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

As a popular song from the 90s declares, age ain’t nothing but a number.

But as it turns out, age is a good guidepost when calculating how much money you should save for various life events. That’s because aiming for an ideal amount to set aside (or verifying that your super saver tendencies have you on track) can help you be better prepared for whatever the future holds, such as:

• Emergencies (like a natural disaster or unforeseen medical troubles)
• Pursuing your dreams (a big wedding, a house, or comfortable retirement)
• Paying it forward (helping your children pay for college)

Whether you’ve only lived a couple decades or are well into the prime of your life, it’s never too late to get started saving or to verify that you’re right on target. Here’s how you can help take the guesswork out of the process and use the following savings benchmarks and advice as a guide.

Savings by Age for Emergencies

It’s inevitable: Life throws you a financial curveball.

That’s when your emergency fund saves 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 percent 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 time to lose.

As you can see from the chart above, the ideal size of your emergency fund fluctuates throughout your life and depends upon your monthly expenses. For example, as you get older, it’s more likely that your house will be paid off and you won’t have a mortgage payment as part of your regular expenses.

The rule of thumb is that you should have at least three to six months’ worth of expenses set aside in an emergency fund. The typical 25- to 34-year-old spends $4,403 each month on both essential and nonessential expenses, according to the 2016 Consumer Expenditure Survey, so the average 30 year old should have $13,209 to $26,418 tucked away in cash savings.

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

It’s not enough to just sock away money though. You need to keep your savings in the right spot: in a deposit account that earns interest and is liquid (aka savings account) instead of a certificate of deposit or an investment account.

Why?

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 trigger tax consequences, plus it usually takes several days before the cash hits your bank account.

Keeping your emergency fund in a high-yield savings account means you don’t have to jump through any extra hoops to get cash when you need it.

If your savings account balance won’t cover at least three months’ worth of expenses (or you haven’t started saving yet), don’t think your financial future is doomed. Say that you’re 28 years old and your goal is to save $13,000 by age 30. To reach your target, you need to set aside $541 per month for the next two years.

Expert Tip: When your budget doesn’t allow you to save that much, it’s perfectly okay to start with a smaller savings goal. Any little bit you put away adds up. Use our calculator to find out how much you need to save to reach your goal. Or take a look at your monthly expenses and do a bit of math (grade school level, we promise!).

Savings by Age for Retirement

Without a doubt, 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, 42 percent 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 $59,039, a 50-year-old should have a retirement savings account of almost $300,000 if you stick to that plan.

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 to make that happen. 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.

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

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 percent of your annual paycheck in your 401(k) and your employer matches 100 percent of your contributions up to 5 percent, the annual contribution to your retirement fund will be 10 percent of your yearly salary. Employer-sponsored retirement programs differ. Check with your employer for eligibility.

If you can’t save 15 percent of your salary all at once, increase your savings rate gradually by 1 percent each year until you reach the 15 percent mark. If you’re getting a 1 percent annual raise at the same time, you won’t even miss the extra money from your paychecks.

But if other financial obligations 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.

Saving for a House, Wedding, and More

As you make progress saving for emergencies and retirement, you might have other savings gaps that you’d like to fill.

Perhaps you’re renting now and want to become a homeowner, which means saving up some cash for a down payment and closing costs. Or you’re in a serious relationship and would like to make it official. So you’re looking to purchase an engagement ring. And after love and marriage, maybe there’s a baby in a baby carriage on the horizon? You’ll want to start saving for college.

And that’s not all. You might be interested in saving for a new couch, a more spacious vehicle, or a splurge vacation for your parents to thank them for being so good to you.

How much should you be saving for these items? The shorter answer is, it depends. Looking at the average cost of each expenses 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 will 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.

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 towards multiple goals, it reduces the chance that something slips through the cracks.

Your financial goals may change as you age, but one thing will always remain the same: You’re never too young — or too old — to save money. Use your years on this planet as a guide, but don’t get discouraged if you need to hit pause or fall behind. There’s always time to get back on track.

Start saving for a rainy (or sunny) day today.