How Much Money to Save at Every Age

[Music] I don't really believe in comparing yourself to others, but sometimes it's good to have a benchmark. No matter what age you are, everyone has dreams and goals. And so by the end of this episode, you'll know how much is safe for every single decade, and you can compare yourself to see if you're above or below average. Now according to a retirement plan provider in the US, the rule of thumb is to save 10 times your income if you want to retire by the age of 67. It's not 65 anymore, we're living longer, so we're starting to push that out a little bit. Now I would say this is not the easiest thing to do. 10 times your income saved by the time of 67 is not something that you can get passively. So how much should you save per decade? Let's start with your 20s. In your 20s, you are probably still figuring out your life goals, your figuring out who you are. And so the focus is to get good money habits in your little tool kit right now, even when you don't have a lot of money. I think in your 20s, there is a lot of pressure to get everything figured out. I blame the Forbes City under 30s awards for like kind of putting this pressure in that by 30 we have to achieve all these different things and we need to know what career we want we need to know, who we want to be with for the rest of our life. We need to know what kind of person we are, what our hobbies are, what kind of education we want to take on. And it's overall quite overwhelming and not something that you have to have down straight away. So the savings goal for your 20s is to have one to two months of living cost saved. But if you want to get an A+ I would say three to six months of living cost saved. And according to the Federal Reserve's Board in 2022, in America at least the average balance of someone in their 20s is $20,000. And I feel like that's going to be skewed by people that are in their late 20s. Sometimes sadly some people in their 20s also have windfalls that they receive from grandparents. And so there's a number of different things that can contribute to the average balance. But I have met 20 year olds with negative savings. I have met 20 year olds with $500 saved. I have met 20 year olds with $20,000 saved. The 20s is probably the hardest time to compare because we're no longer living on the same plane anymore. Some of us have a head start. Some of us have things that we're trying to get out of like student loan debt. So if you have at least one to two months of living cost saved, you are doing well. And if you really, really, really want to get an A+ cost plus if you are like a five star student that just is a bit a little bit of a teacher's pet, what you can do are two things for me. One is opening up a retirement account to match your employee's contribution. And the second is just to start investing. By doing these two things, you're going to be sitting yourself up for success. And this is a time when if you get a bonus, if you get a windfall, if you are American and someone hits you with a car and you get like cash, this adds up. I was watching the show Vandipump Rules. And one of the waitresses, Sheena Shea, who's like a star of the show, this is real life. She got hit by a car and she got an insurance claim for it. And then she used that money to pay for her wedding, which was a beautiful, extravagant wedding. But when you're on your 20s, that $20,000, $30,000, $40,000 can really make a huge difference. So save that money and invest that money. Do what you can to put that money away. Not to say that this was important, but the marriage didn't last. So it was kind of like a frustrating amount of money to have lost in that kind of way. But I digress in your 20s, a little bit saved up. It's not the time to be stressing. If you do not have a lot of money in your 20s, this is the time that you're going to be sitting yourself up. So let's say you've achieved that. Let's say we're now thinking about our 30s. What does that look like and how much should you have saved? Now when it comes to your 30s, life can start to look a little different. Your frontal lobe has developed. Hopefully, especially if you like me and your 20s have made some very, very, very stupid mistakes. And just, you know, it's a little bit of a, a little bit of a messy decade, let's say. And so you might have certain life goals that you're starting to think about a little bit more. Maybe it's time to start saving up for a property. Maybe you'd like to buy your first home, especially if you live in a country like Australia or Canada or New Zealand where property prices, the UK is kind of like any large city to be honest. Where property prices are high. And it's no longer the expectation that you will have been able to buy a home in your 20s. But your 30s are probably the time where you might start thinking about something like that. Sometimes for some people, this might be the time when they think about starting a family. And along with that comes a lot of extra financial considerations. For one, you're going to be accounting for extra costs involved with having baby, looking after baby. Often a reduction in salary or a bit of stagnation or taking time off work. So there's extra things that you have to think about that you didn't have to in your 20s. I also feel like the 30s when a lot of people start finding money or time to put into hobbies. Like I don't know why, but as soon as I meet like women or men that reach 30, it's like they're going to get really into barbecue. The men or they're going to get really into gardening or they're going to get really into like painting minute shows like there's always something. I'm definitely starting to feel