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How much you should have in your savings account depends on your age but at minimum you should have an emergency fund with enough money to cover your expenditures for 3 to 6 months. It’s also important to create goals related to education, retirement savings and other milestones.
To help you set realistic goals, we have researched how much you should have saved at different stages of your life.
In this article, we’ll break down our recommendations for:
Experts agree that having at least 3 months’ worth of expenses in your savings account is a good strategy.
This will essentially constitute your rainy day fund, also known as an emergency fund. It can act as a financial safety net in the event of unexpected expenses and potentially help you avoid resorting to loans or credit cards. For example, you could use your rainy day fund to help pay for a medical emergency or car repairs.
Of course, you can also save for specific desires or goals. Perhaps you’d like to purchase a new car or have some money set aside to help pay for college. Or maybe you’re forward-thinking and want to start investing money for your retirement.
No matter what your goals are, we have advice and strategies to help.
However, keep in mind that there isn’t a single answer that applies to every person, some like to use a Savings Calculator. How much you should have in savings depends mainly on your personal circumstances.
Personal factors that contribute to how much you should have saved include:
First introduced by Senator Elizabeth Warren, this 50/30/20 budgeting rule divides up your after-tax income into three spending buckets:
Let’s take a closer look at each of these categories.
In simple terms, needs refer to unavoidable expenses. Ideally, 50% of your after-tax income should be enough to cover these fundamental expenses.
Needs may be:
According to this rule, you can use 30% of your after-tax income to purchase things you want. These are items or experiences that you could live without but choose to spend your money on.
Wants may be:
Now that you’ve tackled your spending, it’s time to focus on your savings goals. This category involves allocating 20% of your after-tax income towards achieving your savings goals or paying off debt.
This includes money for investing, building up your emergency fund and creating substantial retirement savings. You may want to deposit money in a high-yield account, open an IRA, invest in index funds, buy savings bonds or take advantage of other opportunities to save.
To determine how much you need for each category, multiply your after-tax revenue by the target percentage.
Here’s what your 50/30/20 budget should look like if you’re earning the median monthly salary for your age group:
| Age group | Median monthly salary | 50% needs | 30% wants | 20% savings |
|---|---|---|---|---|
| 20-24 | $2,722 | $1,361 | $817 | $544 |
| 25-34 | $3,990 | $1,995 | $1,197 | $798 |
| 35-44 | $4,812 | $2,406 | $1,444 | $962 |
| 45-54 | $4,876 | $2,438 | $1,463 | $975 |
| 55-64 | $4,859 | $2,429 | $1,458 | $972 |
| 65 and up | $4,253 | $2,126 | $1,276 | $851 |
Are you looking to compare what you’ve set aside to others in the country?
Here’s the average savings account balance by age group:
| Age group | Average savings balance |
|---|---|
| Under 35 | $11,200 |
| 35-44 | $27,900 |
| 45-54 | $48,200 |
| 55-64 | $57,800 |
| 65-74 | $60,400 |
| 75+ | $55,600 |
This data comes from the Survey of Consumer Finances conducted by the Board of Governors of the Federal Reserve System.
As previously mentioned, your situation could be vastly different from the average person, and factors like your DTI can affect how much you can set aside. No matter what your financial reality is, it’s crucial to have a well-funded savings account to handle any emergencies.
According to the Federal Reserve’s 2022 Report on the Economic Well-Being of U.S. Households, 68% of Americans would need to borrow money to cover an unexpected bill of $400. Simply put, if you can reliably cover a surprise $400 expense, you’re already in better shape than a third of Americans.
When preparing for retirement, most experts recommend setting aside 10% to 15% of your pre-tax income per year.
Your retirement savings may include money stashed in a 401(k), Roth IRA, traditional IRA, pension fund or some other type of retirement account.
To better visualize ideal targets for retirement savings, it can help to break it down into goals based on your age group.
Use the table below to determine savings goal by age and how much you should put away for retirement based on your age group:
| Age group | Retirement savings goal |
|---|---|
| 20-29 | $84,999 |
| 30-39 | $324,528 |
| 40-49 | $719,598 |
| 50-59 | $790,344 |
The answer to this question depends on your personal circumstances and overall goals. It’s okay to start small—just be sure to save at least a little money from every paycheck. You typically earn the least in your 20s since this is right after you leave school and take on your first full-time job. According to the U.S. Bureau of Labor Statistics, the median annual income for workers between the ages of 25 and 34 is $48,256. Even if you save just 10%, that’s nearly $5,000 saved toward your future.
