How Much Money You Should Have Saved At Every Age | Retirement Savings By Age
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
hey everyone this is lauren mack with hack in the rat race when it comes to retirement and strategies for saving for retirement people often ask how much money should i have saved at every age in order to reach my retirement goals this can be a very difficult question to answer because so much depends on one's lifestyle age in which they want to retire goals during retirement and so on in this video i'm going to talk about how much money you should have saved at every age for a typical american planning for retirement if you stay until the end of this video i am going to share with you a tip that you might be able to use in order to dramatically reduce the amount of savings you will need in retirement and possibly reduce the amount of time you'll have to work in order to get there additionally if you watch this video and think you're behind or maybe you haven't even started saving then i have created a workbook called from xero to retirement which walks you step by step through getting your finances in order and saving for retirement i'll put a link to it in the show notes below so let's jump right in the key to having enough money to live comfortably in retirement is to start saving as early as possible this means starting in your 20s most people in their 20s are just embarking on their careers whether that's freelancing in the digital economy starting a business entering a trade or finishing up college and starting a career either way people in their 20s usually have very little save for retirement and more often not can find themselves in debt due to school loans training startup costs or even entering the workforce and that is okay if you happen to be someone in your twenties who has managed to avoid debt and have money saved then congratulations you are ahead of the curve the best piece of financial advice i could give someone in their 20s is to start creating good financial habits while in your 20s because it will be a tremendous benefit throughout your life at this age there really is no specific amount that you should have saved although the more the better i usually recommend that if you're in your 20s you should at least have an emergency fund of one to two months worth of expenses saved up the reason having an emergency fund is that it can help you avoid falling into the debt trap i actually recommend that people of all ages have an emergency fund set aside that is easily accessible in cash so this is a good habit to begin early speaking of debt many people in their 20s are fresh out of school finally making some good money and it can be very tempting to rush out and finance and purchase a fancy car maybe some designer clothes or even a sweet bachelor pad but avoid the temptation to do that of course when you're just starting out there are necessities such as getting a car to get you to work or maybe suitable clothing for work however it's important to try not to live beyond your means or max out your credit cards many times when you do get your first job one of the benefits offered to employees is a company sponsored retirement account like a 401k oftentimes the company match meaning to a certain percentage the company will match the amount you put in so if the company match is 5 then if you put in 5 they will match your 5 i always recommend signing up for a corporate sponsor retirement account in my videos and i always suggest contributing at least up to what the company will match because this is like getting free money and it's considered part of your compensation package what if you work for yourself as a freelancer entrepreneur or work for a company that simply doesn't offer a retirement account then i recommend opening an ira or roth ira and contributing to the annual maximum limit ira stands for individual retirement account if you want to learn more about the difference between 401ks iras and raw diaries i created a video called roth ira versus traditional ira versus 401k i'll link to it above and in the show notes below to sum it up life in your 20s should be all about establishing good money habits make sure you have an emergency fund of at least one to two months of expenses three to six months would be ideal set up a retirement account either through an employer-sponsored 401k or your own ira or roth ira and lastly make sure to avoid the debt trap live within your means the more you can start investing early on as possible the sooner you'll be able to retire so now let's talk about your 30s by now you've most likely been in the workforce for a while and hopefully things are progressing well with your chosen occupation many experts recommend by the time you reach 30 years old you should have one year of salary saved up so for example if your annual salary is fifty thousand dollars a year then you should have fifty 000 saved up and invested this amount of savings should be in addition to the three to six months of savings that should be tucked away in your emergency fund in order to protect you from falling into the debt trap because of job loss medical bills car repair speaking of debt by the time you reach 30 you really should try to eliminate what i consider bad debt some examples of these are credit card debt car loans student loans etc paying on these types of debt each and every month prevents you from investing the difference and limits your ability to further invest and contribute to grow your nest egg as you saw in the earlier example in your 30s it can be tempting to keep up with joneses and live beyond your means many of your friends and acquaintances will take out large loans to buy an expensive home they'll borrow large sums of money in order to buy a luxury automobile in order to give the illusion of wealth avoid falling into this trap and feel tempted to compete with these people by making the same mistakes 98 of the time these wealthy people are actually highly leveraged and truly broke the best way to get out of the rat race meet your retirement goals and even retire early and wealthy is to live frugally and within your means okay so now you've reached 