Savings by Age: How Much to Save in Your 20s, 30s, 40s, and Beyond

As you navigate through life, it’s likely your goals will change and evolve, both personally and financially. But no matter what stage of life you’re in, one thing will always remain the same: You’re never too young — or too old — to save money.

You won’t find any hard and fast rules regarding exactly how many dollars you should save based on your years on the planet. But using your age (or a nearby range) can be a helpful guidepost when calculating an estimate of how much money you should save for various life events. Just remember: Don’t get discouraged if you need to hit pause or fall behind. There’s always time to get back on track.

Aiming for an ideal amount to set aside (or verifying that your super-saver tendencies have you on track) can help you better prepare for whatever the future holds, such as:

• Emergencies (like a natural disaster or unforeseen medical troubles)
• A comfortable retirement
• Pursuing your dreams (a new house, your child’s college)
• Prioritizing your goals

Whether you’re fresh out of school, well into your career, or forging your own path through life, it’s never too late to get started saving or to check to see that you’re heading in the right direction.

Everyone is different, but if you’re wondering, “How much should I be saving?” let the following savings by age benchmarks and advice act as a guide to help take some of the guesswork out.

Savings for Emergencies by Decade

Fast Answer:

• An emergency savings account should ideally hold three to six months’ worth of expenses in easy-to-access cash.
• To keep your emergency savings accessible, consider a high-yield online savings account (not a CD or investment account).

It’s inevitable: Life throws you financial curveballs.

That’s when your emergency fund can save the day.

An emergency fund is cash you set aside in a savings account only for unexpected expenses. If your dog swallows a chew toy and needs a trip to the vet, for example, or your car breaks down and needs a new transmission, the funds in your emergency account can pay for those just-in-case moments.

According to Bankrate, only 39% of Americans have enough cash on hand to cover a $1,000 emergency. If you haven’t started building your cushion yet, there’s no better time than the present.

The ideal size of your emergency fund will likely fluctuate throughout your life based upon your monthly expenses. Rule of thumb? Aim to have at least three to six months’ worth of expenses set aside.

The typical 25- to 34-year-old spends $4,705 each month on both essential and nonessential expenses, according to the 2018 Consumer Expenditure Survey, so the average 30-year-old should have $14,115 to $28,230 tucked away in accessible savings.

Of course, everyone is different. If you rent an apartment, don’t have children, and don’t drive a car, your emergency fund can likely stand to be a lot lower than someone with a mortgage, children in school, and monthly car insurance payments.

To figure out an emergency fund goal that’s more specific to your unique financial situation, plug your numbers into our emergency savings account calculator.

Where you keep your money is also important. An emergency savings account should be kept in a deposit account that earns interest and is liquid (like our Online Savings Account), instead of a certificate of deposit (CD) or an investment account.

Why? It’s simple. Your emergency savings needs to be accessible.

With most CDs, you may have to wait until its maturity date to pull money out. Or, if you withdraw it early, you may have to pay a penalty. Drawing money out of an investment account could also trigger tax consequences, plus it usually takes several days before the cash hits your bank account.

Keeping your emergency fund in a savings account that earns a competitive interest rate means you don’t have to jump through any extra hoops to get cash when you need it. Plus, your money will earn interest at a competitive rate — meaning it’s growing all the time.

Expert Tip: Three to six months’ worth of expenses can feel like an overwhelming savings starting point, especially if you’re living on a tight budget. Remember it’s perfectly okay to start with a smaller savings goal, whether it’s one month of expenses or $1,000. Any little bit you can put away will add up! Then, use our calculator to find out how much you need to save to reach your ultimate goal.

Retirement Savings in Your 30s and Beyond

Fast Answer:

• A general rule of thumb is to have one times your income saved by age 30, twice your income by 35, three times by 40, and so on.
• Aim to save 15% of your salary for retirement — or start with a percentage that’s manageable for your budget and increase by 1% each year until you reach 15%

When it comes to saving for retirement, the early bird gets the worm. The sooner you start saving, the longer you have to take advantage of the power of compound interest, which is the interest you earn on your original principal and any accumulated interest.

According to a recent survey, 64% of Americans could potentially retire broke because they lag behind on saving. A general rule of thumb is to have one times your income saved by age 30. By age 35, you should have saved twice your income and by age 40, three times your income. Considering that the median household income is $61,937, a 50-year-old should have a retirement savings account of about $310,000 if you stick to that plan.

