According to a new Bank of America survey, 16 percent of millennials — which BoA defined as those between age 23 and 37 — now have $100,000 or more in savings.
That’s pretty good, considering that by age 30, you should aim to have the equivalent of your annual salary saved. The median earnings for Americans between 25 and 34 years old is $40,352, meaning the 16 percent with $100,000 in savings are well ahead of schedule.
How much should you have stashed away at other ages?
While the amount you need in savings is highly personal, and specific dollar amounts can be arbitrary, money expert at Intuit Kimmie Greene has a simple formula to help you figure out if you’re setting aside enough money.
In your 20s: Aim to save 25 percent of your overall gross pay, Greene tells CNBC Make It. “That 25 percent is the combination of 401(k) withholdings, matching funds from your employer and any cash savings that you have,” she notes. “It can also include debt repayment.
“Just make sure your lifestyle expenses don’t exceed 75 percent of your gross income.”
By age 30: Have the equivalent of your annual salary saved, Greene says. If you earn $50,000 a year, aim to have $50,000 in savings when you hit 30.
Again, this includes any retirement-account contributions, matching funds from your company, cash savings or money you have invested elsewhere, like in index funds or with robo-advisers.
By age 35: Have twice your annual salary saved.
By age 40: Have three times your annual salary saved.
By age 45: Have four times your annual salary saved.
By age 50: Have five times your annual salary saved.
By age 55: Have six times your annual salary saved.
By age 60: Have seven times your annual salary saved.
By age 65: Have eight times your annual salary saved.
Greene’s timeline is similar to the one recommended by retirement-plan provider Fidelity Investments, which says a good rule of thumb is to have the equivalent of your salary saved by age 30 and to have 10 times your final salary in savings if you want to retire by age 67.
“While this can sound super daunting today, if you’re putting that money to work starting in your 20s, it’s not as difficult as it sounds,” says Greene.
She also notes that “life is anything but linear” and it’s impossible to follow this formula to a tee. You may have to adjust accordingly and save more or less in any given year, depending on major life events, such as having a kid or buying a home.
At the end of the day, the sooner you start saving — for retirement or any other major purchases you hope will be in your future — the better off you’ll be.
