If you’re asking yourself “How much should I have saved by 30” then let me tell you this – you’re not alone.
No, for real, you’re really not. I just turned 31 this month and I still question if I saved enough by 30. Now I ask if I’m saving enough by 31. And next year I’ll be wondering if I saved enough by 32.
You know what’s worse than worrying if you saved enough? Not worrying about saving enough.
For me, saving money is always in the back of my mind, and I’m guessing that it is for you as well if you’re reading this article. Maybe you’re worried that you simply “started late” (although 30 is still very early) or maybe you’re wanting to retire at 35 and you simply want to know what to do for the next 5 years.
Regardless of your goal, you’re wondering if you’ve saved enough at 30. But the question is really this – what is your goal?
If you don’t know what your goal is then you can never know if you’ve saved enough, so that always has to be your starting point. When trying to determine your goal, these are the things that you need to consider:
What’s Your Time Horizon?
How much longer do you have that you’re going to be making money? If you’re not working, then you’re not saving. Sure, you might have some passive income coming in which is truly the dream for us all, but if you don’t, then you’re going to be simply depleting your savings.
The time horizon is imperative because not only does it tell you how long you’re going to have to actually save that money but it’s going to tell you how long you need to plan to live without income.
For instance, if you’re 30 and plan to retire at 65 and live to 90, then you have 35 more years to make money and once you retire you have 25 years to live off your savings.
If you’re 30 and plan to retire at 50 and live to 90 then you have 20 years to save and 40 years to live off that stockpile.
You see how these goals are related? It might seem very basic but it’s something that you need to strongly consider when planning your retirement.
How Much Do You Plan to Save?
“Andy, I’m reading this article because I need YOU to tell me how much to save!”
I know, I know, but what I’m asking is this – how much are you saving right now? Do you think you’ll be able to feasibly save that same amount the rest of your career? More? Less?
For instance, let’s walk through a few examples:[continue reading…]