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If you’d like to save for more money, consider getting a high-yield savings account or reevaluating your budget regularly.
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Many experts recommend you have at least three to six months’ expenses in an emergency fund.
You should probably have an amount equal to your income saved for retirement by age 30.
You may need to adjust those numbers depending on your goals and at what age you plan to retire.
How much should you save in an emergency fund?
The general rule of thumb is that you should have three to six months of expenses in an emergency fund. While that may sound like a lot, think of it this way: If you lose work and can’t immediately find another job, you’re financially secure for at least three months.
Some personal finance experts recommend you save more than six months’ expenses — especially since the coronavirus pandemic has rendered many Americans jobless for longer than expected.
Ultimately, it’s up to you to decide how much you want to save for emergencies. We’ve looked at the average annual expenses by age group according to the US Bureau of Labor Statistics, then multiplied the numbers by three and six to give you a range of how much you should expect to save.
For example, the cost of average monthly expenditures for Americans under age 25 is $3,505.25. We’ve rounded that up to the nearest dollar ($3,505) and multiplied it by three and by six, for a range of $10,516 to $21,032.
AgeAmount in emergency savingsUnder 25$10,516 to $21,03225 to 34$15,976 to $31,95335 to 44$19,928 to $39,85645 to 54$20,964 to $41,92755 to 64$17,643 to $35,28565 to 74$14,109 to $28,21875 and older$11,455 to $22,910
Note: Average annual expenditures for Americans increased by over 9% from 2020 to 2021, according to the US Bureau of Labor Statistics. The US Bureau of Labor Statistics analyzed 14 areas of household spending, and the areas that saw the most significant increases in the last year were entertainment, apparel, and services spending.
Keep in mind, that $3,505.25 takes into account nonessential spending on things like clothes and jewelry, nights out at restaurants and bars, and other entertainment. Many people recommend you just save three to six months of essential expenses, such as rent and groceries. So if you don’t have at least $10,516 at age 25, for example, don’t panic.
Of course, you may spend more or less than the nationwide average for your age range. To calculate your monthly expenses, write down how much you spend on everything from rent payments, to groceries, to gas, to student loan payments. You’ll probably want to eliminate discretionary spending in your calculation, and keep the tally to the costs of things you absolutely need.
Once you’ve totaled your monthly expenditures, decide how many months’ worth of expenses you want to keep in savings. Multiply your monthly costs by the number of months, and you have your emergency savings goal.
Should I increase my emergency fund?
If you’re worried about what might happen when the economy isn’t performing well, you might consider increasing your emergency fund savings. However, Brittany Davis, AFC, associate financial planner at Brunch and Budget, says you don’t want to suddenly increase your savings amount if it’s difficult to maintain.
“You want to do something that’s sustainable for your budget, and be realistic with your spending and saving ratios,” advises Davis. “If you see that you want to increase your savings, cut back on one thing. Then, take that difference and put it into your high-yield savings account.”
Don Hilario, CFP professional and founder of Hilpan Moxie, suggests reviewing different savings options.
“You want to be mindful that your personal bank is offering you a higher yield than it was a year ago. And depending on when you have access to the money, you should consider cash alternatives, such as CDs and/or treasury bills,” says Hilario.
How much should you save for retirement?
Financial advising company Fidelity Investments recommends you have a minimum of one year’s salary saved for retirement by the time you’re age 30, then move on from there. You’ll likely need to reevaluate this goal regularly, because chances are, your income will be higher at age 50 than at age 30. Here are the recommendations:
1 times your income by age 302 times your income by age 353 times your income by age 404 times your income by age 455 times your income by age 506 times your income by age 557 times your income by age 608 times your income by age 659 times your income by age 70
To calculate how much you should save for retirement by each age, we’ve looked at the nationwide median household income of $70,784, according to the US Census Bureau. Then we multiplied it by the corresponding number listed above.
