How much money you should save BY AGE?

Summary

This video script addresses common financial questions about saving and investing, offering guidelines for each decade of life. It emphasizes building financial habits early, paying off high-interest debt, and tracking spending. By age 30, aim for one year's salary saved; by 40, three years' salary; by 50, six times your annual salary; and by 60, eight times. The video also discusses adjusting spending, managing debt, and planning for retirement, highlighting the importance of compounding and personalized financial strategies.

Takeaways

• 💼 In your 20s, focus on building financial habits rather than just the amount saved, and prioritize paying off high-interest debt.
• 💳 Track your spending in your 20s to understand where your money goes, which is crucial for future savings.
• 🏦 Aim to save at least one month of living expenses by your 20s and consider opening a tax-advantaged investment account.
• 💹 By age 30, the guideline is to have one year's salary saved, which includes money in savings, retirement, and investment accounts.
• 🚀 In your 30s, save and invest at least 10-20% of your income, avoid lifestyle inflation, and work towards becoming debt-free.
• 💰 By age 40, the target is to have saved three times your annual salary, considering the power of compounding growth.
• 📈 Maximize retirement contributions in your 40s, aiming for at least 15% of your gross income, and be proactive with tax planning.
• 👵 In your 50s, reassess your investment portfolio for wealth preservation and consider turning investments into retirement income.
• 🛡️ By age 60, aim to have saved at least eight times your annual salary and review your investments for risk tolerance and retirement sustainability.
• 🌟 Remember that financial guidelines are not one-size-fits-all; adjust them according to your personal circumstances and goals.

Q & A

What is the average amount saved by a 20-year-old in the UK and the US according to the video?

The average 20-year-old in the UK has less than £1,000 saved, and in the US, it's less than $1,800.

What are the key financial habits to focus on in your 20s as suggested in the video?

In your 20s, focus on getting rid of high-interest rate debt, tracking your spending, saving up at least one month of living expenses, and opening a tax-advantaged investment account.

What is the guideline for savings by the age of 30 according to Fidelity?

The guideline is to have one year of your salary saved up by the age of 30.

How much would someone have saved by age 65 if they invested $50,000 annually with an additional $500 per month and an 8% average rate of return?

They would have approximately $1.77 million saved up by the time they reach 65.

What are the three financial goals for someone in their 30s as outlined in the video?

The goals are to save a bigger percentage of your income (10-20%), avoid lifestyle inflation, and work towards becoming debt-free except for a mortgage.

What is the recommended savings target by age 40 according to the video?

The target is to have saved three years of your salary by age 40.

How does compounding growth affect the additional savings needed to hit the overall target according to the video?

The compounding growth of initial savings makes a significant difference, reducing the amount of additional savings needed to meet the overall target.

What are the three areas to focus on financially in your 40s as suggested in the video?

In your 40s, focus on maxing out your retirement contributions, being proactive in tax planning, and understanding how to prioritize your expenses.

What is the general recommendation for savings by age 50 according to the video?

Experts recommend having six times your annual salary saved up by age 50.

What are the two key considerations for investments as one approaches retirement mentioned in the video?

As one approaches retirement, it's important to reassess the investment portfolio to make it less risky and to think about how to turn investments into a steady stream of income in retirement.

What is the guideline for savings by age 60 and beyond as discussed in the video?

The guideline is to have saved up at least eight times your annual salary by age 60 and beyond.

What is the final thought shared in the video regarding financial guidelines and personal circumstances?

The final thought is that while guidelines are helpful, they may not fit everyone's reality, and it's important to tailor them to one's own situation.