When it comes to finances, Iâ€™ve always had a decent head on my shoulders. But I wish when in my 20s, I asked myself how much money should I have saved by 30? Instead, my twenties were filled with exploration and trying to figure out what I wanted to do with the rest of my life.
Although I wasnâ€™t much different than many other 20 somethings, I still wish I had started saving more for my financial future. I certainly didnâ€™t have it all together, and despite being financially apt, I wasnâ€™t thinking much about retirement. But now Iâ€™m at an age when I recognize that I should have been.
According to money expert Kimmie Greene, how much should you have saved by 30 is simple:
The equivalent of your annual salary. Iâ€™m going to be honest, I missed that boat. But maybe you havenâ€™t.
Perhaps youâ€™re in your 20s. Youâ€™re young and idealistic; you might even have some plan. Or, perhaps you have no idea where youâ€™re heading. But no matter what your situation, you might want to start asking yourself how much money should I have saved by 30?
Because yes, itâ€™s true that youâ€™re young, but life moves quickly, and itâ€™s never too early to start saving for retirement. There are even some steps along the way that can help you out.
Nowâ€™s a good time to start envisioning your ideal retirement. And know that there are recommendations for where you should be. But also take into consideration your personal situation because that matters too.
So if youâ€™re wondering how much should you have saved by 30, check out these suggestions that can get you where you need to be.
To get your head in the retirement game, start with visualizing your future. Have you ever asked yourself the following questions: When do you want to retire? When youâ€™re older, do you still want a side gig? Where do you see yourself in 30+ years?
When I think about my ideal life in 30+ years, I see myself still with a Fiverr account and writing. I envision living by the beach or within the mountains. Iâ€™m drinking Fair Trade coffee and petting a cat. Oh, and my husbandâ€™s there too of course. A log cabin sounds nice, something simple but cozy. Or, a beach house. That would be fantastic too.
Why is visualizing your future so important? Letâ€™s examine my ideal scenario to find out.
In my future, I see a little bit of cash still coming in. I also see some significant variables in my estimated cost of living. Yes, this is due to my indecisiveness.
If I want to live by the beach, I better start saving more. But if Iâ€™m content with the mountains, not only would my husband be happy, but we wouldnâ€™t have to save as much. Iâ€™ve seen some reasonable log cabins in the mountains.
Asking yourself where you want to be and what you want during your retirement age plays a vital role in how much you should save. If I pictured myself attending elaborate parties, gambling, and living in a mansion, my retirement game plan would have to change immediately.
Itâ€™s up to you to decide what your ideal lifestyle will be and if you have the resources at this time to save for it. And remember ideals change so be willing to adapt your financial plan in the future.
Iâ€™m banking on the fact that I could be writing for a very long time. And although I donâ€™t expect to get rich off of it, writing could always provide a little bit of income â€“ even when officially part of the AARP gang. I also think that living in the mountains is probably my best bet. That might change, but for now, I need to figure out how to make that lifestyle happen.
Iâ€™m a big fan of concrete details and knowing exactly what I need to do to accomplish a goal. Thatâ€™s why I appreciated Jacqueline Picasâ€™ US News article. In it, she provided a straightforward answer to the question: How much should you put away for retirement?
Pica recommends that, regardless of your age, you should be putting away at least 10% of your income into retirement.
Although I appreciate this concrete number, I donâ€™t think Iâ€™ve ever put away that much. Just being honest. I wish I had, but paying the rent or mortgage has always been slightly more important.
Like me, you also might think that 10% remains out of the realm of possibility. Or you might be saving more, great! I also think that your visualized future and the current job can underscore or override this basic recommendation. But itâ€™s still an important percentage to know, and an excellent goal to work towards or beyond.
So thatâ€™s my ultimate goal: to stash away 10% of my pay. But for now, Iâ€™ll start will 5%, and see where that takes me. Iâ€™m okay with baby steps as long as Iâ€™m not falling backwards. You might be in a similar boat.
If you have a 401k through your employer, thatâ€™s a great way to save this percentage. A lot of employers will even match your percentage (to a certain point). So letâ€™s say that you put in 5%, and your employer matches up to 3%. That means youâ€™re actually stowing away 8%. Youâ€™re close! Maybe, after evaluating this, you think you could knock up your contributions to 7%. Now youâ€™ve met the recommendation (remember your employer, in this case, matches 3%).
You should also look into combining your 401k with Bloom.com to get you closer or over that 10% mark.
Bloom optimizes your existing 401k and makes sure youâ€™re getting the best bang for your buck. Theyâ€™ll search for hidden fees and make sure your employee 401k generates the full amount possible.
And if itâ€™s not, theyâ€™ll put in the legwork to fix it. For $10 a month, this site pays for itself and could save you some energy and cash for the future.
