Recommended Savings by Age: How Do You Compare?

[00:00] how much should I be saving and

[00:01] investing how much money should I have

[00:02] by this age how much do I need for a

[00:04] comfortable retirement these are

[00:06] questions I get asked all the time and

[00:07] so in this video I wanted to cover the

[00:09] answer to each I warn you now some of

[00:12] these numbers might surprise you they

[00:13] certainly surprised me when I first saw

[00:15] them but there is a little trick to Fast

[00:17] Track your progress which I'll share

[00:19] later on in the video let's start with

[00:20] the decade of your 20s you might be

[00:22] fresh out of University with a mountain

[00:25] of student Deb maybe you've done an

[00:26] apprenticeship or a training program

[00:28] instead and you likely have an

[00:30] entry-level paycheck the average

[00:32] 20-year-old in the UK has less than

[00:34] £1,000 saved and in the US that number

[00:36] is less than

[00:38] $1,800 at this stage it's not exactly

[00:41] about the dollar amount that you've got

[00:42] saved up but actually about building the

[00:44] right financial habits that will pay off

[00:46] big time for the decades to come so that

[00:49] said some of the key things to focus on

[00:50] in your 20s are number one get rid of

[00:53] any High interest rate debt Consumer

[00:56] Debt like credit cards can very quickly

[00:58] spiral out of control growing faster

[01:01] than your money would make in

[01:02] Investments so if you have high interest

[01:04] rate debt the best way to keep more of

[01:06] what you make in your pocket is to pay

[01:08] that off make that a priority number two

[01:11] track your spending knowing where your

[01:12] money is going is the very first step to

[01:14] being able to save more of it so the

[01:16] simple Act of doing this is going to put

[01:18] you further than most people in this age

[01:20] group and number three work towards

[01:22] saving up at least one month of your

[01:23] living expenses and then once you've got

[01:26] that covered then do number four and

[01:28] that is opening up a tax advantage

[01:30] investment account and invest even the

[01:32] smallest amount $10 or equivalent even

[01:34] if you don't have that much in your 20s

[01:36] it doesn't matter the reason you just

[01:38] want to get started is firstly to start

[01:39] building financial habits into your

[01:41] identity from early on and secondly

[01:43] because you have time on your side so

[01:45] even the smallest amount can start

[01:47] compounding you can get started by using

[01:49] the trading 212 Link in my description

[01:51] and get a free share worth up to £100

[01:53] just by depositing £1 moving into the

[01:56] 30s hopefully by the age of 30 you have

[01:58] a bit more to your name than you did in

[02:00] your 20s the guideline according to

[02:02] Fidelity is to have one year of your

[02:05] salary saved up so if your salary is

[02:07] 50,000 by age 30 you'd have 50,000 saved

[02:10] up so that amount includes the money

[02:12] sitting in your savings account your

[02:14] retirement account and or your

[02:16] investment account now I don't want you

[02:17] to look at this guideline and feel bad

[02:20] or feel behind because that's not the

[02:22] point and I myself hadn't reached this

[02:24] guideline but what I do want to show you

[02:26] is where these guidelines are coming

[02:28] from why they exist and how will they

[02:30] will translate into your retirement

[02:31] savings so according to the Bureau of

[02:33] Labor Statistics the average annual

[02:35] salary for people in their 30s in the

[02:37] United States is around $50,000 and in

[02:39] the UK it's just under £40,000 so if

[02:42] someone in the 30s who is making 50,000

[02:44] per year were to invest that 50,000 and

[02:47] then contribute an additional 500 per

[02:49] month from that point on assuming an 8%

[02:52] average rate of return they would have

[02:54] approximately 1.77 million saved up by

[02:57] the time that they reach 65 that's

[02:59] that's pretty decent that's what the

[03:01] compounding growth for a 35e period from

[03:03] age 30 to 65 looks like the three goals

[03:06] in this decade is number one save a

