Have you ever wondered how your savings compares to others’ accounts? Do you know what kind of account you should rely on to help build your savings? Here is a look at the rate people should be saving money for a comfortable retirement.
Teen Savings Goals
ACCOUNT: Basic Savings (With Parents)
Children and teens need to learn what savings means, and they need to inherit the habit of saving from their parents. Basic savings accounts that are shared with parents are ideal for teens that might still need some parental guidance. These accounts should be different from college savings, because this account should never be touched. Teens should be taught to save for the future.
Set goals with your teen and establish a timeline for savings. An average teen has no expenses and can thus save more than someone in their early 20s. If you started saving at this age, you could save just 8 percent of each paycheck to meet a retirement goal.
You’re 25. Now What?
ACCOUNT: Savings Online
People in their mid-20s should have a solid savings established. While it might be tempting to touch it between jobs, the goal is to forget you have that money stored up. Busy 20-somethings should try to save money using accounts that are accessible online, because they spend so much of their lives online.
By the age of 25 the average person should have $10,000 in savings. This money could be moved into less accessible accounts, such as CDs. If you started saving at this age, you would need to save 15 percent of each paycheck to reach a retirement goal.
35 Candles: How Much Savings?
ACCOUNT: CD Accounts, Money Market Savings
Once you reach your mid-thirties you should be comfortable saving money and leaving it alone. By 35, you’ve mostly sustained an injury or two that’s made you consider how important retirement savings will be, too. People in their thirties should consider CD accounts and money market savings.
Once you have children it might be more difficult to save money. Remember that your habits will inspire your children to be good savers too (or not). Show your children what it means to be financially conservative by asking them to contribute a few dollars a month to the family vacation fund.
When you reach 35 years of age you should have about $100,000 in savings. If that doesn’t sound like you, don’t worry: most people have had ups and downs in their thirties that require them to work hard and rebuild accounts. If you don’t start saving until 35, you will need to save 30% of each paycheck in order to retire.
You’re 50. Is Your Account Mature, Too?
ACCOUNT: High Yeild Savings
Once you have more money in savings it’s easier to demand a higher-interest account. Go into your bank and ask about options. The national savings rates might be one thing online, but when you go into the bank savings rates could be adjusted for your situation. You might be surprised how much attention the bankers give you, and how well they explain complicated terms.
It might be wise to hire an accountant during tax time, or to get a financial advisor occasionally. Your savings could easily be put to work for you in smart mutual funds, bonds, or safer stock options. By the age of 50 your account should be larger than $200,000, conservatively. Those who wait until 50 to save for retirement would need to save every single red cent they earn if they wanted to retire.
Saving money is essential if you want to rest and relax in your senior life. Try to image yourself working as a bagger at Publix when you’re 72 years old because your professional career forced you into retirement and Social Security has become non-existent. This grim possibility will inspire you to save more, spend wisely, and appreciate every bonus check you get to invest.