AgeAmount to save for retirement30$70,78435$141,56840$212,35245$283,13650$353,92055$424,70460$495,48865$566,27270$637,056
We’ve used the median household income to keep things simple, but your retirement savings goal will depend on how much you earn — and more importantly, how much you plan to spend. Keep in mind that you could receive raises as you get older, too, especially if you spend most of your working years in the same career.
The amount you need for retirement will also depend on your lifestyle. If you expect to scale back during retirement, you might need less than the recommended amount. But if you plan to travel the world or buy a vacation home, you’ll probably need more.
How much do you need to save in your 20s?
Many experts recommend you save at least three to six months’ worth of expenses for an emergency fund. Based on the average monthly expenses reported by the US Bureau of Labor Statistics, you should aim to save between $10,516 and $21,032 if you’re under 25, and $15,976 to $31,953 if you’re age 25 to 34.
Fidelity recommends you save the equivalent of one year’s salary for retirement by age 30, so you can spend your 20s working toward that goal before your 30th birthday.
If these goals don’t feel realistic right now, don’t worry. The most important thing is to save what you can, even if you feel behind. It’s also worth considering the following:
Data from the Federal Reserve shows Americans under age 35 have an average of $11,250 in bank accounts.Data from the Federal Reserve shows Americans under age 35 have an average of $30,170 in their retirement accounts.Data from investment management company Vanguard shows the median 401(k) balance for Americans under age 25 is $6,718, and $33,272 for those ages 25 to 34 — but the median 401(k) balance varies by gender, salary, and industry
By looking at how much other people your age have saved, you may realize you’re not as behind as you think.
How much do you need to save in your 30s?
Ideally, you should save at least three to six months’ worth of expenses for an emergency fund. Based on the average monthly expenses reported by the US Bureau of Labor Statistics, you should aim to save between $15,976 and $31,953 at age 34 and $19,928 to $39,856 if you’re ages 35 to 44.
Fidelity recommends you save the equivalent of two years’ salary for retirement by age 35, and three years’ salary by age 40.
If these large numbers seem daunting, don’t worry. Focus on saving what you can — you can’t make up the difference all at once. You should also know the following:
Data from the Federal Reserve shows Americans under age 35 have an average of $11,250 in bank accounts, and those ages 35 to 44 have $27,910.Data from the Federal Reserve shows Americans under age 35 have an average of $30,170 in retirement accounts, and those ages 35 to 44 have $131,950.Data from investment management company Vanguard shows the median 401(k) balance for Americans ages 25 to 34 is $33,272, and $86,582 for those ages 35 to 44 — but the median 401(k) balance varies by gender, salary, and industry.
Looking at how much other people your age have saved may give you perspective about how much you need to set aside.
How much do you need to save in your 40s?
Try to keep at least three to six months’ worth of expenses in emergency savings. Based on the average monthly expenses reported by the US Bureau of Labor Statistics, you should aim to save between $19,928 and $39,856 if you’re age 35 to 44 and $20,964 to $41,927 if you’re age 45 to 54.
Fidelity recommends you save the equivalent of four years’ salary for retirement by age 45, and five years’ salary by age 50.
If you feel behind on your savings goals, you’re not alone. Focus on saving what you can, or even just getting started if you’re new to saving. Consider the following:
Data from the Federal Reserve shows Americans ages 35 to 44 have an average of $27,910 in bank accounts, and those ages 45 to 54 have $48,200.Data from the Federal Reserve shows Americans ages 35 to 44 have an average of $131,950 in retirement accounts, and those ages 45 to 54 have $254,720.Data from investment management company Vanguard shows the median 401(k) balance for Americans ages 35 to 44 is $86,582, and $161,079 for those ages 45 to 54, but those numbers vary by gender, industry, and salary
If you’re wondering how to save more, scroll to the bottom of this post for practical tips.
How much do you need to save in your 50s?
Experts recommend keeping at least three to six months’ worth of expenses in emergency savings. Based on the average monthly expenses reported by the US Bureau of Labor Statistics, you should try to save $20,964 to $41,927 if you’re age 45 to 54 and $17,643 to $35,285 if you’re age 55 to 64.
Fidelity recommends you save the equivalent of six years’ income for retirement by age 55, and seven years’ salary by age 60.
