Optimal Savings Goals for Different Age Groups
Saving money is something you should do throughout your life, adjusting your approach as you get older. How much you need to save depends on factors like your income, financial goals, where you live, and your family situation. There are many guidelines for how much to save at different ages, but they can vary.
The key is to start saving as early as possible and keep it up until you’re close to retirement. Starting young helps you build an emergency fund that can cover three to six months of expenses. It also allows you to take advantage of compound interest, where you earn interest on the interest you’ve already earned.
It’s crucial to keep saving at every stage of life to help you buy a home, start a family, pay for your kids’ education, enjoy your lifestyle, and save for retirement.
Regardless of your age, one of the best things you can do for your savings is to use a high-yield savings account. For instance, Forbright Bank offers a Growth Savings account with an annual percentage yield of 5.30%, which is significantly higher than the national average.
Here are some savings goals based on age:
**Savings Goals by Age 35**
Experts at Fidelity suggest having saved one year’s salary by age 30 and two years’ salary by age 35. For full-time workers aged 25 to 34, the median weekly earnings are $1,056, which adds up to $54,912 a year. If you earn this median amount, you should aim to have around $110,000 saved by age 35. However, many Americans fall short of this goal, with the average savings being $20,540 by age 34, according to 2022 data from the Federal Reserve.
**Savings Goals by Age 45**
By the time you’re 35 to 45 years old, you might be well into adulthood, possibly owning a home and having a family. During this time, your savings goals often include buying a home, starting a college fund for your kids, and building your retirement savings. Median earnings for people aged 35 to 44 are $1,233 a week or $64,116 a year. Fidelity recommends having four times your salary saved by age 45, which would be a little over $256,000 if you earn the median income. However, the average savings for this age group is about $41,540 by age 44.
**Savings Goals by Age 55**
In your mid-50s, retirement is getting closer, making saving even more crucial. This is typically when you reach your peak earning years, allowing you to save more quickly. Fidelity suggests having six times your salary saved by age 50 and seven times by age 55. For full-time workers aged 45 to 54, the median earnings are $1,303 a week or $67,756 a year. Based on this income, you should aim for $406,536 saved by age 50 and $474,292 by age 55. Yet, many people in this age group have much less, with average savings of $71,130 at age 54.
**Savings Goals by Age 65**
By age 64, the average American has $72,520 saved, according to the Federal Reserve. This suggests that many people aren’t adding significantly to their savings after age 55. The median earnings for those aged 55 to 64 are $1,254 a week or $65,208 a year. Fidelity advises having eight times your salary saved by age 60 and ten times by age 67. By age 64, a good target is nine times your salary, or about $587,000 based on median earnings.
**Bottom Line**
It’s essential to make sure your money is working for you. A high-yield savings account should be part of any savings plan. For example, the Growth Savings Account from Forbright Bank offers a 5.30% APY on your savings.