If you’re wondering, “How much do you have by 25?” or “How much have you had saved by 40?” you already know that saving for the future is crucial. So, finding out about the average savings by age can help you evaluate your financial plan to see if your earnings are on track.
A survey found that more than half of Americans were changing their priorities to save money for their future. Knowing where you stand can help you make progress toward your retirement goals, as well.
Here we look at the statistics and average cost savings by age. We also highlight the disparities between age groups when it comes to minority demographics.
But first, let’s look at the importance of savings!
Why saving at any age is important
The most important thing you can do for your financial health is to always set aside savings for the future.
If you have less than $4,500 in your bank account, you might want to adjust your budget or make additional income.
Savings alone doesn’t determine success
Remember that everyone has his or her own route to success. Some people save money from an early age, and others make improvements over time.
These are not measures of future financial success. And you may have different savings goals that could lead to you saving more or less than other individuals of your age.
For example, you may realize that you want to retire to a low-cost-of-living region. So, you may decide to spend less on living expenses than someone who lives in an expensive city.
However, knowing what others save on average can be useful, and knowing how much money you need to reach your goals is important.
Average savings by age: How much should you have?
So what are the average savings by age? We’ve broken down the numbers below based on information from the Federal Reserve about the median financial asset balances by age group.
You will also see data from Fidelity on how much your annual salary you should have saved by age.
These are the results of calculations of the total amounts of liquid assets available for savings by age brackets. These assets include bank accounts and investment portfolios.
How much should you have saved by 25?
You are just entering your monetary career at age 25. You might be worried about learning how to budget, and you may be working on paying down student loans as you start your working life.
You may think about your checking account balance right now, but have you ever thought, “how much do I have saved by 25?”
According to the Federal Reserve, individuals between the ages of 35 and 40 had an average savings account of $34,780.
But that doesn’t mean you’re getting less savings. And that’s perfectly fine!
Now is the time to start saving. When you are in your 20s, you have plenty of time to spare. So, choosing to set aside savings and invest now will pay off big time.
How much should you have saved by 30?
If you’re wondering, “How much should you save by 30?” Fidelity recommends saving at least one percent of your yearly income by then.
Suppose you make $50,000 per year. By this logic, you should have at least $50,000 saved at 30 years of age. The Federal Reserve estimated that younger Americans had an average savings of $34,780.
Since the data is not further broken down, it is impossible to state how much more 30-year-olds have preserved than 25-year-olds.
But by the time you’re in your 30s, you may be more focused on other financial concerns than you were in your 20s. For example, you might aspire to purchase your first house. Or setting aside funds for your own children.
With this in mind, the amount you can save will vary. While 30-year-olds may need to have more saved, 70-year-olds may pay less.
How much should you have saved by 35?
Do you want to know how much you should save by 35? The Fed found that people in this age group averaged a savings of $170,740.
A 35-year-old might not have quite as much saved up as an older adult, but you might have some larger savings goals in the future.
You may want to think about retirement. You may want to gradually build up your long-term career portfolio.
According to Fidelity, you should have two your annual pay saved by the age of 35. Whatever you do at age 35, taking saving more seriously is highly recommended.
How much should you have saved by 40?
At 40, you may be closer to a typical savings of $170,740 by age than most individuals would be by the age of 44. Fidelity recommends having at least three times your annual salary saved at 40.
To prepare yourself for the future, you may be saving for college tuition for your children.
And now that you’ve already answered the question, “How much do you need to have saved by 40?”, getting closer to retirement ought to motivate you to save more. After all, your paycheck is reaching its possible career peak in your 40s.
How much should you save by 50?
In your 50s, you’ve likely had more time to build your financial assets. Of course, most people will need to stop saving at some point.
Hopefully, even non-patient individuals can save on at least a moderate basis. Fidelity recommends having six times one’s annual salary saved at age 50.
According to data from the Federal Reserve, those aged 45 to 54 had an average personal wealth of $373,420. The sharp increase could have been the result of people’s greater focus on saving for an extended retirement.
How much should you have saved by 60?
According to Federal Reserve data, Americans aged 55 to 64 had a median balance of $570,250 in financial assets. Fidelity recommends saving eight times your annual salary by age 60.
