Keeping Track: What Your Net Worth Should Be Each Decade
11 Jun 2019
Wondering if your finances are on track for retirement? Here are the average targets of net worth by age.
Did you know that around one in three Americans have under $5,000 in retirement savings? You need to fix this immediately. Whatever your age, you should be thinking about how to save for your retirement.
Start saving for retirement as soon as you start earning money. Check out our guide to your target net worth by age. Let’s get started!
1. Set up a Retirement Plan in Your Twenties
Set up a retirement plan as soon as you start earning money. You’re probably going to have student debt during your twenties. Over 70 percent of students do.
However, don’t worry too much about your student debt. Focus on building your net worth during these years. Set up a retirement plan, such as a 401(k) or 403(b) with your employer.
You can also save with a Roth IRA as well. Save approximately 10 percent of your salary during your 20s. This can also be in the form of investments in stocks.
2. Half Your Salary in Savings by 30 Years Old
Aim to save around 50 percent of your salary already saved for retirement by the time you’re 30. For example, if your salary is $50,000, put away around $25,000 in retirement savings.
If you didn’t start your career until your late 20s, your financial circumstances will be different.
3. Double Your Salary in Savings at 40 Years Old
Strive to have a net worth of double your salary. A salary of $100,000 should allow you to have a net worth of $200,000 by the time you’re 40 years old.
Don’t just put your savings in the bank or investments. Build up your real estate to improve your net worth as well.
4. Four Times Your Salary at Age 50
When you’re half a century old, you should have around four times your annual salary as your net worth. It may sound like a lot of money. But, if you started saving for retirement in your 20s, you can reach this financial goal by the time you’re 50.
Of course, if you didn’t start thinking about your retirement savings until your late-30s, you’ve got save more aggressively.
5. On The Cusp of Retirement
Most Americans expect to retire around 66 years old. And yet, many people are earning more than ever before by the time they’re 60 years old.
You should expect to have accumulated around six times your annual salary by this stage.If you were earning around $100,000 by the time you’re sixty, you should have roughly $600,000 by the time you’re 60 years old.
However, by the time you’re 60 years old, you need to think about what your retirement needs are. If you don’t expect to retire until your more than 70 years old, then your financial requirements probably aren’t as high.
Targets for Net Worth by Age
Now you know how much you should be saving for retirement each year. Net worth by age does not give a one-size-fits-all plan. You have to do your homework to determine how much you need to save.
Do you want more retirement advice? Check out our blog post on saving for retirement.