Keep in mind, however, these are rough estimates and the amount you should save for retirement will vary based on a few things:

• your income
• your planned retirement age
• the kind of lifestyle you want to have in retirement

In other words, if you want to retire at age 62 and travel the world, you might need a bigger retirement account than if you plan to retire at 70. Plugging the numbers into a retirement calculator, like Bankrate’s, can give you an idea of whether you’re on pace with your savings progress.

In a perfect world, starting in your 20s and until retirement, you would put aside 10% to 15% per paycheck in your 401(k), 403(b), or a similar tax-advantaged retirement account, like an IRA.

But you may be starting a new career, paying back student loans, or have other financial obligations and aren’t able to save 15% of your salary all at once. If that is the case, start with a percentage that you’re comfortable with and increase your savings rate gradually by 1% each year until you reach the 15% mark. If you’re getting a 1% annual raise at the same time, you won’t even miss the extra money from your paychecks.

Expert Tip: You can turbocharge a 401(k) by saving enough to qualify for your employer’s full match (if one is available). For example, if you set aside 5% of your annual paycheck in your 401(k) and your employer matches 100% of your contributions up to 5%, the annual contribution to your retirement fund will be 10% of your yearly salary. Employer-sponsored retirement programs differ, so check with your employer for eligibility.

If other financial constraints keep you from saving until later in life, consider taking advantage of what’s called a “catch-up contribution.” Some plans let you to make an extra yearly contribution to your tax-advantaged retirement account once you hit age 50. (The amount allowed is determined by the I.R.S.)

When saving for retirement, automate monthly transfers from your checking account to a savings account or an IRA (if it makes sense tax-wise) for a hassle-free way to watch your retirement savings grow. And remember to check in on your savings (ideally, at least once a year) to see how your efforts are paying off.

Finally, don’t forget about Social Security, which you may qualify for starting at age 62. These monthly payments can be used to supplement your retirement savings.

Saving for Future You: Family, Fun, and More

Fast Answer:

• The costs for larger life expenses like new homes, cars, weddings, children, etc. vary.
• Research the average cost of these expenses to help set your savings goals.
• Prioritize your savings when aiming to save for multiple large expenses at once.

As you make progress saving for (not so fun) emergencies and retirement (the end goal), you’ll probably have other goals in the interim that’ll require saving up cash to accomplish.

Maybe you’re renting now and want to become a homeowner — which means you’ll need cash for a down payment and closing costs. Or you’re in a serious relationship and would like to put a ring on it. And after love and marriage, could there be a baby in a baby carriage on the horizon? You’ll want to start saving for college (and lots and lots of diapers).

And that’s not all. You might one day hope to refurnish your living room, upgrade to a more spacious vehicle, or splurge on your dream vacation — Saint-Tropez, anyone?

Of course, saving for these items will vary. But looking at the average cost of each expense can give you an idea of how much you need to set aside.

Expert Tip: The amounts above are based on averages, meaning the actual amount you’ll need to save will probably differ, depending on the circumstances. For example, the cost for a two week vacation in Hawaii will be drastically different than a weekend getaway to your local state park.

Also some, like saving for furniture or a vacation, may be short-term financial goals. But others — a down payment on a house, a wedding, or college, for example — might take a little longer. When you’ve got so many goals, it’s understandable if you don’t know where to start.

Prioritizing can help.

Say you want to get married in the next two years and purchase a home three years after that. You can afford to save $1,500 a month towards both items. In this instance, you might sock away $1,000 each month for the wedding and $500 for the down payment on a house. After you say, “I do,” you can redirect that $1,000 over to your home savings fund.

Our buckets tool can help you organize your savings goals into separate digital envelopes, eliminating the need to open multiple savings accounts for your various savings priorities.

Expert Tip: Prioritizing keeps you from stressing over not saving enough for all the things you want to do with your money. And if you’ve got a plan for saving toward multiple goals, it reduces the chance that something slips through the cracks.

One last piece of advice? No matter your age, put your savings on auto-pilot. Whether it’s for retirement, a road-trip, or a new home, automatically diverting a portion of your paycheck or initiating recurring transfers into your respective savings accounts can help ease the stress of reaching your goals. Plus, when you set it and forget it, spending your cash becomes much less tempting.

When mapping out your financial future, age may act as your savings compass. Let it point you in the right direction, but don’t panic if your path is different from everyone else’s. It’s never too soon or too late to start saving, and with defined goals and a plan, you you have time to get your savings on track.

One savings account, multiple savings goals. Customize and organize all your financial priorities with our Online Savings Account.

Learn more today.