Savings for retirement is one of the difficult thing people find to do. Sincerely, it’s difficult to know if you’re saving enough for retirement.
Although, in most cases you can use a retirement calculator to project retirement plan, but who knows what life events are going to come along and you will be left without any other options than to throw your savings off track? And how do you know the market will be so reliable?
However, experts often suggest you have a nest egg of $1 million to $1.5 million saved when you retire. Can that possibly be right? Or did they think everyone is earning six figures?
It goes without saying that the amount of savings you’ll need to retire depends on your individual situation. But let’s face it: We all want to know what the neighbors are saving. And we all want to know if we’re saving enough ourselves.
The scoop of this article is to discuss the breakdown of median retirement savings by age as well as suggested savings base on period of your working life. It also cover tips to get your savings in order if you think you’ re behind
Median savings figures are taken from the Federal Reserve’s 2018 Survey of Consumer Finances, which analyzes retirement account balances of Americans who have them. Recommended retirement savings by age are provided by Fidelity.
Saving for Retirement in Your 20s
The recommendation: You should have the equivalent of one year’s salary saved by the time you reach 30.
The reality: The median retirement savings in households headed by someone younger than 35 is $12,300. (Note: The Federal Reserve report doesn’t have data specific to households headed by people in their 20s.)
More than three-quarters of adults arefalling short on recommended retirement savings, and younger people are no exception. Just 27.5% of people ages 21 to 34 have a retirement account.
If you’re in your 20s, you have plenty of time to catch up on your savings. But every year you don’t start saving can cost you significantly.
If you save $100 each month starting at age 25, and your retirement account grows by 5% each year, you will have nearly $172,000 by the time you are 67.
If you waited until age 35 to start saving that $100 each month, your balance would be just under $95,000.
Am sure you don’t want this.
Compound growth needs time to work. Your 20s should be all about letting it get started.
Saving for Retirement in Your 30s
The recommendation: You should have three years’ worth of your salary saved by the time you turn 40.
The reality: The median retirement savings in households headed by someone ages 35 to 44 is $37,000.
Sure you will faces some big expenses in your 30s. Maybe you bought your first home. You might have gotten married. Kids may even been in the picture now.
On the bright side, you’re probably making more money now that you’re in your 30s. You’ve hopefully put in some years in your field and even gotten a few promotions.
Research statistics indicates, most Americans in this age bracket are behind.
Just as it was in your 20s, getting started is key if you haven’t already.
Fidelity recommends that those who begin saving at age 25 save 15% of their income. If you begin at age 30, the recommendation is 18% instead.
But by 35, that number goes to 23%.
If you did get started in your 20s, make sure you’re adjusting your contributions as your income goes up. With so many years left ahead, you’d be surprised at the impact an extra $50 or $100 can have.