Don’t panic if you haven’t saved the recommended amount yet. You still have time to kick it into high gear, and it may comfort you to know the following:
Data from the Federal Reserve shows Americans ages 45 to 54 have an average of $48,200 in bank accounts, and those ages 55 to 64 have $57,670.Data from the Federal Reserve shows Americans ages 45 to 54 have an average of $254,720 in retirement accounts, and those ages 55 to 64 have $408,420.Data from investment management company Vanguard shows the median 401(k) balance for Americans ages 45 to 54 is $161,079 and $232,379 for those ages 55 to 64, but those numbers vary by gender, industry, and salary
How much do you need to save in your 60s?
Try to save at least three to six months’ worth of expenses in an emergency fund. Based on the average monthly expenses reported by the US Bureau of Labor Statistics, you should try to save $17,643 to $35,285 if you’re age 55 to 64 and $14,109 to $28,218 if you’re age 65 to 74.
Fidelity recommends you save the equivalent of eight years’ income for retirement by age 65, and nine years’ income by age 60.
Many Americans plan to retire in their 60s, so you may be feeling panicked if the amount in your savings doesn’t align with experts’ recommendations. Don’t worry — the most important thing is that you’re saving what you can. It also may help to remember the following:
Data from the Federal Reserve shows Americans ages 55 to 64 have an average of $57,570 in bank accounts, and those ages 65 to 74 have $60,410.Data from the Federal Reserve shows Americans ages 55 to 64 have an average of $408,420 in retirement accounts, and those ages 65 to 74 have $426,070.Data from investment management company Vanguard shows the median 401(k) balance for Americans ages 55 to 64 is $232,379, and $255,151 for those age 65 and older — but those numbers vary by gender, industry, and salary.
Tips for saving more money
Has looking at these numbers freaked you out a bit? There’s still time to get on the right path, whether you’re age 20 or 60. Here are some tips for saving more for your emergency fund and retirement.
Open a high-yield savings account
Keep your checking and savings accounts separate may help you resist the temptation to spend more. And choosing a high-yield savings account over a traditional savings account can be even more useful.
High-yield savings accounts pay higher interest rates than regular savings accounts. Most charge no monthly fees, whereas traditional accounts impose fees unless you keep a certain amount in savings or set up direct deposits. This combination of earning more and paying less in your account can help you save more.
Some high-yield savings accounts, such as the Ally High Yield Savings Account, let you set up individual savings goals in your account. This way, you can have a separate bucket for your emergency fund, travel fund, and home down payment fund. Ally also has a “Surprise Savings” feature that assesses your spending habits and automatically transfers extra cash from checking to savings.
Reevaluate your budget regularly
Consider looking at your expenses once every year, six months, quarter, or month.
You might realize that you have more income coming in than you originally accounted for — perhaps you received a bonus or raise. Hilario says you could consider using your cash surplus to restore or increase your emergency savings.
If you’re struggling to save or maintain your budget, Hilario recommends reviewing your budget. You can see if the outflow of money spent is less than your take-home pay. If it is, Hilario says you might consider reducing nonessential expenses.
Ultimately, staying on top of your budget makes it easier to figure out where you can save more money.
Set up automatic transfers
Many of us say we’re going to put more in a savings account or retirement fund, but we simply forget or fall out of the habit. Setting up automatic savings can remove the burden of remembering to save.
Sign in to your bank account online to schedule weekly or monthly transfers from checking to savings. Talk to your employer about automatically taking money out of each paycheck to go into your 401(k). If you have an IRA, call a representative or go online to set up automatic transfers from your bank account into your retirement account.
Automatic transfers make saving easier, and you’ll likely end up saving more without realizing it.
Make the most of your employer 401(k) match
If you have a 401(k) through your employer, chances are, it offers a company match.
For example, a business might match 100% of your contributions, up to 5%. So if you aren’t contributing at least 5% of each paycheck to your 401(k), you’re losing out on free money from your employer. Maxing out your company match is a simple way to put a little more toward retirement.