If you're wondering what it will take for you to retire or whether you have enough tucked away for an unexpected emergency, you're not alone! Many Americans are wondering how much money they should have saved at this point in their life to ensure they can enjoy retirement, feel prepared for the future, and be ready in case of an emergency expense.
Overall, savings account levels have dropped in recent years. According to data compiled by the U.S. Bureau of Economic Analysis, the average percentage of discretionary income that found its way into some type of savings account was only 4.1 percent in 2022. That figure is significantly lower than peak saving periods of 26.3 percent in 2021 and 33.8 percent during 2020. While savings account levels have been shrinking overall, it can be hard to know where you personally fall with your finances. Here are some recommendations to ensure you continue saving and growing your savings accounts.
When talking about savings for an unexpected expense, you should aim to have an emergency savings account with 3 to 6 months of savings to cover expenses. When determining how much you should have saved for retirement, retirement experts typically advise clients to build a retirement fund with at least 10 times their annual income by the age of 67.
People who want to retire at 65 would, in theory, need to possess an additional two years of income at 65. The math holds true for people who want to get out of the workforce sooner by taking Social Security at 62. Given the current state of savings, achieving these goals can seem daunting.
If you are unsure whether you're on track for your retirement savings, consider the average recommendation that people should be saving a pre-tax amount of 10 to 15 percent of their income in an interest-bearing account or a retirement account. While this is the goal, on average, most Americans save less than 5 percent. Consider the following age-appropriate savings benchmarks and see where you currently stand.
When reaching the three-decade mark, you should have a minimum of one year’s annual salary tucked away in one or more savings accounts.
To steadily accumulate 10 years of income by 67, you should have at least three years’ worth of income saved at your 40th birthday.
By the half-century threshold, you are tasked with picking up the pace with having a savings reflecting six years of income.
At 60 years old, retirement age is close at hand. You should have a minimum of eight years of annual income saved to remain on pace.
As we mentioned earlier, the ability to retire comfortably calls for at least 10 years of income across a variety of savings opportunities.
The Survey of Consumer Finances, last published by the Federal Reserve Board in 2019, shows that savings account balances continue to lag and emergency fund goals are lacking. With the average account balances by age standing at $11,250 (under 35), $27,910 (35 to 44), $48,200 (45 to 54), $57,670 (55 to 64), and $60,410 for those 65 to 74 years old, there is room for better savings habits.
In Georgia, the average salary for someone with a high school diploma is $27,915, $51,206 per year with a bachelor’s degree, and $74,602 for those with an advanced degree. If how much money you should have saved by now doesn’t align with what you’ll need, there are interest-generating savings accounts that can help you get on track.
Budgeting and managing your money has never been easier!
If you're looking to boost your savings accounts to build or enhance your emergency fund, here are some solid choices to consider.
It’s not unusual for people saving for retirement or creating an emergency fund to leverage more than one of these options. Consider talking with a professional about managing your financial resources in a comfortable and practical fashion.
One of the best ways to increase savings quickly is to invest in products that offer compounded interest. Savings account options that offer compound interest essentially roll the accrued interest back into the fund. When the next interest disbursement date arrives, you make money on the principal balance plus the interest that was added to the account. This savings strategy effectively allows you to make more money than you would in an account that doesn't compound interest regularly.
If you're wondering how to start saving, it all comes down to budgeting. Knowing how much money you're bringing in and how much you're spending will let you know how much, if any, you can set aside. To get started with an easy budget, download Peach State’s Free 3 Practical Budget Worksheet That Actually Work!
If you're trying to save money for retirement or build an emergency fund, Peach State has the solutions to help you achieve your goals! Our savings accounts, money market accounts, and term share certificates (or CDs) are sure to provide a successful combination for your needs.
If you don’t know where you'll be able to find savings in your current financial plan, download Peach State’s free budget templates!
If you're unsure which account is best for your unique timeline, explore our free financial resources or contact Peach State today!