40 and you've managed to not succumb to the debt trap that so many people fall into in their 30s you should be more financially stable than you were in your 30s so how much should you have saved for retirement by now well most experts recommend that you have three times your annual salary saved up so for example if you make sixty thousand dollars a year you should have a hundred and eighty thousand dollars saved up and invested in addition to this should be maxing out your contributions to your retirement account that we've been talking about that is really important not only to help grow your investment but contributions to your retirement account can decrease your overall tax liability it is also a good idea at 40 to buy a house home ownership is really important because home values tend to rise over time if you buy a home at age 40 with a 30-year mortgage and make all your payments your home will be paid off by the time you're 70 and you've reached retirement therefore reducing housing expenses in retirement once your home is paid off then it becomes an asset this also gives you the option of selling it once you reach retirement downsizing paying cash for a new property that's worth less than the value of your home therefore giving you the extra cash to help you pay for your retirement another benefit of owning a home or rental properties is leverage which is the mortgage if you put twenty thousand dollars down on two hundred fifty thousand dollar house and the value rises ten percent then your returns twenty 25 000 instead a 10 return on 20 000 is 2 000 as you reach 50 years old many people are well established in their career and hopefully have managed to get a few raises over the years and are now making even more money at this point you should save around five times your annual salary so if you make sixty thousand dollars a year then you should have three hundred thousand dollars saved for retirement you should really be noticing the compound interest effects now due to all that diligent savings over the years once you turn 50 years old the irs allows you to start making catch-up contributions to your retirement accounts which means you're allowed to contribute higher limits to the annual contributions so you should be taking advantage of this in order to grow your retirement account quicker and also reduce your overall tax liability another recommendation at this age is to continue to remain debt free live frugally and continue to pay down your mortgage by age 60 now you're getting close to retirement by this age it is recommended to have seven to eight times your annual salary saved up so if you make sixty thousand dollars a year then you should have four hundred and eighty thousand dollars saved for retirement you're probably debt free now and really enjoying watching your savings and investments grow at this point it might be tempting to start dipping into your retirement savings however avoid doing this keep up the study savings pace many people are still working and earning great incomes in their 60s and can really boost their retirement accounts if they have fallen behind in the early years hopefully by now your home is either paid off or close to being paid off which should give you peace of mind as of now you should be eligible for social security benefits but you might want to put that off as long as possible to be able to receive the maximum amount of money you can go to the social security website they have a form where you can enter your information and it will give you estimates of what to expect at different ages i'll put a link to it in the show notes below you'll be able to determine at what point it makes sense to take it out and how much will be added for waiting and if you're just starting out saving for retirement and you're still relatively young don't assume you will have social security benefits when you reach your 60s or 70s many experts debate whether they'll actually be enough money to pay out those benefits in the future now for the bonus tip like i said at the beginning of this video having enough money for retirement depends mostly on your lifestyle cost of living and retirement in america however these days more and more people are choosing to retire outside the united states where the cost of living is dramatically less and they can have a much better standard of living for substantially cheaper than the us the thought of retiring abroad might sound frightening to some people and i get it but i have traveled to over 58 countries and lived all over the world and i can tell you that you might be quite surprised retiring abroad is not unusual in fact many americans choose to either retire early to stretch their retirement savings even further by joining the ever growing list of american expats who are deciding to retire abroad many countries around the world entice retirees by offering retirement visas to come spend their golden years enjoying the beaches golf courses and laid-back lifestyle in their country i personally know so many people who have chosen this option and none of them have regretted it you're probably thinking oh lauren what about the health care overseas it cannot be as good as the u.s well my husband and i have received medical care in numerous countries all over the world including emergency surgeries from countries in southeast asia south america mexico europe and i can tell you that every time we receive medical care it has been as good or better than the care we received in america and the bill was certainly much less expensive if this sounds appealing to you then take a few scouting trips to some countries where you think you may want to live and spend some time checking it out and meeting up with some expats that live there to get their impression of what it's like to retire abroad in the country that you're considering now i want to hear from you in the comments section would you like me to do a video on retiring abroad have you been considering moving abroad to retire if so where let me know in the comments below if you're watching this video and you're thinking lauren i am so far behind or i haven't even started is it too late then watch this video right here