Since the average household income is around $70,000, those figures don’t quite match up. Americans in their sixties will have a harder time saving for retirement than those in their 20s and 30s.
If you’re 60 years old, full retirement age is on the horizon. You have been setting aside money for a long time to ensure that you can retire comfortably in the future. Now is the time to save for retirement before you can no longer work or cannot work.
Minority demographics and average savings by age
While the average statistics among the age groups we track reflect the situation, we cannot disregard the drastic differences among minority groups in terms of financial resources.
According to the Federal Open Market Committee (FOMC), minorities have lower median financial resources.
Savings differences
The Federal Reserve survey cited in this article shows that White non-Hispanics had an average wealth of $481,430.
In contrast, those that did not identify as Black had an average total wealth of $68,800, while those who identified as Hispanic had an average total wealth of just $50,390.
That said, with expanded access to financial literacy and focused intent, this story can be changed. It is part of our mission at Clever Girl Finance.
How to set savings goals
So you now know how much the average savings by age group is. For better or worse, you have savings goals of some kind.
In an evolving world, it is crucial to plan ahead. It is important to have a plan at all times.
Fortunately, there are no regulations for setting savings goals. You could set up a target for yourself to save up for your next vacation. Or you could put off retirement and save for a later date.
Break your goals down into smaller goals
If your goal is to save the most money possible on gas, breaking that down into smaller chunks is beneficial.
For example, suppose you want to save $1,100 for Christmas shopping by December. If you begin shopping in January, you’ll have to set aside $100 per month to reach your goal.
The same approach can be used for larger goals. Suppose you would like to buy a house with a $10,000 down payment in 4 years. You will need to set aside $2,500 each year to meet your goal.
The sky is the boundary for setting savings goals! Don’t let anything hold you back from setting high savings goals that reflect your values.
How to know how much you need for retirement
When you open retirement accounts or add funds to them, you’ll probably find that everyone’s situation is completely different. Here’s how you can determine how much you should save depending on your unique situation.
Retirement calculator
One of the best ways to see how much money you can save is to use a calculator for retirement planning. These calculators can help you figure out what your expenses and daily life will be like at retirement age.
This enables you to establish the right amount to save rather than just vaguely planning for old age.
Tips for saving the amount you need
As you begin to save at any age, consider your spending habits. It’s fine to buy things, but you must first take account of your savings rate when spending each month. That way you can ensure you reach your targets.
You can also consider how you could save money when you retire. Many seniors spend significantly less than $55,000 per year per household, while others may spend as little as $53,000.
Pay off whatever you can so that your expenses are reduced in retirement. For example, you might repay your mortgage or car loan prior to retirement and pay down credit card debt, only using your debit card.
Make sure that your pre-retirement income is large enough to cover expenses.
You should also consider saving and investing more than just IRAs or 401ks. You may also save money in an emergency fund, and you may choose to invest any extra money that you have as well.
If you aren’t maxing out your retirement account, you can still invest in other assets such as real estate and ETFs.
Understand that everyone’s situation is different. That means that you can save less than someone else with a different goal.
You can save more than average if your life goals allow. Remember that the guidelines for saving money are merely guidelines and you should follow your own individual goals.
You may be planning to live off your investments in retirement. But it is important to consider other sources of income that you have, such as social security benefits or pensions.
In addition, you may make extra income from other sources, such as real estate rental income.
These can also affect your income if you stop working, be sure to budget for them.
Where to keep your savings
These are some of the locations where most cash is saved. Money can be saved in high-yield savings accounts, money market accounts, or CDs (certificates of deposit).
Common places for retirement savings are 401k plans and IRAs.
You may choose to do a combination of saving and spending to be ready for both retirement and expenses that crop up before you retire.
Your nest egg can provide a useful back-up fund in case of an emergency or as a rainy day fund when you finally retire.
How do you compare to the average savings by age?
Whether you are just starting out wondering how much you should have saved by 30, or heading toward retirement at 65, saving regularly is essential to building a bright financial future.
Although these statistics are nice goals to strive for, your financial plan will always look different from average. Rather than worrying about average retirement savings and average savings account balances, remember that every situation is unique.
Remember to budget your financial resources as a unique experience. If you would like assistance beginning your financial savings campaign, consider checking out our free savings challenges or creating a savings plan!
