How Much Money Should You Have Saved at Each Age?

Q: When is the best time to start saving?

Ideally, you’ll want to start saving for retirement in your 20s when you start earning a regular paycheck. The sooner you start contributing to a 401(k) or other retirement fund, the faster your money will grow, thanks to the power of compounding (that’s when interest you earn also earns interest).

Q: How much should I save each month?

How much you should save each month will depend on your age and income. One rule of thumb is to aim to put around 20% of your take-home pay into savings (including retirement). If that’s too much, it’s fine to start with just 5% (or even less) and build as your income grows.

Q: Can I have too much money in my savings account?

Savings accounts generally don’t have maximums but keep in mind that bank accounts are only federally insured up to $250,000 per account holder, per institution in the event of bank failure. Also, keep in mind that savings accounts generally pay relatively low interest. Having too much money in your savings account means you may be missing out on an opportunity to get a higher return by investing your money. Though investing carries risk, you can potentially get a much higher return than you could in a savings account over time.

How Much Should I Have in Savings at Each Age?

Jacqueline DeMarcoUpdated February 21, 2023

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

There’s no one-size-fits-all number for how much money you should have saved at any age, since the answer will depend on your income, expenses, goals, and lifestyle. There are, however, several general guidelines that can help you figure out how much you should have socked away for emergencies, retirement, and other savings goals at different ages and stages of life.Here’s a closer look at how to determine the right amount of savings to have in your 20s, 30s, 40s, 50s, and beyond.

Types of Expenses You Should Budget For

Generally, your first savings goal is to have at least three to six months’ worth of living expenses set aside to cover any unexpected bills or a job loss. Some people (like those who are self-employed) may want to aim for 12 months’ worth of expenses. Ideally, you’ll want to have this in a separate savings account, so you aren’t tempted to spend it on something else. To determine how much to set aside, you’ll want to look at your current living expenses — both fixed and variable.

Fixed Expenses

Fixed expenses are recurring bills that stay roughly the same from one month to the next. Fixed expenses may include:

Rent/mortgage payments
Car payments
Other loan payments
Utility bills
Internet /cell phone service
Insurance premiums
Tuition fees
Childcare costs
Steaming services
Gym membership fees

Variable Expenses

Variable expenses are costs that change from one month to the next and can be more difficult to budget for than fixed expenses. You may want to track your spending for a few months to get a sense of how much you spend, on average, each month on variable expenses. Here’s a look at some common variable expenses:

Groceries
Gas/transportation
Dining out/takeout
Entertainment
Hobbies
Home decor
Clothing
Travel

How Much You Should Have In Savings

Once you have a sense of your monthly living expenses, you can calculate how much you should have in emergency savings. You can use your total monthly expenses to do this calculation or only include essential spending, assuming you’ll cut out nonessential spending should you have an emergency expense or lose your income.Another savings guideline you may want to keep in mind is based on the 50/30/20 budgeting rule. This framework dictates that 20% of your take-home pay should go toward savings and debt repayment (beyond the minimum), 50% should go to needs, and 30% to wants. (This is just one possible example.)The age-based saving guidelines below are based on the 20% saving target and the average salaries of people working full-time in the U.S. Keep in mind, though, that your monthly savings target may be different depending on your income. Also, the 20% rule may not be realistic if the cost of living is high in your area. Recommended: How Much Does the Average American Have in Savings?

How Much Do You Need to Save in Your 20s?

There’s no exact answer to the question, how much money should I have saved by 25? However, here’s an example of what we get if we use the 20% savings goal and average income statistics.Based on 2021 data from the U.S. Bureau of Labor Statistics, the average household income after taxes for those under 25 is $44,389, or about $3,700 per month. So, you’d want to save around $740 per month, including your (and any employer’s) contributions to your 401(k) at work.Of course, if your income is much lower, or higher, your number will look different. Also, 20% is a big number in your 20s, so you may want to start by putting just 5% of your take-home pay into savings and gradually build from there.Recommended: Breaking Down Different Bank Account Types

How Much Do You Need to Save in Your 30s?

As your income grows, you may want to start putting more money into savings, especially if you’re saving for large expenses like buying a home and having a family. Based on government data, the average after-tax household income for people aged 25 to 34 is $78,214, or around $6,500 per month. Using the 20% savings goal, you’d want to save around $1,300 per month, including your (and any employer’s) retirement fund contributions.Again, this number will look different depending on your income, and you may not be able to swing 20% if the cost of living is high in your area.Recommended: 8 Popular Budget Apps for Couples

How Much Do You Need to Save in Your 40s?

In your 40s, you may be saving for your kids’ college education, while also keeping a close eye on your retirement fund. Using government data for the average after-tax household income for people aged 34 to 44 ($97,916 or around $8,200 per month), and applying the 20% savings rule of thumb, you’d want to save around $1,640 per month. This number includes anything you are putting in your savings, retirement, and college savings accounts. Your number may need to be larger or smaller depending on your income, goals, and expenses.Recommended: Guide to Saving Money for Kids

How Much Do You Need to Save in Your 50s?

