Whether you're asking "How much should you have saved by 25?" or "How much should you have saved by 40?" you know that saving for your future is always critical. So, learning about the average savings by age can help you size up your finances to see if you are on the right track.
Recently, over half of Americans in a survey said that they are changing their priorities to save more money for their future. Knowing where you stand can make sure you are on target for your retirement goals, as well.
In this article, we take a closer look at the numbers and average savings by age. We also highlight the disparities when it comes to minority demographics.
But first, let's discuss the importance of savings!
Why saving at any age is important
Whether you are just starting out or well into your financial journey, the most important thing you can do is to consistently tuck away funds for your long-term financial stability.
The average American has about $4,500 in their savings account. If you aren’t saving anything for your future, that’s likely a sign that you need to rework your budget or pursue income-boosting opportunities.
Savings alone doesn't determine success
Keep in mind that everyone has a different path to financial success. Some start saving early, while others make up ground later on.
With that, these averages are in no way a measure of your future financial success. And you likely have unique savings goals that may mean you are saving more or less than others at your age.
For example, you may know that you want to retire to a low-cost-of-living area. So, you may decide to save less than someone that is planning to retire in an expensive city.
However, having an idea of what others are saving on average is good to know, and understanding how much money you need for your goals is crucial.
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 data from the Federal Reserve about the mean financial asset balances by age group.
You will also see information from Fidelity about how many times your annual salary you should have saved by age.
These numbers reflect the total amount of liquid assets for savings based on age brackets. These financial assets include bank accounts and investment portfolios.
How much should you have saved by 25?
At 25, you are just starting out your financial journey. You may be focused on learning how to budget and perhaps working on paying off student loans as you start your career.
It's possible that you haven't thought much about your bank account balance at this point, let alone pondered the question, "how much should you have saved by 25?".
According to the study, the Federal Reserve found that people under the age of 35 had an average savings of $34,780.
But since you are on the younger side of this large age bracket, you might have considerably less savings. And that’s okay!
Now is the time to start saving. When you are in your 20s, time is really on your side. 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 asking, “How much should you have saved by 30?” According to Fidelity, you should aim to save at least 1x your salary by the time you are 30.
Suppose you make $50,000 per year. By this logic, you should have at least $50,000 saved at 30. The Federal Reserve study found that people under the age of 35 had an average savings of $34,780.
Since the data isn’t broken down any further, it is difficult to say how much more 30-year-olds have saved than 25-year-olds.
Your 30's may bring different financial priorities
But when you reach your 30s, you might be focused on different financial goals than in your 20s. For example, you might be saving up to buy your first home. Or setting aside funds for the children you hope to have.
With this in mind, the answer to how much you save may vary. Though 30-year-olds will likely need to have a bit more saved.
How much should you have saved by 35?
Want to answer, "how much should you have saved by 35?" The Federal Reserve found that people between the age of 35 and 44 had an average savings of $170,740.
A 35-year-old might not have quite that much saved up. But you’ll likely have some bigger savings goals on the horizon.
Maybe you are starting to think about retirement. Maybe you are working to build your career for long-term financial earnings.
According to Fidelity, you should have twice your annual salary saved at 35. Whatever you do at 35, taking saving more seriously is a great idea.
How much should you have saved by 40?
At age 40, you might be closer to the typical savings by age of $170,740 that people between the age of 35 and 44 had in 2019. Fidelity recommends having at least three times your annual salary saved at 40.
In addition to saving for your own future, you may be preparing to cover the cost of college degrees for your children.
And now that you've answered the question, "how much should you have saved by 40?", creeping closer to retirement should encourage you to save more. After all, your earnings are hitting their potential 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 have to hit pause on their savings goals at some point.
But hopefully, you’ve been able to save on at least a semi-regular basis. Fidelity recommends having six times your annual salary saved at age 50.
According to Federal Reserve data, people aged 45 to 54 had an average of $373,420 in financial assets. That sharp increase might be due to an increased focus on paying for an extended retirement.
How much should you have saved by 60?
Based on Federal Reserve data, Americans aged 55 to 64 had an average of $570,250 in financial assets. Fidelity recommends that you have eight times your annual salary saved at age 60.
Since the median household income is currently a little over $70,000, those numbers don’t quite stack up, but they're close. Most Americans in their 60s will have to make up ground in terms of saving for their retirement.
When you’re 60, full retirement age is just around the corner. In the best-case scenario, you’ve been saving for retirement for quite a while. But if not, now is the time to tuck funds away before you want to stop working or are unable to continue working.
