How Much Should You Have Saved by Age 40? 50? 60?

Do you have enough saved for your stage in life? Find out the metrics that really matter, and how you stack up, in this latest episode of You and Your Money with Jonathan Mathews, CFP®.

See the companion blog post: https://whzwealth.com/blog/how-much-should-you-really-have-saved-by-age-40-50-60

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Transcript

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Welcome to You and Your Money. Today's episode features Jonathan Matthews, Associate Vice President Wealth Advisor at WHZ Strategic Wealth Advisors. question. Is there actually a correct number people should have saved at different ages as you go through life, Jonathan? There's not a correct number, no. There's no one magic number that's gonna fit everyone. The— that's one of the bigger misconceptions around retirement is I have to get to X amount of dollars. Saving benchmarks can be helpful they're reference points. It's something that is determined by your individual financial situation, and that matters more than your account balance, to be honest. It depends on your lifestyle, your income needs the debt, when you want to retire, whether you'll have a pension, Social Security. All those things kind of go into consideration. What's more important than hitting that perfect number, I would say, is understanding if you're moving in the right direction. And whether your plan aligns to the goals that you have in place. All right, so that's a great answer because, you know, I think a lot of people feel discouraged. You know, they read about these numbers like we just mentioned, and perhaps they haven't accomplished that, so they feel like they haven't reached those benchmarks, right? Right. And that— those headlines can be a point of anxiety for people. They get very, very concerned, very nervous about where they're at. Someone may have less saved than the benchmark. So I do want to preface this conversation with that is that don't get too much anxiety thinking that you're not in a certain place that you feel like you need to be because people live different ways. Some people are living modestly and have little debt. Others might have a much larger portfolio and some might not be financially prepared because they're spending more. So having said that, benchmarks can still be useful as, you know, guideposts along the way, right? Right. Definitely. It can help. It could be a gauge for progress. And for example, many financial professionals suggest aiming for— the rule of thumb is 1 year of salary by age 30, around 3 times your salary by 40, 6 times your salary by 50, and 8 to 10 times by 60. Okay. So good. That's a great start. So let's talk how to tell your particular situation measures up to those marks. Start with people in their 40s. And focusing in your 40s? What do you think? Right. So you're in your 40s. It's the balance act here. Things are coming at you fast. You got kids in school. You're in your job. You're getting promotions. It's peak career-building stage. Weddings. Yeah, weddings. They're juggling mortgages for maybe the first time. They're raising children. Helping aging parents is another tough one and also trying to save for retirement all at the same time. So the focus isn't just on accumulating the assets. It's about building consistent structure. And that's the decade that you really want to avoid what we call lifestyle creep or lifestyle inflation. Just because you're making more money doesn't mean you should be going out and spending it all on things. And making sure that you have a budget in place as income rises, knowing how to spend appropriately is really important. All right. That easier said than done, I would think, for a lot of people, right? Yeah. Yeah. Yeah, it definitely can be. And The incremental increases matter a lot because over time, it's the secret of compounding. It works, but it can cut both ways, right? People underestimate how powerful time is in investing. The earlier you start, there's so many studies that validate that. A disciplined investment strategy over decades can create substantial long-term impact. And it's also the decade where people start to retire, realize that, hey, retirement is not that far off, right? You start thinking about those things. It is. Life comes at you fast. Once people enter their 40s, they start doing some mental math and they think, "Okay, I'm only 20 years away from retirement and what does that mean?" instead of 40 years when they are fresh out of college. The kids that were in here earlier, they have so much more time. Then once you get into your 40s, you think it's coming up quickly. That realization creates a lot of urgency for people and if channeled correctly, it can be a good motivator too. One of the points that we start is being more intentional with the money. Ask the right questions. Am I saving enough? Is my position in my portfolio appropriate? What kind of retirement do I actually want to have? Those are the healthy questions to ask. All right, let's move on to the 50s. What about what changes now you've hit— you're in your 50s? Yeah, so one of the biggest delays there is the serious planning. And it's a transition decade. So retirement feels very real at that point. You're getting close. People are aiming for 5 or 10 years left of work and they want to be able to contribute as much as they can. The good news is that when people start reaching those peak earning years, that's when opportunities to accelerate savings increase too, both from regulatory benefit and from them making more money. It's also when tax planning becomes really important. How about 60s? Moving to the 60s, where are you at? Yeah, so 60s, now you're there, right? It's true. It's an emotional milestone as much as it is a financial one. Where the retirement shifts from being theoretical to pretty imminent. One mistake that people make is becoming either too aggressive or too conservative. They think,"I'm not where I need to be," and then they lean too hard into it, or they think,"I need to slow down," and they move to, you know, all cash. So neither one of those is probably the right direction to go. It's somewhere in the middle, and that's where we believe that planning is really the important part of that. Okay, so let's go back. Now you're in your 50s, you're in your 60s, and maybe you're just feeling a little discouraged, you're feeling behind What's your message? Don't be ashamed to start planning. Don't be afraid to ask questions. Financial progress is possible at every stage of life. So where, where you're at there's always room to work through it. And the worst decision someone can do is avoid looking at it and putting their head in the sand. People, a lot, we all get to life at different stages. We've got, you know, kids at different ages. There's divorces, there's setbacks, there's, Caregiving responsibilities, recessions, all of these things can happen, but it's not about judging the past. It's more about making decisions of where you're at today. All right. So we covered a lot of ground, a lot of decades here, but leave me with just with some— leave a checklist of things we can do right now and should do.

Yeah. So 5 things: 6:12

focus on your current financial picture, automate savings where you can. Consistency is really powerful. Put things, you know, offshore that and do whatever you can to not have to put that as a mental task. Third, review your investment allocation, make sure it matches your goals and your risk tolerance. Fourth, and this is probably one of the tougher ones, is avoid emotional decision-making, especially during times of volatility. That long-term discipline matters. And then the fifth one is don't try to figure it out alone. There's plenty of resources to support For more information regarding wealth management and customized financial planning with WHZ Strategic Wealth Advisors, please visit whz wealth.com whz strategic wealth Advisors offer securities and advisory services through Commonwealth Financial Network Member FINRA sipc, a registered investment advisor Fixed insurance products and services offered through CES Insurance Agency. They practice at 697 Pomfret Street Pomfret Center Center, CT 06259 and 392AMerrow Road, Toland, CT 06084. They can be reached at 860-928-2341. WHZ Strategic Wealth Advisors do not provide legal or tax advice. The tenured financial services team strives to support clients in achieving their financial life goals while providing absolute confidence and unwavering partnership for life.