[0:00] how much should I be saving and
[0:01] investing how much money should I have
[0:02] by this age how much do I need for a
[0:04] comfortable retirement these are
[0:06] questions I get asked all the time and
[0:07] so in this video I wanted to cover the
[0:09] answer to each I warn you now some of
[0:12] these numbers might surprise you they
[0:13] certainly surprised me when I first saw
[0:15] them but there is a little trick to Fast
[0:17] Track your progress which I'll share
[0:19] later on in the video let's start with
[0:20] the decade of your 20s you might be
[0:22] fresh out of University with a mountain
[0:25] of student Deb maybe you've done an
[0:26] apprenticeship or a training program
[0:28] instead and you likely have an
[0:30] entry-level paycheck the average
[0:32] 20-year-old in the UK has less than
[0:34] £1,000 saved and in the US that number
[0:36] is less than
[0:38] $1,800 at this stage it's not exactly
[0:41] about the dollar amount that you've got
[0:42] saved up but actually about building the
[0:44] right financial habits that will pay off
[0:46] big time for the decades to come so that
[0:49] said some of the key things to focus on
[0:50] in your 20s are number one get rid of
[0:53] any High interest rate debt Consumer
[0:56] Debt like credit cards can very quickly
[0:58] spiral out of control growing faster
[1:01] than your money would make in
[1:02] Investments so if you have high interest
[1:04] rate debt the best way to keep more of
[1:06] what you make in your pocket is to pay
[1:08] that off make that a priority number two
[1:11] track your spending knowing where your
[1:12] money is going is the very first step to
[1:14] being able to save more of it so the
[1:16] simple Act of doing this is going to put
[1:18] you further than most people in this age
[1:20] group and number three work towards
[1:22] saving up at least one month of your
[1:23] living expenses and then once you've got
[1:26] that covered then do number four and
[1:28] that is opening up a tax advantage
[1:30] investment account and invest even the
[1:32] smallest amount $10 or equivalent even
[1:34] if you don't have that much in your 20s
[1:36] it doesn't matter the reason you just
[1:38] want to get started is firstly to start
[1:39] building financial habits into your
[1:41] identity from early on and secondly
[1:43] because you have time on your side so
[1:45] even the smallest amount can start
[1:47] compounding you can get started by using
[1:49] the trading 212 Link in my description
[1:51] and get a free share worth up to £100
[1:53] just by depositing £1 moving into the
[1:56] 30s hopefully by the age of 30 you have
[1:58] a bit more to your name than you did in
[2:00] your 20s the guideline according to
[2:02] Fidelity is to have one year of your
[2:05] salary saved up so if your salary is
[2:07] 50,000 by age 30 you'd have 50,000 saved
[2:10] up so that amount includes the money
[2:12] sitting in your savings account your
[2:14] retirement account and or your
[2:16] investment account now I don't want you
[2:17] to look at this guideline and feel bad
[2:20] or feel behind because that's not the
[2:22] point and I myself hadn't reached this
[2:24] guideline but what I do want to show you
[2:26] is where these guidelines are coming
[2:28] from why they exist and how will they
[2:30] will translate into your retirement
[2:31] savings so according to the Bureau of
[2:33] Labor Statistics the average annual
[2:35] salary for people in their 30s in the
[2:37] United States is around $50,000 and in
[2:39] the UK it's just under £40,000 so if
[2:42] someone in the 30s who is making 50,000
[2:44] per year were to invest that 50,000 and
[2:47] then contribute an additional 500 per
[2:49] month from that point on assuming an 8%
[2:52] average rate of return they would have
[2:54] approximately 1.77 million saved up by
[2:57] the time that they reach 65 that's
[2:59] that's pretty decent that's what the
[3:01] compounding growth for a 35e period from
[3:03] age 30 to 65 looks like the three goals
[3:06] in this decade is number one save a
[3:09] bigger percentage of your income aim to
[3:11] save and invest at least 10 to 20% of
[3:14] your income every year even more if you
[3:16] can your 20s is more about finding out
[3:18] what you want to do exploring as many
[3:20] things as you can focusing on building
[3:22] your career Capital so the skills and
[3:24] the credentials and what you need to
[3:26] then in your 30s find out what has
[3:28] worked for you and then double down on
[3:30] that to make more money number two avoid
[3:32] lifestyle inflation an easy trap in your
[3:35] 30s is to increase your spending in line
[3:37] with your income maybe this wasn't a
[3:39] thing in your early 20s because you
[3:40] didn't have much money to start with to
[3:42] spend but in your 30s you've really got
[3:44] to watch out for it and number three
[3:46] work towards becoming debt free except
[3:48] for your mortgage this will free up more
[3:51] of your income to dedicate to
[3:52] Investments and to retirement savings by
[3:55] the way if you do want to learn how to
[3:56] invest then I have a completely free
[3:57] Master Class where I go into more detail
[3:59] about how to multiply your money by
[4:01] knowing the right things to invest in
[4:03] the biggest mistake beginners make and
[4:05] how to avoid them and how to set
[4:07] yourself up financially for a WorryFree
[4:09] future it's completely free and the link
[4:11] is in the description and then we move
[4:13] into the next decade 40s so we've seen
[4:15] that the guideline is to have saved one
[4:17] years of your salary by age 30 then the
[4:19] aim is to save one more from 30 to 35
[4:22] and then another from 35 to 40 so when I
[4:25] read that guideline my first instinct
[4:27] was okay that's a lot of money how many
[4:28] people will actually be able able to do
[4:30] that but actually the key Point here is
[4:31] that the savings Target is not just
[4:33] about the amount it accounts for the
[4:36] compounding growth of the money that
[4:38] you've already saved as well so let's
[4:40] break that down the goal is to have
[4:41] saved three years of your salary by 40
