Some New Savings Targets To Shoot For?

by J. Money - Published March 19, 2018

lucky money cats

Guess what?? They talked about personal finance on the radio today, and I almost had a moneygasm! Haha…

The clip was on some new savings recommendations that apparently just came out, and while I couldn’t find the exact article off the show’s website, I did come across this one that matched it to a T (and which was also over a year old?): “Here’s how much money you should have saved at every age

Never heard of targets like these before, but hey – let’s play along! Here’s what “they” are now recommending ;)

  • At 25 years old — you should have 1/2 of your yearly salary saved
  • At 30 years old — you should have 1x your yearly salary saved
  • At 35 years old — you should have 2x your yearly salary saved
  • At 40 years old — you should have 3x your yearly salary saved
  • At 45 years old — you should have 4x your yearly salary saved
  • At 50 years old — you should have 5x your yearly salary saved
  • At 55 years old — you should have 6x your yearly salary saved
  • At 60 years old — you should have 7x your yearly salary saved
  • At 65 years old — you should have 8x your yearly salary saved
  • At retirement — you should have 10x your yearly salary saved

So pretty much, once you hit 30 years old you should be adding another 100% worth of your salary to your savings with each passing 5 year period… And then once you hit around 10x your salary you’re safe to pull the cord.

(Although really, how you can determine a retirement date without mentioning EXPENSES even once is beyond me, but again – I’ll continue playing the game ;))

Before I had much time to even marinate on it though, the comments from the radio host and sidekicks were pretty obvious about their feelings, haha…

“Aww, how cute!” – one of them blurted out.

“Explain to us millennials again what “savings” is?” – said another ;)

Pretty sad to hear, particularly as many of their listeners were probably laughing along in agreement!,  however it did make me smile because I knew the second I reached my computer I’d have something fun to do with all my data.

So you ready to compare?? Think I’ll match up or miss the marks completely?

Okay, here we go… I counted both my savings and my investments btw in the calculations since it looks like that’s what “savings” entailed per the CNBC article (along with debt payments, fyi), and then I also did my best to exclude my wife’s contributions to better estimate the #’s for just *one* person too.

Here’s what it churned out!

The “New” Standard vs J. Money

  • 25 years old (2005): $2,000’ish ÷ $35,000 = .05% yearly salary (standard = 1/2)
  • 30 years old (2010): $250,000 ÷ $60,000 = 4x yearly salary (standard = 1x)
  • 35 years old (2015): $450,000 ÷ $75,000 = 6x yearly salary (standard = 2x)
  • 40 years old (2020): $900,000 estd ÷ $100,000 = 9x yearly salary (standard = 3x)

So major #FAIL there with 25 year old J. Money (and no big surprise, considering I couldn’t even tell you what an IRA or 401(k) was!), but come age 30 and beyond we turned up the heat on that puppy! Putting us around 3x the recommended rates – alright alright alriiiight! (Said in the best Matthew McConaughey voice)

(It’s no coincidence btw that our money skyrocketed the minute we started tracking it all and blogging about our journey… The ’08 market crash and generous employer benefits also helped speed it up, but you really can’t discount the power of accountability with this stuff! And really just CARING ENOUGH to make things happen!)

So yeah – new or not, I’m all for these savings targets here, but only because I’d choose ANY targets being passed around mass media than NO targets at all, haha… Whatever it takes to wake people up!

As for me though, I’m sticking to the trusty 25x yearly expenses plan based on the “Trinity Study” we here in the FIRE world love so much. Gotta forecast things on your lifestyle costs, not your salaries!

My two cents anyways… What are your thoughts? You like these targets or think they’re a bunch of hippy dippy bologna? (Bonus points if you can tell me where that reference is from ;))

Feel free to compare your own #’s to these targets too and share… Maybe they’ll put things in better perspective for you?

For additional reading, check out Financial Samurai’s charts and thoughts on this as well: How Much Savings Should I Have Accumulated By Age? He gets a wee deeper in his analyzations than I, haha…

Perhaps you’ll get multiple moneygasms ;)

Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!

{ 51 comments… read them below or add one }

1 [email protected] March 19, 2018 at 5:58 am

I’m also crushing this metric today. Totally agree with you about a 25x goal and not a 10x goal. I think this standard is designed to motivate the person on track to have nothing. Having 10x is way better than that. I’m all for anything used to motivate savings. The radio hosts on the other hand…sad. Why would they make it sound okay to have nothing saved?

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2 Lily | The Frugal Gene March 19, 2018 at 9:19 am

Yesssssss, not enough people mention the normalization of financial helplessness here.

