At 40 how much should i have saved

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

It’s clear that Americans feel unprepared for retirement. One in three have less than $5,000 in retirement savings, and one in five have no retirement savings at all, according to a Northwestern Mutual study.

So what is a healthy amount to have saved? What goals do you need to hit at every stage of your life?

There are multiple rules of thumb, depending on which person or company you consult. Fidelity, for example, says that in order to retire by age 67, you’ll need to have 10 times your final salary saved by that point. This rule of thumb is applicable for a broad range of people, from those who make $50,000 to those who make $300,000 a year, the company says.

T. Rowe Price says generally, most people should save at least 15% of their income each year in order to achieve savings benchmarks at each age. However, a more typical pattern is for people to start saving 6% in their 20s, and then ramp up to 15% in their 30s (and for the rest of their life), says Roger Young, a senior financial planner at T. Rowe Price.

Featured Partner Offers

Minimum Deposit Requirement

$0

Monthly Maintenance Fees

$0

2

CIT Bank Savings Connect

Minimum Deposit Requirement

$100

Monthly Maintenance Fee

$0

2

CIT Bank Savings Connect

“We aren’t trying to make people feel guilty or beat them over the head, but rules of thumb can be helpful to people to put things in perspective,” Young says.

Others say these rules are arbitrary. Haleh Moddasser, senior vice president and partner at Stearns Financial Group, says it’s hard to rely on these benchmarks, since everyone’s situation is so different. “In this day and age where people are being displaced by technology, the most important thing you can do is invest in yourself,” she says. “If that means forgoing a contribution to your IRA so you can go to grad school, I’d say absolutely you should do that.”

It’s important to remember these benchmarks may not work for everyone. The most imperative thing is to make sure you are assessing your financial position, planning for the future and making adjustments when needed at each stage of your life.

By Your 30s

Fidelity says: At this age, you’ll want one times your current salary.

Meghan Murphy, a vice president at Fidelity, says that by age 30 – and, ideally, in your 20s – you can do this by making sure you are taking advantage of your employer match option in your company-sponsored retirement plan. On average, employers will match about 4.5% of compensation, she says.

T. Rowe Price says: At 30, you’ll want one-half times your current salary, and by 35, you’ll want one times your salary.

“These aren’t the hard and fast rules,” Young says. “If you are behind at age 35, you have time to recover. But it’s good to have some sense that are you behind and you want to get serious about saving.”

Others say: Moddasser maintains that the benchmark rules “discount the fact that there might be better things you could be doing with your time.” In your 30s, she says, the number one thing you should be focusing on is paying down your debt.

Then, she advises making a 10-year financial plan to figure out how you can do that during this decade while also planning for down payments on a house or investing in your career (such as getting additional certifications or degrees).

Wade Pfau, a professor of retirement income at The American College who studied the safe savings rate for retirement, says starting at 35, you should be saving 16% of your income each year in order to retire at age 65.

By Your 40s

Fidelity says: At this age, you’ll want three times your current salary in savings.

Rowe Price says: At 40, you’ll want two times your current salary, and by 45, you’ll want three times your salary.

Others say: Your 40s should be a time to focus on your earning power and to try to make as much money as you can, Moddasser says. If you have kids, this is also the stage where you should be considering contributing to 529 plans to pay for their college education, she adds.

Lucienne Hinger Hubiak, a Certified Financial Planner at Mint, says a great rule of thumb is the 70-20-10 spending guideline. Living expenses should be about 70% of your monthly income, debt payments (if you have any) should be about 20% of your monthly income and savings (for both long and short term goals) should take the remaining 10% of your monthly income.

By Your 50s

Fidelity says: At this age, you’ll want six times your current salary.

T. Rowe Price says: At 50, you’ll want five times your current salary, and by 55, you’ll want seven times your salary.

Others say: According to a 2018 Vanguard study, the average 401(k) balance for those ages 45 to 54 was $129,051, while those for ages 55 to 64 was $190,505. (That’s the actual amount, as opposed to the loftier goal. It doesn’t include any separate IRA balance workers may have.)

Ideally, according to Vanguard, you’ll want to save 12% to 15%. By age 50, you should be well on your way.

According to J.P. Morgan, these “retirement checkpoints” depend on your household income. At 50, if your household income is $75,000, you should strive to have 3.9 times your income saved, if you want to retire at 65. However, if you are 50 and your household income is $150,000, you should have saved 5.4 times your income. (There’s a good reason upper income folks should have more saved: Social Security replaces a lower percentage of their pre-retirement income.)

By Your 60s

Fidelity says: At 60, you’ll want eight times your current salary, so by 67 (retirement age), you’ll have 10 times your salary saved.

T. Rowe Price says: At 60, you’ll want nine times your current salary, and by 65, you’ll want 11 times your salary.

Others say: This is the point in your life when you should be saving most aggressively in order to maintain your current lifestyle in retirement.

This decade – presumably your highest earning years – will “define your lifestyle for the rest of your life,” Moddasser says.

How much money should a 40 year old have?

How much money should I have saved at the age of 40?

How much money does the average 40 year old have?