that way as well. The idea in your 30s is that you're starting to get a better idea of your values and what you want to spend your money on. And so the savings goal for your 30s is that you want to have an equivalent of your annual salary saved up or invested. I'll say that again. In your 30s, you want to have the equivalent of your annual salary saved up or invested. So if you make $50,000 a year, you should have $50,000 a year saved or invested or a mixture of saved invested in your retirement fund. And the average balance of someone in their 30s is about $41,000. Now remember, this includes people that are 31 to people that are 39. And if you really want to start thinking about taking your 30s to the next level, kind of getting an A plus in your 30s, if you may, your 30s are probably the time to really start clearing out those bad dits if you haven't already. These sort of things include credit card loans that you haven't paid off. They include student loan debt that you're going to start chipping away at. It includes debt that you have high interest on. But this does not mean mortgage debt. This does not mean low interest rates student loan debt. This is not debt that you need to pay off quickly like a car payment debt that's, you know, under 3% not that those exist right now. But the idea is you pay off the heavy bad debt. It's okay to keep the good debt. And you want to make sure that whatever your salary is in your 30s, you want to have that much saved up either in cash, invested or a mixture of cash invested in your retirement fund. I kind of prefer this way of doing it because if you think about it like, Sally might be making $100,000 a year. And Sarah might be making $300,000 a year. Those are two very different people with two very different salaries. However, if I was to sit here and go, hey, everyone, like we should all save $100,000 or we should all save $50,000. Like that's a lot easier for the person making 300k. She's going to be like, yeah, of course, easy. Whereas, you know, for the person making $100,000 a year, that's half her salary. That's not easy to save up in comparison to someone that makes a lot of money. And so by kind of negotiating it down and saying, hey, as long as you are saving an alignment with your personal income level, then the person making 300k a year, she should be having $300,000 saved up or invested, not $300,000 a year, but across her 30s. That is what she should be having. And the person making $100,000 a year should have about $100,000 saved up or invested. And so that way, regardless of where you are in terms of your income, you're kind of getting a good idea of how much you should be putting away. And it starts to feel a little bit less daunting when you actually have a number that you can aim for. And the idea behind it is again, there's no point of giving like a blanket statement of like, put away this amount, it is all down to your income. And so as your income increases, you better make sure that those lifestyle creeps that start to kind of make their way into your life, do not chip away at your money. Because as your income increases, as you get that next promotion, as you become manager, as you become a director, you're going to want to start treasing like one. You're going to want to start going to the expansive gym that all the other, you know, high executive performing women go to, I don't know, I feel like you'll be like, oh my god, my handbag is not good enough. I need like my Kate's paid handbag is like so so outdated. And I need something else. I know if it's Kate's paid, I personally love Kate's paid, but you get what I mean. The idea is you need to keep your expenses low and that way you'll be able to save up at least a year of your salary. So you figure that out, you've got your 20s to kind of mess around, you're starting to get things right in your 30s, what should your money look like in your 40s? Now in your 40s, you might be starting to feel maybe a little bit more comfortable in your own skin. You're going to hopefully know more of what you want. You've been putting up with less BS in your life. You've been wearing sunscreen and taking a retinol at the evenings, putting it on your skin. So you know, you kind of like snatched. I mean, that's the goal, this thing is crossed. But in your forties, the life goals that you're probably going to have might be things like renovating the current home that you have because it might, you know, have started to feel a little bit outdated or you might even be looking to find a bigger home to accommodate for some of the changes in your lifestyle, maybe your children are getting older. If you have children, maybe your pets require a single story level house because they're getting older and they can't go up and down the stairs. And that's clearly a normal reason to change houses. You might also be thinking a little bit more about your career, you know, at this point, you've been in the workforce for 10, 15, 20 years. And so you kind of understand the game. You've figured out exactly where you're hitting in terms of at least how strong or how intensely you want to go up the corporate ladder or starting a business. You might also completely decide to shift and start something completely different. I mean, Vera Wang started her company in her forties, I think when she was denied becoming Vogue's editor. She was like, that's fine. I'm going to start Vera Wang. And you're also going to be able to start thinking about if you have children, college, education costs or if you have an Ion earlier retirement. What's that calling people in their forties, the sandwich generation or the kind of sandwich group because not only are you taking