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3 J. Money March 19, 2018 at 10:08 am

I know – it’s super sad :( Most people think radio hosts make a ton of money too, so if they can’t save any how can regular people? Def. not a good role model for that one…

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4 Olivia March 19, 2018 at 6:14 am

The standard doesn’t seem to be taking into account compounding investments! It seems to be on a linear scale.

And you go, J$! It’s never too late to start for anyone :). I feel like a lot of people don’t get it together in their mid twenties because we’re being bombarded with media that says we have time to live it up in our twenties and don’t need to be serious about it.

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5 J. Money March 19, 2018 at 10:12 am

Yup – that and it’s usually more fun to spend and ignore “adult” stuff in your 20s :) I’d like to think i’d do it all over differently if I could, but it was also a lot of fun! Haha… I certainly would have started the blog 10 years earlier though and continued living with my parents as well ;)

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6 Mrs. Moe March 19, 2018 at 7:01 am

Interesting article. For the fun of it I did the exercise for my current situation (the big 4-0)…. Removing our daughter’s college savings account (because that won’t be funding our retirement) our savings is about 2.5X which is about .5X shy of the expectation. Things this figure doesn’t account for:
* Downsizing our lifestyle in retirement (we plan to live much smaller when Miss Moe heads off to college – who needs a five bedroom house in suburbia as a couple?)
* Pensions (even with early retirement we’ll both have access to a small pension – equal to about 18% of our last salaries once we reach 62)

We’ll be ready to pull the cord when we have evaluated how much we’ll spend in retirement since our lifestyle will change dramatically…. I did look back to see where we were in different times (35/30/25) and wow – J$ you got your act together a lot sooner than we did! :D

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7 J. Money March 19, 2018 at 10:23 am

Haha well, I’ve made plenty of other mistakes over the years to make up for it, so good thing I now have the $$ part down at least! :)

Fun to see where you guys hit with this though – I agree it def. doesn’t account for handfuls of other stuff out there like pensions, downgrading, etc… so if you’re that close without ’em, even better!

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8 Inga March 19, 2018 at 7:07 am

Who in the world comes up with these nonsense rules and why do people give them the time of the day?! It’s ridiculous to think that we are all supposed to do the exact same thing at the same time.

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9 J. Money March 19, 2018 at 10:27 am

Haha agreed…

But still fun to compare and think about, if only for free entertainment ;)

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10 Dave @ Married with Money March 19, 2018 at 7:18 am

These targets are nice and simple, but I always disliked them because it uses salary, not expenses (which is really what matters more), and salary can fluctuate. If you move jobs and get a $25k raise at age 29 you’re suddenly behind on these numbers, even if your expenses are low and you’ve got a very high savings rate – the amount of time needed to get to that point just doesn’t lend itself well to those nuances.

That being said these targets are great and would do most people good to understand them. But we’re not really ‘most people’ on here, we’re reading Budgets Are Sexy!

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11 J. Money March 19, 2018 at 10:27 am

True on all accounts, my good sir. Very very true.

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12 Cubert March 19, 2018 at 7:23 am

Just wrote about this today, my friend. Or something like this… On the one hand, lamented how my Generation X self was negative six figures in net worth back in mah mid-30s! How’s THAT for a target? The story ends on a much better note.

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13 J. Money March 19, 2018 at 10:28 am

With student loans what they are these days, it’s not surprising :( And they better be student loans factoring in here or else our country is in even worse shape!

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14 Jacq March 19, 2018 at 7:35 am

Considering the ‘advice’ out there on the best way to increase your salary is to job hop, and or I work in an industry that doesn’t have a set % raise, I have no clue what my yearly salary at 65 would be, how the heck am I supposed to figure out what 8x of it is?!? Was my thought when I first saw this info.
I’m just going to keep saving a bunch, and keeping expenses low. My previous job was a big salary boost, but not good management. This job I’ve got some of the best management yet and I don’t want to take the gamble on that by hopping jobs.

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15 J. Money March 19, 2018 at 10:44 am

Haha yes – all good points!!! Another reason this stuff should be focused on expenses and lifestyle over salaries…

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16 Ms. Frugal Asian Finance March 19, 2018 at 7:59 am

Great job with your savings, J! I’m pretty sure I dont meet the goal for people at the age of 30 specified above. I have no excuse. Staying in school for too long might be one, but it doesn’t really matter as long as I continue to live frugally, work, save, and invest.