Those without 401ks should aim for putting the annual non-taxable limit of 5,500 into a Roth IRA. This investment will also grow each year. But donâ€™t stress if you canâ€™t make it to the limit, just do what you can.
Instead of dwelling on how much should you have saved by 30, take your finances into your own hands and give yourself some realistic goals.
In spite of being on a soccer scholarship in college, I still had student loans to pay. And when I decided to get my Masters of Arts in Teaching, the bills really started flying in. At that point, retirement seemed like a dream. I just wanted to get out of debt.
If you think itâ€™s hard to save because youâ€™re still paying off student loans, youâ€™re not alone. And, realistically, you donâ€™t want to put all of your money towards retirement instead of paying off those loans. Loans rake up some serious interest. But you should try to create space for retirement too.
So consider consolidating your loans and repairing your credit. Then you can save a little bit of room to put some money towards retirement.
And donâ€™t fret that more money may go towards paying off debt than your retirement fund. Because if you truly think about it, youâ€™re still saving for your future. Youâ€™re paying off interest, and once you pay off that debt, youâ€™ll have even more money to add to that retirement plan.
Iâ€™m a goals person. Just like I appreciate concrete details to get me going on my way, I also have an obsession with goals.
Everyoneâ€™s financial goals are different, but thereâ€™s no denying that they keep you on track. A lot of your financial goals for the future depend on where you are in your life right now. Iâ€™m a freelancing work-at-home mama, and my husband works a full-time job, but we have a minimal budget.
However, we get by, and we do know that retirement is necessary. Still, our visualized future probably differs from yours. Yes, youâ€™ve read all of the expert numbers and advice, but ultimately you need to figure out what youâ€™re able to finance each month.
You also need to decide when you want to stop working and what kind of retirement you want. All of these aspects will help you come up without a monthly savings goal.
Iâ€™ve always been a fan of percentages of incomes and starting off small. As noted above, if 10% of your paycheck is not feasible, perhaps start with 5%. See how that goes. Then adjust it along the way.
Giving yourself a goal can be a considerable benefit. You might want to consider writing goals down. In fact, according to Forbes, people who vividly thought about or visualized their goals were around 1.4% more likely to complete them.
This may not sound like a lot, but if youâ€™re wondering how much should you have saved by 30, the answer is probably quite daunting. And although many experts say a 30-year-old should have the equivalent of his/her income stowed away, thatâ€™s a great goal, but may not be 100% possible. Thereâ€™s a solid percentage for you too, wink.
But these recommended numbers are excellent targets to work towards: Annual income by 30 and save 10% of income each year. If youâ€™re able to put this plan into action at age 20, youâ€™ll accomplish those goals. But if you havenâ€™t started yet, donâ€™t freak out, just start today.
Iâ€™m all about living a frugal lifestyle. And I think some people think they have more money in life than they really do. Because if youâ€™re trying to stash away the equivalent of your annual income by the time youâ€™re 30, you might need to cut back on spending now. Then youâ€™ll have more money for your future.
In your 20s, itâ€™s easy to spend and not think about retirement that seems like a distant reality. But life creeps up on us. So itâ€™s important to separate your wants and needs because cash is so easy to blow â€“ especially when youâ€™re young.
A frugal lifestyle can make your visualized future possible. It might even propel you into that 10% savings a year. Iâ€™ve written about my frugal lifestyle in a recent post called This Frugal Mama Is Teaching Her Kids How to Make Every Buck Count, itâ€™s a relevant article if youâ€™re wondering how much money should I have saved by 30?
In that article, I wrote about saving with coupons.com and even cutting your phone and cable bills with Twigby and Hulu. These small changes make a significant impact and can help you save for your retirement while in your 20s.
Iâ€™ve learned that Iâ€™m more apt to spend money if itâ€™s in my checking account. But if itâ€™s just automatically taken out and put into savings, I canâ€™t see it. So I donâ€™t spend it. Thatâ€™s why Iâ€™m a huge fan of automatic deductions.
Nowadays, you can link your bank account to your IRA, 401k, savings account, etc. All it takes is a click-of-a-button to have money automatically transferred. You can even set it up so that itâ€™s reoccurring for once a week, once a month, or whatever works for you.
And if it ends up being too much, you can always adjust it with another click of the button.
Having your annual salary saved by 30 sounds daunting, but if you use some of the steps above, youâ€˜ll be on track to get there. But if you canâ€™t, remember that any amount you stash away now for retirement is a good thing.
And If youâ€™re reading this, and youâ€™re younger than 30, Iâ€™ll give you some perspective. Iâ€™m currently 35 (for only another month, but Iâ€™m still going with that number). According to expert Kimmie Greene, at 35, I should have double my salary in savings!
But rather than freaking out about how much money should I have saved by 30â€¦now 35, Â Iâ€™m going to make some small changes instead. One baby step at a time. Are you with me?