[4:43] let's say your salary is 50,000 the
[4:45] total Target would be then 3 * 50,000
[4:49] 150,000 however you've already saved one
[4:51] years of salary by age 30 so this 50,000
[4:55] will grow or will have grown to around
[4:58] 107,000 so now the remaining amount you
[5:00] need to save from 30 to 40 is
[5:04] 150,000 minus 107,000 so 43,000 dividing
[5:08] that 43,000 over the 10 years from 30 to
[5:10] 40 that comes out to only needing to
[5:12] save about 360 per month not the full
[5:15] 830 per month that you might have
[5:17] initially calculated so the key point is
[5:19] that the compounding growth of your
[5:21] initial savings make a big difference in
[5:23] how much additional savings you need to
[5:25] hit the overall Target so the earlier
[5:27] you invest the easier it is to then meet
[5:29] the rest of the guidelines the three
[5:31] areas to focus in your 40s are number
[5:33] one start maxing out your retirement
[5:35] contributions aim to invest at least 15%
[5:38] of your gross income for your retirement
[5:40] these are probably your best earning
[5:42] years in most cases so save as much as
[5:44] you can both in your employer spons and
[5:45] retirement account as well as your own
[5:47] investment account number two be
[5:49] proactive in your tax planning meet with
[5:51] a tax adviser who will help you maximize
[5:53] your deductions every year and number
[5:54] three understand how you're going to
[5:56] prioritize your expenses if you find
[5:58] yourself taking care of your parents
[6:00] consider their needs in the context of
[6:02] all of your other and your own Financial
[6:04] priorities as well Home Health Care
[6:06] assisted living is expensive and those
[6:08] costs need to be weighed against saving
[6:11] for your own retirement and for your
[6:13] children's savings and education as well
[6:15] so now is a time to factor in everything
[6:17] and how you'll make it work then as you
[6:19] approach your 50s the savings goal
[6:21] becomes a bit more ambitious experts
[6:23] generally recommend having six times
[6:24] your annual salary saved up by this age
[6:27] for example if your salary has been
[6:29] around 60 ,000 per year the target would
[6:31] be to have 360,000 saved and invested by
[6:34] 50 I don't know how realistic this is
[6:36] and looking at the history of the stock
[6:38] market and the average rate of return it
[6:40] seems doable but if you're in your 50s
[6:42] and you're watching this I'd love to
[6:43] hear from you and I'm sure so would
[6:45] everyone else let us know in the
[6:46] comments how realistic this is and what
[6:47] you would have done differently if you
[6:49] could go back in time and tell your 20
[6:51] or 30 or 40 year old s things you want
[6:53] to look at in this decade of your life
[6:54] include number one reassess your
[6:56] Investment Portfolio as you start
[6:58] approaching retirement you want to begin
[7:00] thinking about wealth preservation not
[7:03] just wealth accumulation so it's
[7:05] recommended to make your Investment
[7:06] Portfolio less risky consider investing
[7:08] in more stable Investments like bonds to
[7:10] balance out some of the risks that you
[7:12] may have taken for your portfolio in the
[7:14] early decades number two think about how
[7:15] you can turn your investments into a
[7:17] steady stream of income in retirement
[7:19] this would be a good time to talk to an
[7:20] adviser who specializes in helping
[7:22] people turn their retirement assets into
[7:24] income they'll look at important
[7:26] Financial factors such as whether you
[7:28] might outlive your retirements savings
[7:29] they'll consider inflation best and
[7:31] worst case scenarios Health expenses
[7:33] that you need to take into consideration
[7:35] and a lot more then we move into age 60
[7:38] and Beyond by age 60 retirement
[7:40] hopefully is on the horizon you want to
[7:41] make sure you have now enough saved up
[7:44] to maintain your lifestyle ideally the
[7:46] guideline is to have saved up at least
[7:48] eight times your annual salary some
[7:50] things to consider at this age number
[7:52] one review your Investments look at your
[7:55] risk tolerance to maintain the savings
[7:57] you built and not uer a big loss right
[8:00] at the beginning of your retirement find
[8:03] out more on optimal ways to invest your
[8:04] retirement savings to make sure you
[8:06] don't outlive it number two ensure you
[8:08] have a clear retirement plan this
[8:10] includes understanding your expected
[8:12] income sources such as pensions savings
[8:14] and Investments and adjust your plans as
[8:16] necessary to meet your goals so you also
[8:18] want to be thinking about health
[8:19] expenses how you're going to pass on any
[8:22] savings Investments assets to your
[8:23] children and taking into account those
[8:25] plans as well so those are some very
[8:27] high level guidelines for you to
[8:28] consider before I close off I do want to
[8:30] leave you with a final thought these
[8:32] numbers are all well and good these
[8:33] guidelines are all well and good but
[8:35] they tend to box everyone in into the
[8:38] same lifestyle which is really far from
[8:40] the reality and the situations or
[8:42] circumstances each of us have an article
[8:44] by go banking rate actually found that
[8:46] most Americans have less than $1,000 in
[8:49] savings and almost 50% of those living
[8:51] in the UK have less than 1,000 this
[8:54] massively contrasts with the guidelines
[8:56] and the numbers that I've said earlier
[8:57] in the video so even if you have more
[8:59] than that saved up at this point that is
[9:01] you doing better than most people at the
[9:03] end of the day these guidelines and
[9:05] these videos are great to get knowledge
[9:06] and education fromom and then you want
[9:08] to tweak it and apply it to your
[9:10] situation thank you for watching if you
[9:12] like this video you may also enjoy this
[9:13] video right here which explains in more
[9:15] detail how compounding works and how the
[9:17] first 100,000 is the most important when
[9:19] it comes to your savings thank you so
[9:21] much for watching and see you back