[03:09] bigger percentage of your income aim to

[03:11] save and invest at least 10 to 20% of

[03:14] your income every year even more if you

[03:16] can your 20s is more about finding out

[03:18] what you want to do exploring as many

[03:20] things as you can focusing on building

[03:22] your career Capital so the skills and

[03:24] the credentials and what you need to

[03:26] then in your 30s find out what has

[03:28] worked for you and then double down on

[03:30] that to make more money number two avoid

[03:32] lifestyle inflation an easy trap in your

[03:35] 30s is to increase your spending in line

[03:37] with your income maybe this wasn't a

[03:39] thing in your early 20s because you

[03:40] didn't have much money to start with to

[03:42] spend but in your 30s you've really got

[03:44] to watch out for it and number three

[03:46] work towards becoming debt free except

[03:48] for your mortgage this will free up more

[03:51] of your income to dedicate to

[03:52] Investments and to retirement savings by

[03:55] the way if you do want to learn how to

[03:56] invest then I have a completely free

[03:57] Master Class where I go into more detail

[03:59] about how to multiply your money by

[04:01] knowing the right things to invest in

[04:03] the biggest mistake beginners make and

[04:05] how to avoid them and how to set

[04:07] yourself up financially for a WorryFree

[04:09] future it's completely free and the link

[04:11] is in the description and then we move

[04:13] into the next decade 40s so we've seen

[04:15] that the guideline is to have saved one

[04:17] years of your salary by age 30 then the

[04:19] aim is to save one more from 30 to 35

[04:22] and then another from 35 to 40 so when I

[04:25] read that guideline my first instinct

[04:27] was okay that's a lot of money how many

[04:28] people will actually be able able to do

[04:30] that but actually the key Point here is

[04:31] that the savings Target is not just

[04:33] about the amount it accounts for the

[04:36] compounding growth of the money that

[04:38] you've already saved as well so let's

[04:40] break that down the goal is to have

[04:41] saved three years of your salary by 40

[04:43] let's say your salary is 50,000 the

[04:45] total Target would be then 3 * 50,000

[04:49] 150,000 however you've already saved one

[04:51] years of salary by age 30 so this 50,000

[04:55] will grow or will have grown to around

[04:58] 107,000 so now the remaining amount you

[05:00] need to save from 30 to 40 is

[05:04] 150,000 minus 107,000 so 43,000 dividing

[05:08] that 43,000 over the 10 years from 30 to

[05:10] 40 that comes out to only needing to

[05:12] save about 360 per month not the full

[05:15] 830 per month that you might have

[05:17] initially calculated so the key point is

[05:19] that the compounding growth of your

[05:21] initial savings make a big difference in

[05:23] how much additional savings you need to

[05:25] hit the overall Target so the earlier

[05:27] you invest the easier it is to then meet

[05:29] the rest of the guidelines the three

[05:31] areas to focus in your 40s are number

[05:33] one start maxing out your retirement

[05:35] contributions aim to invest at least 15%

[05:38] of your gross income for your retirement

[05:40] these are probably your best earning

[05:42] years in most cases so save as much as

[05:44] you can both in your employer spons and

[05:45] retirement account as well as your own

[05:47] investment account number two be

[05:49] proactive in your tax planning meet with

[05:51] a tax adviser who will help you maximize

[05:53] your deductions every year and number

[05:54] three understand how you're going to

[05:56] prioritize your expenses if you find

[05:58] yourself taking care of your parents

[06:00] consider their needs in the context of

[06:02] all of your other and your own Financial

[06:04] priorities as well Home Health Care

[06:06] assisted living is expensive and those

[06:08] costs need to be weighed against saving

[06:11] for your own retirement and for your

[06:13] children's savings and education as well

[06:15] so now is a time to factor in everything

[06:17] and how you'll make it work then as you

[06:19] approach your 50s the savings goal

[06:21] becomes a bit more ambitious experts

