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How Much Should You Save In Your 30s, 40s and 50s?

Human beings are natural procrastinators, and our savings decisions are no different. We prefer consuming now, promising ourselves to save more once we get a pay rise to recover lost ground. This rarely happens, as increased pay often results to a corresponding increase in our standard of living, until we get to a point where we simply have to do something to recover.

How do you recover lost savings mileage ?

This year, as I marked my birthday, it occurred to me that I’m as close to 30 years old as I ever will be, and that I am pretty far from achieving the financial goals I set when I got my first job. I have been saving rather consistently, but because of basic financial mistakes I have made along the way, I have lost significant momentum in building up savings. I will share a couple of those mistakes on here in a later post.

Looking forward, I realize that I probably need to recast my goals, and save a lot more, to be able to achieve a degree of financial independence by the time the coming decade is over.  On the amounts I need to save, I  came across this article  that recommends the following level of savings at various life stages:

  • At age 35, you should have saved an amount equal to your annual salary.
  • At age 45, you should have saved three times your annual salary.
  • At 55, you should have five times your salary.
  • When you retire at age 67, you should have eight times your annual pay.
A related article says that the longer you wait to begin saving, the more you will need to save to achieve the above goals. Sample this:
  • Start at age 15, and you need to save 8% of annual income for life.
  • Start at age 20, and you need to save 11.1% of annual income for life.
  • At age 25 you need to save 15.4%.
  • At age 30 you need to save 21.4%.
  • At age 35 you need to save 30.1%.
  • At age 40 you need to save 43.2%.
How far are you in saving for retirement?
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