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How Much Money Should I Have Saved For Retirement by Age 30?

October 9th, 2012 | Posted by JG in Saving Money

All of us want to know whether or not we’re on the right track when it comes to our finances.  Other than the occasional advice we hear on television, it can be hard to determine if we’re saving enough for retirement.  This post will allow 20-somethings to take a look at their financial path thus far and provide information on how much one should have in their retirement account by the age of 30.  I understand that everyone has a unique set of circumstances, but hopefully this will make you think a bit as you enter the next decade of life.

Before I get started, I totally understand that we all make different amounts of money, have chosen different paths, and will ultimately follow our own star.  I’m not going to tell a 27 year old pouring every spare dollar she has into creating the next Facebook that she’s making a poor choice.  Nor do I have any critique of the 28 year old training to become a heart surgeon.  This person will soon be able to write a check for more than I make in a year.

But for the rest of us who work at a desk for some company, here it goes!

All things being equal, those earning more over a lifetime typically have an easier path to saving larger amounts of money.  So before you send me emails saying that this doesn’t make sense, remember that this is just a hard and fast rule of thumb.  We all have different standards of living and will retire under different circumstances.

Many of us in our twenties aren’t earning all that much, have a solid chunk of debt, and are often undecided about what we want to do when we “grow up.”  Despite these challenges, retirement saving should be among the top three things you MUST actively be doing if you want to avoid eating cat food for dinner when you’re 80 years old.  The idea that saving $1,000-$2,000 per year will eventually allow you to live out your final years in peace isn’t going to happen.

Average retirement savings by age

A recently conducted survey by the Employee Benefit Research Institute showed that among workers 25-34 years old, 57% had less than $10,000 set aside for retirement and 88% had less than $50,000.  Among workers 35-44 years of age, 51% had less than $10,000 and 72% had less than $50,000.

If you don’t consider age, 48% of Americans have less than $10,000 in retirement savings.

These are sobering statistics and will result in a lot of hardship for many people down the road.  Remember, just because other people do not save much doesn’t mean you have to join them!

So how much do you think I should have at 30?

I’ve thought long and hard about this question and have scoured the internet looking for answers.  From what I’ve found, I think it’s a safe bet to have the equivalent of one year’s salary (pre-tax) in your retirement account(s) by the time you turn 30.  This should serve as a decent benchmark to help you determine if you need to start saving a bit more to retire comfortably.  Keep in mind that your 401k might not be enough to reach this goal.  I strongly urge everyone reading this to open a Roth IRA if your income allows.  I’ve referenced the benefits in my recent post about becoming a millionaire in four easy steps.

But JG, I never seem to have enough money at the end of the month for these goals you encourage!

I’m not going to lie.  This economy continues to be very tough for far too many people.  If you are barely struggling to keep your head above water, do what you have to do to eat and pay your rent/mortgage, but really pay attention to the things in life that you consider necessities.  If you consider yourself broke but still have internet on your smartphone, HD and DVR on your cable package, and satellite radio in your car, I’m confident that there are many ways to reduce your monthly costs.


If the amount of money I recommended to have saved by 30 seems outrageous or unreasonable, I would encourage you to spend some time thinking about how long you expect to live.  If you think that it is conceivable that you’ll retire at 65 and die at 90, then you’ll need 25 years of cash to pay all of your bills, buy groceries, travel and pay out-of-pocket medical expenses.

As I’ve said in earlier posts, I understand the whole philosophy of “You Only Live Once,” but life is full of surprises.  I’d hate for you to have to choose between eating dinner and being able to afford your medicine.

The earlier you start saving for retirement, the less you’ll have to contribute (see the example in Saving and Investing When You’re In Debt) and the greater the chance that you’ll be able to live out your final chapter on your terms.

What would your 80 year old self say to you right now about your savings goals?

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3 Responses

  • RS says:

    My 80 year-old self thanks you.

  • maurice says:


    Can you explain a bit more why having approximately one year’s worth of salary in our retirement accounts before 30 is the right number? How do we project this forward, for example, how much should we have by 35, 40 etc.? I don’t know if you’ve done this in previous articles (sorry if you did already and I missed it), but could you throw up an example for someone who wants to retire at 60 and live 30 years (with say 60k per year to live on)… how much do they need to put away per year assuming like a 7-9% interest on their retirement savings.

  • Steve says:

    wow way to dodge the question you posed for yourself