By the time you’re in your 30s, you should have about $50,000 saved. Assuming you are around the median annual income increases to $58,188 for people between the ages of 35 and 44, this is equal to about a year’s salary. Of course, this is a rule of thumb and your situation may vary.
By your 40s, you’ll want to have about three times your annual salary saved. For workers between the ages of 45 and 54, the median annual income jumps to $66,508, which means you should have nearly $200,000 set aside.
In your 50s, you’ll want to save as much as possible. At least three to six times your annual salary is a safe amount. At this point, you should focus on trimming your expenses as much as possible. Once you stop working, a common rule of thumb is to aim to withdraw no more than 4% of the value of your investment portfolio during the first year of retirement.
As we mentioned previously, give yourself a strong safety net by setting up a rainy-day fund with at least three months’ worth of expenses in it.
Expenses include rent, groceries, utilities, healthcare and transportation costs. To figure out how much you need, simply calculate how much you’re spending each month and multiply that sum by 3.
It’s quite likely that you have financial goals other than just preparing for your retirement.
Some common financial goals include:
You can stay on target by opening a savings account. In doing so, you can mark it as an account that’s specifically for your intended goal. Even better, having a separate account can help you resist any urges to spend money by keeping your savings distinct for your day-to-day checking account.
One of the best ways to stay on track is to maximize your earnings and minimize your expenditures.
Admittedly, that’s sometimes easier said than done. However, there are some actions you can take to help reach your savings goals.
Some tips for you to stay on track include:
Another way to maximize your savings is by opening a high-yield savings account. Banks offering this type of savings account include Amex High Yield Savings Account with 4.10% or Capital One 360 Performance Savings Account also with an APY of 4.10%. Other options include Ally Bank savings account with 4.00% APY, Marcus by Goldman Sachs savings account with slightly higher APY at 4.25% and SoFi savings account with a 4.20% APY. If you’re looking for even higher interest rates, UFB Direct savings account has an 4.77% APY and Western Alliance Bank savings account has a slightly higher APY of 4.70%.
Other high-yield savings accounts:
It’s also helpful to check your balances regularly and share your goals with other people. For in-depth advice and guidance, consider working with a financial advisor or a financial planner. While it may sometimes seem challenging to save money, remember that you’re investing in yourself and your future.
A good savings account has a high interest rate and gives you plenty of options when it comes to making deposits and transferring funds. There are also different types of Savings Account.
When it comes to savings vs checking accounts, aim to keep about two months’ worth of expenses in your checking account. You can put the rest of your money into investment accounts to take advantage of higher interest rates and other favorable account terms.
It depends on your age and financial goals, but you should try to contribute the maximum amount each year. If you don’t earn enough to make the maximum contribution, invest as much as you can. For 2023, the IRS has capped the contribution limit at $22,500 for individuals under 50 and $30,000 for workers aged 50 and older.
By age 30, you should have at least 1x your annual salary saved. If you earn $50,000 per year, for example, you should have $50,000 by the time you turn 30.
The 50-30-20 rule is a budgeting rule that tells you to allocate 50% of your net earnings to your needs, 30% to your wants and 20% to savings.
A $20,000 emergency fund may be sufficient if your monthly expenses are $3,333 or less, as this covers six months’ worth of expenses. However, an emergency fund calculator can help you estimate exactly how much you need to save.
As previously mentioned, experts agree that you should have at least three months’ worth of expenses in savings. If you are a single person without many expenses, a $5,000 emergency fund may be enough. However, it’s best to use an emergency fund calculator to estimate your actual needs.
Leigh Morgan is a seasoned personal finance contributor with over 15 years of experience writing on a diverse range of professional legal and financial topics. She specializes in subjects like navigating the complexities of insurance, savings, zero-based budgeting and emergency fund development.
In the last five years, she’s authored over 300 articles for credit unions, digital banks, and financial professionals. Morgan is also the author of “77 Tips for Preventing Elder Financial Abuse,” a book focused on helping caregivers protect the elderly from financial scams.
In addition to her writing skills, she brings real-world financial acumen thanks to her previous experience managing rental properties as part of a $34 million real estate portfolio.