care of people below you, your children, your dependents, these the nephews, you're also going to have to start thinking about your parents the generation above you. Because they're going to be in their 60s and 70s. And you know, it's really scary. Some of our parents are a bit older. So they might even be in their 80s and 90s. And you have to start thinking about their care and what does that look like while they are still young, semi-young and healthy. But starting to get older, starting to possibly need surgeries, needing care, a lot of my childhood. It's very interesting how different people grow up. But in my childhood, my grandparents lived with us. We had like a multi-generation household. So a lot of times it was kind of expected of us to take our grandparents to the doctors or the hospital or get them for elective surgeries or get them checked up. And it was very normal. But that's just an extra thing to think about in terms of finances and in terms of time. And so your forties start to get a little bit more complicated with all these different moving parts and all these different ideas of what's going on. But hopefully by the time you're in your forties, your income will have increased definitely since your 20s. You'll have a lot more confidence. You'll be able to ask for what you're worth. And so the savings goal in your forties, bear with me, should be three times your annual salary. Three times your annual salary should be saved or invested. So if you are making $50,000 in your forties, you should have $150,000 saved or invested retirement accounts are included in this. But that is the idea. And remember, you might be thinking, "This is a lot like how does this work? Why, why this number?" And remember, this is all to make sure that you are in the complete best possible place to be set up so that when you turn 67, you have 10 times your salary. But to do that, to have that to retire comfortably with that, these are the benchmarks that you need to be taking off. So if you make $100,000 a year, you need to have $300,000 saved or invested. And if you started investing in your 20s or 30s, or even now in your forties, so earlier you start, the list you have to put in to grow this investment account, but it doesn't mean it's too late. It doesn't mean if you're listening and going, "Oh my God, I'm like, definitely not there yet." This is the time to learn. This is the time to figure it out. And it just means finding that way to increase your income, to invest more money into your retirement account, and build up that nest egg, because future you is going to be so, so, so thankful. And the average balance saved and invested of someone in their forties is $71,000. So forties sounds a little bit scary. Things are getting a little bit more serious. You might kind of feel like you're starting to begin your midlife crisis. So the best money saving tool in your forties is to not buy a fast car, to not buy a motorbike. I feel like it's the fast car, but I don't know what like our generation is going to do. And I definitely don't know what Jansi is going to do, but I'm very excited to see what happens. Now, we're going to move over to our fifties and our fifties. We're feeling pretty comfortable. We're feeling in our skin. We might suddenly start wearing like fur coats and calling everyone dear. I personally really look forward to my fifties. Fifties is not that old though. My parents are in their fifties. And in my head, they're still like 37. And so you're still active. You're still young enough. You're still figuring things out. And you might even have adult children at this stage. And at this point, you need to have saved or invested six times your income. Also, on average, someone in their fifties has around $80,000 saved up or invested in your fifties. If everything has gone to plan, you might be getting close to paying off your home. You might even start looking at purchasing more property like a batch or a holiday home if you are fortunate to do so. But funnily enough, maybe more like sadly, a lot of cautiousness starts to grow amongst people in their fifties. A lot of people in their fifties, when it comes to thinking about retirement, that ends up being the main focus. When you're in your twenties, retirement is something you do later down the track. It's like, oh, you're retirement. I'll do that later. I can retire, but I'm only 23 years old once. I'm going to go to Paris. So I could retire, but I love this new perfume. I'm obsessed with perfume right now. And I'm going to buy it. And so when it's so far away, it's just hard to even imagine it or picture it or think like, is this valuable? Is this something I need to do? And so in your fifties, it is a little bit scary because now you've got like a decade and a bit left to retirement. And the people that have made good financial decisions in their 20s, 30s and 40s and good health decisions in their 20s, 30s and 40s, you're starting to see that group separate from the group that maybe were not looking after their health or their finances. And this obviously needs to be caveated with the fact that some people just have had really hard lives. And they have bad luck. And it is not necessarily their fault that they are in their fifties and they have found themselves maybe not in the financial position that they thought that they would be in. And I have to say, this is the time when living in a country where you have support, social security, government support, these things really help and really matter. And countries like the UK and Australia and New Zealand and Canada actually do a pretty decent, I mean, not perfect, but decent job offering like, hey, if you have sickness