[06:23] generally recommend having six times

[06:24] your annual salary saved up by this age

[06:27] for example if your salary has been

[06:29] around 60 ,000 per year the target would

[06:31] be to have 360,000 saved and invested by

[06:34] 50 I don't know how realistic this is

[06:36] and looking at the history of the stock

[06:38] market and the average rate of return it

[06:40] seems doable but if you're in your 50s

[06:42] and you're watching this I'd love to

[06:43] hear from you and I'm sure so would

[06:45] everyone else let us know in the

[06:46] comments how realistic this is and what

[06:47] you would have done differently if you

[06:49] could go back in time and tell your 20

[06:51] or 30 or 40 year old s things you want

[06:53] to look at in this decade of your life

[06:54] include number one reassess your

[06:56] Investment Portfolio as you start

[06:58] approaching retirement you want to begin

[07:00] thinking about wealth preservation not

[07:03] just wealth accumulation so it's

[07:05] recommended to make your Investment

[07:06] Portfolio less risky consider investing

[07:08] in more stable Investments like bonds to

[07:10] balance out some of the risks that you

[07:12] may have taken for your portfolio in the

[07:14] early decades number two think about how

[07:15] you can turn your investments into a

[07:17] steady stream of income in retirement

[07:19] this would be a good time to talk to an

[07:20] adviser who specializes in helping

[07:22] people turn their retirement assets into

[07:24] income they'll look at important

[07:26] Financial factors such as whether you

[07:28] might outlive your retirements savings

[07:29] they'll consider inflation best and

[07:31] worst case scenarios Health expenses

[07:33] that you need to take into consideration

[07:35] and a lot more then we move into age 60

[07:38] and Beyond by age 60 retirement

[07:40] hopefully is on the horizon you want to

[07:41] make sure you have now enough saved up

[07:44] to maintain your lifestyle ideally the

[07:46] guideline is to have saved up at least

[07:48] eight times your annual salary some

[07:50] things to consider at this age number

[07:52] one review your Investments look at your

[07:55] risk tolerance to maintain the savings

[07:57] you built and not uer a big loss right

[08:00] at the beginning of your retirement find

[08:03] out more on optimal ways to invest your

[08:04] retirement savings to make sure you

[08:06] don't outlive it number two ensure you

[08:08] have a clear retirement plan this

[08:10] includes understanding your expected

[08:12] income sources such as pensions savings

[08:14] and Investments and adjust your plans as

[08:16] necessary to meet your goals so you also

[08:18] want to be thinking about health

[08:19] expenses how you're going to pass on any

[08:22] savings Investments assets to your

[08:23] children and taking into account those

[08:25] plans as well so those are some very

[08:27] high level guidelines for you to

[08:28] consider before I close off I do want to

[08:30] leave you with a final thought these

[08:32] numbers are all well and good these

[08:33] guidelines are all well and good but

[08:35] they tend to box everyone in into the

[08:38] same lifestyle which is really far from

[08:40] the reality and the situations or

[08:42] circumstances each of us have an article

[08:44] by go banking rate actually found that

[08:46] most Americans have less than $1,000 in

[08:49] savings and almost 50% of those living

[08:51] in the UK have less than 1,000 this

[08:54] massively contrasts with the guidelines

[08:56] and the numbers that I've said earlier

[08:57] in the video so even if you have more

[08:59] than that saved up at this point that is

[09:01] you doing better than most people at the

[09:03] end of the day these guidelines and

[09:05] these videos are great to get knowledge

[09:06] and education fromom and then you want

[09:08] to tweak it and apply it to your

[09:10] situation thank you for watching if you

[09:12] like this video you may also enjoy this

[09:13] video right here which explains in more

[09:15] detail how compounding works and how the

[09:17] first 100,000 is the most important when

[09:19] it comes to your savings thank you so

[09:21] much for watching and see you back