In your 50s, retirement is not such a far-off savings goal. So this can be a good time to assess how much you have in a 401(k) or Individual Retirement Account (IRA), and determine if you need to make any adjustments to your contributions. Keep in mind, though, that there are limits to how much you can put into a retirement account each year. Based on average after-tax earnings for people aged 45 to 54 ($103,497 or around $8,600 per month), and using the 20% savings rule of thumb, you’d want to save around $1,700 per month, including any contributions you (or your employer) are making to your retirement account. Again, your number may look different.

How Much Do You Need to Save in Your 60s?

At this point, many workers are nearing retirement age and will need to have enough savings to maintain a comfortable lifestyle after they retire (more on how much you’ll need to retire below). While you’re still working, though, you’ll want to keep contributing to your retirement fund. Based on government statistics, the average household income for people aged 55 to 64 is $85,573, or around $7,100 per month. Using the 20% rule of thumb savings goal, you’d want to save around $1,420 per month in your 60s. Depending on your income and expenses, of course, your number may look different.Recommended: Life Insurance vs Savings Account

How Much Should Be In Your Emergency Fund?

As mentioned above, it’s a good idea to have at least three to six months’ worth of living expenses (and possibly more) set aside in an emergency savings fund to cover unexpected bills or a job loss. The following emergency savings chart is based on data from the U.S. Bureau of Labor Statistics Consumer Expenditure Survey for average spending for each age group.

Age	Emergency Savings Goal
Under 25	$10,516 to $21,032
25 to 34	$15,976 to $31,953
35 to 44	$19,928 to $39,856
45 to 54	$20,964 to $41,927
55 to 64	$17,643 to $35,285

Recommended: Checking vs Savings Account Differences

How Much Should You Save for Retirement?

Experts advise putting aside around 5% to 15% of your monthly income for retirement. That may sound daunting, especially if you are just starting out in your career, but keep in mind that any matching funds your employer offers count toward that percentage. So if you put aside 5% of your paycheck into your 401(k) and your employer adds another 5%, you’re doing well at 10%.How much money should you have in savings for retirement? The answer to that question depends on your age. Fidelity Investments has developed the following guidelines:

1x annual income by age 30
3x annual income by age 40
6x annual income by age 50
8x annual income by age 60
10x annual income by age 67

If you can save more than this, great. If you are not even close to this target, don’t panic. The key with retirement savings is to save what you can — and to start early. In fact, the earlier you start, the easier it will be to reach your retirement savings goal. This is due to the power of compound interest, which is when the interest you earn on your savings also earns interest.

Other Popular Savings Goals

You probably have other goals besides saving for emergencies and your future retirement. These might include:

Making a down payment on a home
Buying a car
Paying for a wedding
Going on vacation
Buying furniture
Buying electronics
Paying for a child’s education

For savings goals that you want to accomplish in the next few months or years, consider putting the money in a savings account that earns a competitive annual percentage yield (APY), such as a high-yield savings account, money market account, or certificate of deposit (CD).For savings goals that are at least five years off, you may want to consider opening a nonretirement investment account at a brokerage house. While investing involves risk, it also has the potential to yield much higher returns than you can get in a savings account.

Tips for Saving Money

Here are some tips for saving money that can make it easier for you to reach your financial goals.

Pay Off Debt

Paying off debt can help you save more money by eliminating interest payments. Spend some time making a plan to pay down debt as quickly as possible, and then once the debt is paid off, redirect what you were previously spending on monthly debt payments to savings.

Automate Savings

Also known as “paying yourself first,” automating savings involves setting up an automatic transfer of a set amount from your checking to your savings on the same day each month (perhaps on the day your paycheck clears). It’s fine to start with just a small monthly transfer — even small deposits can add up to significant savings over time.

Take Advantage of Employer Matches

If your employer matches your 401(k) contribution up to a certain percentage of your income, it can be wise to contribute at least that much from each paycheck. That way you can take full advantage of the match — which is essentially free money.

The Takeaway

So how much should you have in savings? It depends on your age, income, monthly living expenses, lifestyle, and goals. A good rule of thumb is to put around 20% of your take-home pay into savings and debt repayment above your minimum payments. This includes money you’re putting into a retirement fund at work or on your own, as well as money you put into a savings account for your near-term goals, such as building an emergency fund or saving up for a car or vacation.If you’re looking to get the best rate on your savings, Lantern by SoFi can help. With our online banking marketplace, it’s fast and easy to compare high-yield savings accounts based on APY, fees, and balance minimums. Lantern can help you compare online savings accounts and find today’s best rate.

Frequently Asked Questions

When is the best time to start saving?

How much should I save each month?

Can I have too much money in my savings account?

Photo credit: iStock/pixdeluxe

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About the Author

Jacqueline DeMarco

Jacqueline DeMarco is a personal finance writer and editor based in Southern California. While she spends the bulk of her time writing about complex financial issues, she also tackles a variety of subjects ranging from food to fashion to travel. Her work can be found across dozens of publications such as Credit Karma, LendingTree, Northwestern Mutual, The Everygirl, and Apartment Therapy.

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