Minority demographics and average savings by age
While the statistics we cover below represent the averages across age groups, we cannot ignore the stark disparities among minority communities in terms of financial assets.
According to data from the Federal Reserve featuring the mean financial assets, minority communities have significantly smaller financial assets.
In the Federal Reserve study we reference throughout this article, people that identified as White non-Hispanic had an average of $481,430 in financial assets.
In contrast, people that identified as Black non-Hispanic had an average of $68,800 in financial assets. While people that identified as Hispanic had an average of $50,390 in financial assets.
That said, with increased access to financial literacy and focused intention, this narrative can be changed. It's part of our mission here at Clever Girl Finance.
How to set savings goals
So, now you have an idea of how much the average savings by age is. And whether you answered the question of how much should you have saved by 35 or 60, you should have savings goals of some kind.
Of course, your savings goals will change over time. But it is critically important to have a plan.
Luckily, there are no rules when it comes to setting savings goals. You might set up a goal to pay for your next vacation. Or you might decide to save for early retirement.
Break your goals down into smaller goals
Whatever your savings goals are, breaking them down into manageable chunks that you can visualize is helpful.
For example, let’s say that you want to save $1,100 to cover your holiday shopping by December. If you start in January, you’ll need to set aside $100 each month to reach your goals.
You can use the same principle for bigger goals. Suppose you want to buy a house with a $10,000 down payment in 4 years. You’ll need to set aside $2,500 each year to meet your goal.
The sky is the limit when setting savings goals! Don’t let anything hold you back from setting big savings goals that align with your values.
How to know how much you need for retirement
As you start to open retirement accounts or add funds to them, you will likely realize that every person is different. Here's how you can know how much you need to save for your unique circumstances.
One of the best ways to know how much money to save is by using a retirement calculator. These can help you calculate what your expenses and lifestyle will be like at retirement age.
That way you can come up with the right amount you need to save instead of just vaguely saving for retirement.
- The Bankrate retirement calculator lets you include what percent of your current income you'll need when retired.
- The Financial Mentor calculator has an advanced retirement planning feature.
- Nerdwallet's retirement calculator is straightforward and includes a helpful chart.
Tips for saving the amount you need
As you start to save at whatever age, consider your spending habits. There's nothing wrong with buying things, but it's important to factor in your savings rate before spending money each month. That way you can be sure you'll reach your goals.
Reduce large expenses in retirement
You can also consider how you might reduce large expenses by the time you retire. Many people spend much less money in retirement, with people 65 and older spending around $53,000 or less a year per household.
Try to pay off anything you can so you have fewer bills to deal with. For example, you might pay off your mortgage or car loan pre-retirement, and pay off credit card debt, and use only your debit card.
If your pre-retirement income was significantly larger, then you'll want to be mindful of costs.
Invest extra when possible
Another thing to think about is if you are saving and investing beyond just IRAs or 401ks. You can also save money in an emergency fund, and you may choose to invest extra money that you have, as well.
If you're maxing out your retirement accounts, you can still invest in other sources such as real estate and ETFs.
Understand that your goals can't be compared to someone else's
Next, understand that everyone's situation is unique. That means that you don't have to save as much as someone else with different goals.
You can also save more than average depending on your life goals. Remember that guidelines for saving are just that - guidelines - and you should follow your own financial goals.
Consider other income sources
You may be planning to live off your investments in retirement. But it's important to consider any other sources of income that you may have, such as social security benefits or pensions.
In addition, you may have other extra income sources, such as real estate rental income.
Remember that these will also factor into your income when you stop working, so add them to your budget if you're expecting other sources of income.
Where to keep your savings
Some of the most common places to keep your savings are in a high-yield savings account, money market accounts, or CDs (certificates of deposit).
For retirement investments, common places include 401ks and Individual Retirement Accounts.
You may choose to do a combination of saving and investing in order to be ready for both retirement and expenses that come up before you stop working.
Your savings account balance may be able to serve as your emergency or rainy day fund, or as extra money when you do retire.
How do you compare to the average savings by age?
Whether you are starting out wondering how much should you have saved by 30, or heading towards retirement at 65, regularly saving is key to building a bright financial future.
Although these averages are nice benchmarks to consider, your journey will always look different than average. So before you worry too much about average retirement savings and average savings account balances, know that every situation is different.
Remember, personal finance is a unique journey for everyone. If you need help jump-starting your savings goals, check out our free savings challenges to get the ball rolling, or consider creating a savings plan!