How Do We Save Money for Retirement and Emergencies?
As humans, we tend to save money for special occasions, emergencies, and just for us to have. Some also save money for retirement, which can get pretty expensive. Saving money allows you, and the ones you love to enjoy the freedom of not having to be on any fixed spending amount. With events in your life, such as weddings, buying a car, a down-payment on a house, it’s important to have savings you can rely on. But how are we suppose to know what a good amount to save or even how much money we might need? Today, we will cover this and more as we take a deeper look at the saving rates at each age in life.
Lowered Standard of Living
About 50% of Americans are at risk of lowering their standard of living by not having enough savings. As time goes by and prices go up, the standard of living is slowly becoming higher and higher. Another statistic shows that less than 20% of people believe they will live comfortably in retirement based off savings. With the odds against you, you’ll have to save your whole check for the rest of your life.
How Do We Balance Our Spending?
So how much money do we need to have saved just in case? It honestly depends on how much money you make and how much your monthly cost of living adds up to. Most people have heard that you should save at least 20%. You should use 30% to go towards discretionary items.Your leftover 50% is going towards necessities. Depending on lifestyle and job income, you could save 60% of your check to put away for a rainy day. By the age of 30, you should have savings for both retirement and emergency funds. This rule is called the 20/30/50 and is recommended for those learning how to save.
Retirement and Emergency Savings
A study of data from the Bureau of Labor Statistics shows that $66,470 is a safe amount of money to have in your retirement savings. As for your emergency savings, you should have anywhere from $10,000 to $20,000. By the age of 40, that retirement savings should be around $277,728 and anywhere from $12,000- $25,000 in your emergency savings. When retirement is closing in at the age of 50, you will be hitting your peak earnings. If possible, you should have close to $600,000 in your retirement savings. In your emergency savings, you should have anywhere from $13,000 to $26,000. As we get to the final few steps before retirement, it’s time to sit back and relax. Retirement savings goals for the age of 60 is only $643,792 (small number right). For your emergency savings goal, the amount you save can actually be anywhere from $11,000 to around $23,000.
Learning to save money for retirement and to prepare for anything unexpected is a necessity. At Empower Brokerage, we offer tools that can HELP YOU plan for your future. Stay tuned for more tips or give us a call!