Savings by Age: How Much to Save in Your 20s, 30s, 40s & Beyond | Ally (2024)

FAQs

Savings by Age: How Much to Save in Your 20s, 30s, 40s & Beyond | Ally? ›

Fast answer:

If you're 30 and wondering how much you should have saved, experts say this is the age where you should have the equivalent of one year's worth of your salary in the bank. So if you're making $50,000, that's the amount of money you should have saved by 30.

As a general rule of thumb, you'll want to have saved three to eight times your annual salary, depending on your age: 40: At least three times your salary. 45: Around four times your salary. 50: Six times your salary.

While it would be ideal for young adults to set aside 20% of take-home pay for savings, between student loan debt and a limited income, this goal might not be realistic. If you're working with a tight budget, aim to save as much as you can, even if you can't stick to your 20% goal.

By age 35, aim to save one to one-and-a-half times your current salary for retirement. By age 50, that goal is three-and-a-half to six times your salary. By age 60, your retirement savings goal may be six to 11-times your salary. Ranges increase with age to account for a wide variety of incomes and situations.

The average savings for individuals under 35 is $11,200. Individuals between the ages of 35 and 44 have an average savings of $27,900.

The average American has $65,100 in savings — excluding retirement assets — according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 5% increase over the $62,000 reported in 2022.

At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.

Rowe Price addressed retirement adequacy in a 2024 study that suggested a typical person should have 2.5 times to 4 times their salary saved by age 45. The assumptions used in this analysis were typical of conventional financial planning benchmarks, including: Retiring at age 65. Saving in a tax-deferred retirement ...

One common benchmark is to have two times your annual salary in net worth by age 35. So, for example, say that you earn the U.S. median income of $74,500. This means that you will want to have $740,500 saved up by age 67. To reach this goal, at age 35 you may want to have about $149,000 in savings.

What is a good amount to have saved? ›

Rule of thumb? Aim to have three to six months' worth of expenses set aside. To figure out how much you should have saved for emergencies, simply multiply the amount of money you spend each month on expenses by either three or six months to get your target goal amount.

“Individuals should limit the amount of money in savings accounts to the amount they need to live for two months as long as they can easily access their funds in a safe money market account that pays much higher interest,” said accredited financial counselor Camille Gaines, founder of Retire Certain.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

“By the time you're 40, you should have three times your annual salary saved. Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.”

Depositing $20,000 in a savings account is wise when you have a plan for the money, such as a near-term expense or rainy day fund. For long-term goals, like retirement, you might be better served by opening a brokerage account or certificate of deposit (CD).

There's nothing wrong with keeping $10,000 in a savings account. But it might not earn you the highest yields. CDs and brokerage accounts could be better homes for your cash in some situations.

By the time you're 25, you probably have accrued at least a few years in the workforce, so you may be starting to think seriously about saving money. But saving might still be a challenge if you're earning an entry-level salary or you have significant student loan debt. By age 25, you should have saved about $20,000.