issues and can no longer work, here is the sickness benefit. If you have lost your job in your fifties and you're facing like ageism and the workforce and it's hard for you to get a job, here's like a working benefit or an allowance. And so there are support systems available, but I just want to bring that in because as I have seen in my own experience, there are many people that do the right thing, are good savers, put money away, but sometimes life happens and again, these numbers are things to hope that you can kind of have settle down and hope that you've kind of got done. But it's okay if you do not have six times your income saved up. Sometimes even if that is just equity in the home that you've slowly paid off, well that's your retirement fund or even if you've only got half of it, it is a good place to start. Then it comes your sixties. And I have to say, I mean like a touch wood, but when I reach my sixties, I just don't know how I'm gonna feel like, I don't think forties is old, I don't think thirties is old, I don't even think fifties is old, but I think once you hit sixties, you just can't deny it at that point. Like that is elderly. I've started actually following some accounts where they're like women in their sixties and seventies that do sickness like that. They're like quite fit and they have like toned arms and they go to the gym and they lift weights. And I'm like, this is what I hope. I mean I don't do it now in my twenties, but like God, I hope I do it in my sixties. And so when you get to your sixties, you want at this point to have eight percent of your annual income saved up or invested. Then by the time you are 67, you want to be able to have 10 times your income saved up or invested. And that sounds quite high and it sounds like a lot, but remember over the decades we've slowly been building the sub was been building up, one times our income. Three times our income, four times our income, five times our income, like we build this up slowly. So that by the time you hit 67, you have 10 times your income saved up and invested and that's going to help you be able to do it. draw down money and retire and have a more comfortable life where you do have a roof over your head, where you're not going to the supermarket and just buying baked beans and bread and like having that every night because I have seen it and it is so so so heartbreaking when you see people that are further along that you know life hasn't been too kind to them. So beating the averages is actually something that can be done. It may be easier than you think if you're listening to this and going sim okay I understand these benchmarks but it's scary I just don't know where to begin I don't know how to get started. Here are some quick tips that are going to make it a lot more easier. The first thing is surprise surprise sitting up some goals. If you have the goals that we have spoken about now then you are going to be able to know that hey in my 30s I need to have one times my annual income saved. In my 40s I need to have three times my annual income saved in my 50s I need to have about six times saved and in my 60s I need to have eight times saved. So have these goals then by having these goals you can work backwards okay how much do I need to save every single week to put some money aside and invest it and assuming an annual rate of around six seven eight percent how much will that money grow over time. So it's also important to separate your savings and your everyday spending into different bank accounts even if it's in the same like account app just because that way you're not pulling out money for future you that could be used in retirement you're using whatever you have now and then you don't feel guilty because you go well the $50 I can do whatever I want with it I can spend this money this is not for my future self like I will not be eating beans on toast for the rest of my life I could spend this 50 dollars. And the third thing that you want to do which is weirdly such a game changer like the amount that this helps compared to how hard it is to do because it's very simple to do is to set up reoccurring payments. If you find out that you only have $5,000 saved or $10,000 saved and your goal is to have $30,000 saved by you know the next two years work backwards and figure out well then to get that amount how much do I need to put away every single week or invest every single month and then you're going to have that set up reoccurringly from your bank account for every single month a hundred dollars or three hundred dollars or five hundred dollars gets taken it gets invested into a broad market index fund or saved in a high old savings account and you are putting this money away for future you. I know it can seem scary I know it can seem overwhelming I promise you that the fact that you're even watching this or listening to this means that you are ready to take your retirement seriously and you will do so much better than if you had just decided to bury your head in the sand because it's very easy to do that and so I hope you enjoyed this episode and with that please leave a review leave a comment on YouTube let me know how you found it send it to someone that you think it would benefit and with that I'll see you next week. Disclaimer friends that invest does not provide personalized investing advice for your individual needs we are not financial advisors the advice from friends that invest exists for educational purposes only and should not be relied upon to make an investment or financial decision advice from friends that invest is general in nature and does not consider individual circumstances always do your research and do diligence.