Retirement Savings by Age

Here we give you an exact Blueprint on how much should be your retirement savings based on your Age. Ofcourse it can’t be the same for everyone and depends on what your Annual Salary is. Its ironical to note that the Average Savings by Americans is well below the recommended savings at each Age milestone.

One way to make sure you do not fall into the majority category of Americans who are well short of their Savings target is to Start saving early. If you are young, Its best to start Planning(and saving) for retirement when you are young and can save and invest. This will not only get you get a large corpus by the time you retire, but also help you grow your money through the powerful compounding effect.

Here we lay out a Strategy for you on how to save for retirement by your age which can be right from 25 till 60 years.

Check out this Video on Fox Business re how much an An Average American is Saving:

Retirement savings by age 25

It might sound surprising to some, but you should Start early if you want to build a big corpus for your retirement since in your 20s even though your earning might be little, but you have very less responsibilities as well. So this is the time whatever little you can save, you should try your best as not only starting early will give you the Time needed to build a big corpus but the power of compounding will come into effect and your little but regular savings at an early age, could grow to a big amount over time.

How to invest at 25?
Assuming you are salaried, you should Contribute to the 401(k) or the 403(b) plan offered by your employer and make sure the amount is the maximum you can, since your employer will contribute an equal amount, so why lose out on that?
Mutual funds can be great option too, you can regularly invest in some top mutual funds for the long term. Remember they are linked to market volatility so any money you invest in mutual funds, must be for the long term(at least 5 years or more).
You don’t really need to invest in life insurance since you don’t have dependents at this age who are financially dependent on you.

Retirement savings by age 30-35

In your 30s you must have more or less settled in your job and will be seeing your income growing. Also this is the time when most people usually start a family so Your savings and investments will be determined by these factors too.

Since you have important expenses now for your family, home, and car, its very important to have an emergency fund for unforeseen circumstances. Ideally, this should be about the same as the amount of your annual salary.

You should continue to contribute to the 401(k) plan contributions offered by your employer up to the maximum matching to your company if possible.
Mutual funds are still a good option as you have age on your side and can take market related risks if you have the money for the long term.

Retirement savings by age 40

When you are in your 40s, you are in the prime of your career and earning well! By this time you would have paid your dues and probably have a very good salary. However, the kids have grown up and Your house is bigger, thus you have your commitment for your child’s education as well as your Home’s loan repayment.
Ideally, your Nest Egg or Emergency fund now should be around 3 times your annual salary. However Most Americans are well below this threshold.

This is the time to have the perfect balance between your Savings/Investments in fixed instruments and Equities. You can take some risk thus exposure to equities and other high risk asset classes but at the same time need to have enough savings in the fixed income instruments like Bank deposits, or Gold.

Retirement savings by age 50

In Your 50s, ideally your Nest Egg or Emergency fund now should be around 4-5 times your annual salary.
This is the time to shift your focus from equities and invest in fixed income instruments as you should not take much risk in your investments at this age as your retirement is also just 15 years away and you must be having increased medical expenses and expenses related to your child’s education, Car loan repayments, and home improvement.
If you employer company gave you stock options or other assets, you should consider those as part of your retirement funds.

Retirement savings by age 60

Now is when you begin to reap the rewards of decades of saving. At some point, you’ll be using this money to support your lifestyle.
By 60, Ideally, you should have saved 6 times your Annual Salary as your Nest egg or emergency fund.
However an Average American has an estimated saving of only around $172,000 in his bank.
But you should also consider that your Social security would also contribute towards a significant source of your monthly income at this age.