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It's always smart to sock money away so you can cover the wide variety of costs that will come up in your life. Once you have a sufficient sum set aside, you'll enjoy a powerful sense of freedom and security. Rack up expensive debt for an unanticipated but critical purchase? No way. Pinch pennies during retirement? Not you!
But what are safe amounts to have accumulated by the time you reach the milestone ages of 30, 40 and 50? Exact ages are only relevant as gauges for where you want to be financially, but they're helpful because they provide easy markers on which to base various goals. And although the precise answer on how much to save depends greatly on your unique financial circumstances, needs and goals, there are general guidelines that can help you plan accordingly.
By Age 30: An Emergency Fund + Retirement Savings
If you are just out of your 20s, you're probably about a decade into the workforce. Money might have been (and may still be) tight, especially if you're paying off student loan debt. Because of this, and perhaps other debts you might have racked up, you may not have begun contributing to a retirement account. That's OK—just be sure you start contributing now. More on saving for retirement below.
By age 30, you need a solid emergency savings fund.
Ideally you will have three to six months' worth of expenses set aside. As an example, if your essential bills—which might include rent, utilities, transportation costs and groceries—total $3,500 a month, you'll want at least $10,500 in a savings account. With that, you'll have enough cash to keep you afloat in case you lose your job and it takes a few months to regain employment. You can pull from this account for other necessary but unplanned expenses, too, such as uncovered medical bills or an essential car repair.
If other people are depending on you for their care, you'll want to have even more in savings. A good rule of thumb is one month's expenses for each dependant. So if you have a non-working spouse and a child, five months' worth of expenses saved would be ideal. With that same $3,500 figure, your emergency fund should be $17,500.
If you're nowhere near your own emergency fund goal and aren't sure how to get there, consider these top strategies for saving money. You may consolidate debt so you have extra money each month or use your tax refund to drop a chunk of cash into your emergency savings. You can also look at your daily, weekly and monthly expenses to find places to trim spending.
Once you've reached your emergency savings goal, you can stop adding to it and save for something for the longer term, like a home down payment.
By age 40: Retirement Savings + Child's College Fund + Adjusted Emergency Fund
By now, you should be well into taking advantage of a tax-deferred retirement plan, such as a 401(k) or 403(b) if one is available to you through your employer. In 2019, you can contribute an annual sum of up to $19,000 in pre-tax income, and that maximum typically increases by $500 a year. If you consistently max out your contributions, you might have built up $264,000 over those 10 years since turning 30, assuming a conservative 5% investment growth. These savings will be much higher if your employer matches a portion of your contributions and your investments did especially well.
Even if you can't come close to maxing out your contributions due to your living expenses, experts recommend saving at least 15% of your earnings for retirement. The best way to do that is to set it and forget it by having your contributions taken out automatically each pay period. For more information on saving for retirement with a 401(k), see "How Much Should I Contribute to My 401(k)?"
If you have children, there's another important expense to save for, and that's your kids' higher education. If you want to pay for their tuition, plan to have between $40,000 for an in-state public university to well over $200,000 for private university tuition per child. Keep in mind, this is just for tuition. If you plan to pay for your child's college in its entirety, including living expenses, you'll need to save much more. A 529 Plan can help you save for it in a tax-advantaged way. For more on saving for your child's college, see "How to Save Money for College."
Finally, continue to maintain an emergency savings account, but adjust it for potentially higher expenses. For example, if you bought a home, your mortgage could be more than what your rent was. And maybe you have additional children. Whatever the case, your savings should reflect the reality of your current situation. Perhaps now you need $5,000 a month for six months—equaling a $30,000 buffer. That might be a daunting amount, but if you're married or partnered up, two people could be contributing to the funds and sharing the same expenses, so achieving it may not be as hard as you think.
By age 50: Retirement Savings + Child's College Fund
As long as you didn't waver in your retirement plan contributions, you should have amassed some serious dough by this point. With the same investment assumption noted above, nearly $759,000 might be in your retirement account if you contributed the maximum for 20 years. That's a great goal to have in mind. Keep it up until you're 60 and you can probably count on more than $1.5 million to be in that account. Again, the amount will be significantly greater if your employer also added funds and your investment choices performed well.
Because more couples have children in their mid-30s and beyond these days, you may still be scrambling to boost their college funds. If you had children when you were younger, they may be out of high school—adding that money you were setting aside for college back into your budget.
The good news is your income is likely higher now, giving you more opportunity to sock away as much as possible for retirement, the college fund and the emergency fund (still important, and even possibly more so at this point)—while also ideally leaving you some extra money to travel, buy a new car, upgrade your kitchen or pay for other things you may want. If you've been using a rewards credit card and paying it off every month to avoid debt, you may have enough points to take a dream vacation without even touching your savings.
The Bottom Line
Of course there are no rigid financial rules, so don't panic if you're nowhere near these figures. They should simply serve as inspiring goalposts for where you might want to be when you reach certain age milestones. Now decide what personal net worth aspirations are right and feasible for you. Review your budget frequently and trim where you can, find ways to hike your earnings, steer clear of consumer debt and save aggressively. Do so, and you'll be prepared for most of what life will throw at you.