care, $375 on utilities and $100 on other household expenses. That’s a monthly total of $4,235.

Retirement savings goal: $706,736

Emergency savings goal: $16,553 to $33,106

How much do I need to save by age 60?

By the time you’re in your mid-60s, there’s a good chance that you’re settling into retirement and enjoying the downtime.

For some, this may mean spending more time with your grandkids while other retirees may finally take that big vacation they’ve been dreaming of. Either way, both lifestyles still require money.

At this state of life, those aged 65 and older average yearly income of $51,624. You’ll want to have saved at least eight times that for retirement.

You spend $1,411 on housing, $606 on transportation, $551 on food, $567 on health care, $317 on utilities and $99 on other household expenses. That’s a monthly total of $3,551.

Retirement savings goal: $706,736

Emergency savings goal: $16,553 to $33,106

Other common savings goals

Of course, there is more to life than simply saving up for emergencies or socking away every spare penny for your retirement.

Important as that can be, you’ll also want to save so you can take advantage of the good things life throws your way, whether it’s getting married, buying a house or simply going on a Caribbean vacation with your family.

Whatever it is, you’ll want to have some money saved up, especially if you want to avoid getting saddled with thousands of dollars in expensive, credit-card debt.

You may want to open separate savings accounts for these additional expenses in order to avoid diluting your emergency fund. If you are looking to save a couple years out, say for a new car or down payment on a home, you might consider putting money into a money market fund or a CD, which could earn a bit more interest than your typical savings account.

However, when you start saving for college for a child, the costs graduate into an entirely new level of expense. For the 2018-2019 school year, the average tuition and fees for students living on-campus at a non-profit private college was $51,874 and public colleges averaged $24,869 for in-state students, according to the National Center for Education Statistics.

For parents, that means having to save a lot of money. (You can crunch the numbers using Bankrate’s college cost calculator.)

For college, you may want to look at a 529 savings plan, which is offered by most states. These college savings plans work like an IRA or 401(k), with contributions invested in mutual funds and other financial assets. Money invested in 529s are after-tax dollars, but your earnings grow tax free.

It’s never too early to start saving

Your 20s are a great time to start saving.

It’s okay to start small, the important part is that you’re thinking about your financial future. As you progress in your career and become more financially stable, you can increase your contributions.

Paying off high-interest student debt and automating your savings so you squirrel away a piece of each paycheck are good places to start.

What you can do?

An easy way to increase your savings is by putting it into a high-yield savings account or money market account. Both of these options offer a boost in earnings with minimal effort, but they are also highly liquid meaning you can easily access them without a penalty in case an emergency arises. 

Remember, your retirement savings has some advantages. The contributions you make in your 401(k), for example, aren’t taxed when you invest the money, and you might also get a matching contribution from your employer. The money itself takes advantage of compounding interest. If you save 10 percent to 15 percent of each paycheck, including any match, you’ll be on track.

Your emergency savings, meanwhile, is funded with after-tax money that earns barely any return at all.

Prioritize your savings goals

Budgeting and then saving is the first step. But then you have to make sure you’re properly prioritizing your savings goals.

Consider an emergency fund to be your most important savings goal. Saving for this during good times is going to help you during an inevitable bad time. There’s no way to predict the cost of that unplanned life event.

If you get lucky with a salary raise or bonus, take it straight to the bank and try to live beneath your last salary. And when a debt is paid off, or an ongoing expense evaporates, put that money toward your emergency fund.

Automate as much as possible

Not having to remember to put away money makes saving easier. Automating saving is one of the most effective ways to achieve your savings goals. There are a couple of ways to do this:

  • Have your employer put part of your direct deposit into a savings account.
  • Set up a recurring transfer from your checking account to your savings account.

This same principle applies to contributing to retirement. Those fortunate enough to have a 401(k) plan at their workplace can automate their retirement savings. This again shows the power of the set-it-and-forget it method of saving.

Consider investing

A savings account might not be the best option for long-term money. Once you have an emergency fund, you might be ready to invest.

You’ll also want to determine:

  • Your time horizon for when you’ll need to access the money you’re investing;
  • The purpose of the money being invested; and
  • Your risk tolerance for the money.

Savings accounts and CDs that are within FDIC limits and guidelines are some of the safest places to put your money.

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