Savings Checkpoints in Your 20s and 30s: Will You Have Enough?
Want a quick estimate of how much you could need for the future? Here are some basic guidelines for younger investors.
Key Takeaways
Whether you’re just getting started or already have a solid investing plan, it’s important to commit to saving a set portion of your income.
You should also review the value of all your accounts and assess whether your current total and contributions will keep you on track toward your goals.
Other strategies can help you with your savings, including financial apps, retirement plan savings, budgeting and paying off debt.
You might still be relatively new to investing. Or maybe you’ve been contributing to your investment accounts for a while but aren’t completely sure that you’re on track to reach your money goals.
One question may be on your mind: Will it be enough?
Most people will have a variety of financial goals throughout life, but retirement is the big one. The amount you'll have for retirement depends on how much you have now, how much you plan to save over time and the average return on your investments.
One way to gauge your progress is to look at the current total of all your savings and investment accounts in relation to your age and income. Here are some basic guidelines according to your age and income.
Checkpoints: How Much Should I Have Saved by 30?
Half to full annual salary
Current total of your savings and investments
5 – 10% of annual income
Percent to save each year
Increase savings to 10 – 15% of income
Gradual increase by age 40
What could that look like?
If you make $50,000 per year:
$25,000 – $50,000 in total savings and investments
$2,500 – $5,000 in contributions per year
$100 – $200 per bimonthly paycheckIf you make $75,000 per year:
$37,500 – $75,000 in total savings and investments
$3,750 – $7,500 in contributions per year
$150 – $300 per bimonthly paycheckIf you make $100,000 per year:
$50,000 – $100,000 in total savings and investments
$5,000 – $10,000 in contributions a year
$200 – $425 per bimonthly paycheck
Checkpoints: How Much Should I Have Saved by 40?
2x – 3x annual salary
Current total of your savings and investments
10 – 15% of annual income
Percent to save each year
Increase savings to 15 – 20% of income
Gradual increase by age 50
What could that look like?
If you make $75,000 per year:
$150,000 – $225,000 in total savings and investments
$7,500 – $11,250 in contributions per year
$300 – $450 per bimonthly paycheckIf you make $100,000 per year:
$200,000 – $300,000 in savings and investments
$10,000 – $15,000 in contributions per year
$425 – $625 per bimonthly paycheckIf you make $125,000 per year:
$250,000 – $375,000 in total savings and investments
$12,500 – $18,750 in contributions per year
$525 – $775 per bimonthly paycheck
Are You Ahead … or Behind?
The checkpoints above are broad and don’t consider your personal situation, so there’s no right answer. The actual amount you want for your future could also change based on your career path, your preferred lifestyle or where you will live.
Use our Future Value Calculator to estimate the future value of your current savings based on how much you can invest, your hypothetical rate of return and your time frame.
You can request a call to talk to a financial consultant about your investing strategy.
Boost Your Future: How to Be Money Smart in Your 20s and 30s
The following tips are designed to empower you and show that boosting your investments in your 20s and 30s is not only possible—it can fit seamlessly into your everyday life. Small changes today can give your money the opportunity to grow and compound over the long term.
Invest in your employer’s plan—and get the match.
If your employer offers a 401(k) or other retirement plan, sign up. Many employers also offer matching contributions in the plan. Depending on how the company match is structured, you could get an extra 50-100% of every dollar you contribute (usually capped at around 3-6% of your pay).
Increase your contributions gradually.
Some employers offer automatic 401(k) increases every year (in 1% increments, for example). Opt in for an easy and hassle-free way to bump up your contributions.
Save more with an IRA.
Don't have an employer plan? (Or have you already hit the contribution limit?) You can invest on your own with traditional and Roth IRAs. If you're self-employed, workplace plans like SEP IRAs can help you save while getting tax breaks for your business.
Pay off high-interest debt.
Paying off higher-interest loans might seem like more of a priority than extra retirement contributions. But if you have a lower rate on your loan, the return on your investments over time has the potential to offset any interest payments you're making.
Jump-start saving with a windfall.
Expecting a lump sum of money? Boost investment contributions when you receive a raise, settlement, inheritance or other financial windfall.
Grab a side hustle.
In today's gig economy, finding a part-time job can provide you with additional income streams specifically for investing.
Spend mindfully.
This is what budgeting is all about. You don't have to live frugally at all costs, but you should prioritize what genuinely adds value to your life—and that may leave more resources for investments.
Embrace technology.
Money management can be a lot easier with finance and budgeting apps and other online tools. You can conveniently track your spending, reduce unnecessary expenses and automatically direct savings to your investment accounts.
Ask for help.
Financial advice might not be as expensive (and time-consuming) as you think.
Keep Future Money for the Future
When your account balance starts growing, it might be tempting to use that money, whether it's for unexpected expenses or a fun opportunity.
But sticking to your plan, even when it’s tempting, is what really helps you build the future you’re hoping for. Try to keep that money working for your long-term goals instead of quick fixes. You’ll thank yourself down the road.
We’re here to help you create and manage a plan that will help you pay for the life you want—including advice options to help you along the way.
Authors
Financial Consultant
Invest for Your Future
Learn how to create an investment portfolio that fits you.
You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.
Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
American Century's advisory services are provided by American Century Investments Private Client Group, Inc., a registered investment advisor. These advisory services provide discretionary investment management for a fee. The amount of the fee and how it is charged depend on the advisory service you select. American Century’s financial consultants do not receive a portion or a range of the advisory fee paid. Contact us to learn more about the different advisory services. All investing involves the risk of losing money.