How Much Money Should I Have Saved by 30?

SHORT ANSWER: Standard financial advice suggests you should have the equivalent of your income saved by age 30. 

In your 20s, you're busy getting a degree, launching a career and finding your place in the world. Retirement is not on the minds of most 20-year-olds, but it should be. 

Einstein once said, “Compound interest is the eighth wonder of the world. He who understands it, earns it — he who doesn’t — pays it.” 

Compound interest works over time. The more time you have, the more you can earn. By starting to prepare for retirement in your 20s, you have the time to build an emergency fund, save for a mortgage down payment and create savings for a comfortable financial future in your golden years. 

So, "How much should I have saved by 30?" That depends on your lifestyle, salary and future goals. Benzinga breaks it down for you below. 

How Much Should I Have Saved by 30?

General financial advice suggests saving the amount of your salary by age 30. That means if you're making $60,000 a year, you should have $60,000 saved by age 30. Of course, there are individual considerations. You might have attended years of graduate school and only started working at 25 or 27. Then, saving $60,000 in three to five years can be a tall order. 

If you haven't hit that number, you're not behind. But it is worth increasing savings to build momentum. If you're reading this article in your 20s or 30s, you have time to build savings. Break a big problem into small, achievable savings goals and use the power of compound interest to increase savings over time. There are so many benefits to saving.

Example

If you start saving at age 22, to save $60,000, you'll need to save an average of $7,500 per year or $625 per month. You might not need to save the full amount from your salary if your employer offers a 401(k) match. In that case, maximize contributions so you're not leaving any employer-match funds on the table. 

The figures above do not take into account the effect of interest. Suppose you invest all that you save into an index fund through your 401(k), Roth individual retirement account (IRA) or a brokerage account. With an assumed average annual return of 7%, in eight years, you'd have around $78,000. 

If you can get an average of 7% annual return on investment, you'd only need to save about $500 per month to reach $60,000 in eight years. If you keep the money in a high-yield savings account with an interest rate of 4%, you'd need to contribute $550 per month to reach around $61,000 by age 30.

Savings Goals By Age

How much money should I have saved by 30? That depends on your current income. But 30 is only one milestone. Are you wondering how much you should save in each decade of life? Here's a breakdown of expert-suggested savings amounts by age.

You can adjust this timeline if you plan to retire earlier or later, but it gives you a reference point for starting to build savings. 

How to Reach Your Savings Goals by 30

Your 20s are the perfect time to start making the habits you need to strengthen your financial future and reach long-term savings goals. Here are steps you can take to reach your savings goals by 30. 

Maximize 401(k) Matching

If your employer offers a 401(k) match, take it. You’re passing up free money if you have access to an employer 401(k) match program and you’re not using all of it. Employers could match up to 50% to 100% of contributions on up to 6% of your annual salary. The matched money doesn't come out of your salary. But if you don't contribute, you leave free money on the table. 

For example, if you make $50,000 per year and your employer matches 100% of your contributions up to 3% and 50% up to 6%, you could add an extra $2,750 annually to your retirement savings. If you don't know how much your employer matches, speak with the human resources department to understand employer policies. 

Set a Budget

Learning to budget can set you up for a strong financial future. Look at your total income and necessary and discretionary expenses to set a realistic budget for your lifestyle. The 50/30/20 budget is a good starting guideline. You can also check out free budgeting apps or expense trackers to simplify budgeting. 

Pay Off High-Interest Debt

If you have high-interest debt, paying it off should be a priority. You can make larger payments or consider options like a personal or debt consolidation loan to secure a lower interest rate and plan to pay off the debt over time. You can also try different debt repayment strategies, like the debt snowball or debt avalanche repayment strategy. Learn more about how to pay off debt here. 

Automate Savings

If you receive a regular paycheck, you can automate a monthly transfer to a savings account to make savings automatic. By scheduling automatic transfers from your checking account to a savings account, you'll pay yourself for savings goals first, ensuring that money isn't spent on other expenses. You can also consider using a money-saving app to find and save extra cash.

Consider a Savings Challenge

Savings challenges can be a great way to jumpstart your savings goals. Consider a no-spend challenge, the 100-envelope challenge, the 52-week challenge, a pantry challenge or any other savings challenge that makes savings feel rewarding instead of limiting. 

Set Small, Regular Goals

Becoming a millionaire doesn't require a high-paying job or winning the lottery. You can become a millionaire with regular, smaller savings. Here are a few examples of how you could reach your savings goals, all assuming a 7% annual return:

• Saving $500 per month for 35 years would give you $834,700.
• Increase that to $700 per month, and you'd have $1.1 million in 35 years. 
• Saving $4,000 per month for five years, you could build $281,600 in savings.
• If you leave that $281,600 earning 7% interest without additional contributions for another 20 years, you'd have over $1 million. 
• Saving $1,000 per month for 25 years could result in over $764,400.
• If you leave that $764,400 earning 7% interest without additional contributions for another 10 years, you'd have over $1.5 million. 
• By saving $2,000 per month for 10 years, you could have $335,529. If you continue saving like that for another 15 years, you could have over $1.5 million. 

Final Savings Tips for Anyone Nearing 30

Whether you've still got a few years until you turn 30 or you're already closer to 40, it's not too late, and you're not behind (yet). You can catch up and reach any savings goal. However, it takes persistence and reframing priorities to start saving more. 

Need more support? Check out Benzinga's retirement income calculator to get an idea of how much you need to retire. Or, you can learn how much to save for a house or a car or to spend on groceries to start building your personalized budget and savings goals.