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17 FullTimeFinance March 19, 2018 at 8:05 am

My wife was watching some tv show the other day that I saw the last five minutes of. The punch line was they found a budget too hard so they were just going to go forward with continuing to spend into debt. On so many levels my brain couldn’t handle this. What kind of plan is it to dig yourself so deep creditors go after you… and then I had a sad realization. It’s probably in the show because people actually do that.

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18 J. Money March 19, 2018 at 10:45 am

yup :( the more extreme you are one way or the other the better it is for entertainment.

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19 Budget on a Stick March 19, 2018 at 8:11 am

Interesting, I always compare my current salary when doing these calculations. I’ll have to go back and run the numbers with old salaries and projected future salaries.

Either way, full speed ahead on the contributions front!!!! Got to load up those accounts!

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20 My Sons Father March 19, 2018 at 8:29 am

That is an epic comeback from 25 y/o J-Money to 30 y/o J-Money!

I’m curious if the 10x salary would make you FI like they claim? How close is it to 25x expenses?

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21 J. Money March 19, 2018 at 10:47 am

Too many variables it omits to figure that one out… Though for most people getting to 10x would be a miracle so hopefully they at least shoot for that!

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22 Lily | The Frugal Gene March 19, 2018 at 9:14 am

We’re at 4x in our 30s too!! Yay for twinsies J$! :)

I really really don’t like how the radio hosts came off so snarky. It’s funnier and easier to tackle a huge subject with humor and paint it over with the same stereotypes I guess.

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23 J. Money March 19, 2018 at 10:49 am

I know – that’s their job I guess :( But what a bad role model for this stuff!!

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24 G March 19, 2018 at 9:45 am

Most advisers assume income and spending are approximately equal, which is true most of the time. However, they usually don’t notice the contradiction of assuming you spend everything you make and also assuming that you are saving money.

At 29, I’m at 4.02x earnings.

Using this methodology, the higher your income, the worse off you are, which is kind of bizarre. If your income goes up as fast as your savings, your multiple will always stay the same. Of course, in reality, that’s a good problem to have.

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25 G March 19, 2018 at 9:51 am

Also, most people have no idea what their expenses are. They don’t have a clue as to their total yearly spending. So getting their income off of their W2 is a lot easier.

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26 J. Money March 19, 2018 at 10:52 am

Yeah – that’s why it’s better than having no targets at all, but still… On a completely different note, I remember my dad saying the stranging thing in retirement is now not having to save anymore…You’re so used to doing it your whole life, and then BAM – you’re now spending it all and not saving anymore! Hadn’t ever thought of it before then :)

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27 Ty Roberts March 19, 2018 at 9:45 am

‪Saving more is easier when you first start out in life because you’ve not put yourself in a financial hole from car payments, student loans, mortgage, kids, etc.‬

‪Saving more remains easy as your income grows if you can avoid lifestyle inflation.

Saving is hard for so many only because we set ourselves up to fail by prespending a huge percentage of what we earn. ‬

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28 Joe March 19, 2018 at 9:51 am

Nice job with your savings. You’ve done really well over the last 10 years.
I like 25x expense better too. Income can fluctuate quite a bit. It doesn’t make sense to peg the saving goal to income. My income is not too high right now so I’m pretty good on that chart. I’ll need to double check, but I think I have around 12x income in my retirement account at 45. Not too shabby.

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29 J. Money March 19, 2018 at 10:52 am

Damn good, son!

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30 Kim March 19, 2018 at 12:25 pm

I’m not sure I understand how they’re including debt in this. For example, I could imagine a lot of people thinking they’re doing great because they have 1x their salary in savings (earning almost no interest if it’s at a brick and mortar bank), while they also have 1x their salary tied up in student loan debt.

Me, I already know I’m not doing great in my savings-to-debt ratio, which is why I’m working on it now. ;)

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31 J. Money March 19, 2018 at 2:08 pm

Hah – you’re right on that! Just like someone could have 1 year salary banked but a $700,000 mortgage on the books! This is where the overall snapshot of a Net Worth comes into play! Savings is definitely just one side of the equation.

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32 Revanche @ A Gai Shan Life March 19, 2018 at 1:06 pm

I’m all about the free entertainment but I will say that there are a whole lot of circumstances under which these guidelines are totally unreachable (ex: people who have incarcerated family, single parent families who lack a support network, people who are supporting more than one generation, people who had no support to get a higher education and so are in debt up to their eyeballs). Some people experience all of those examples at once, too, so I totally understand why those guidelines just make those folks roll their eyes.

There’s not a great understanding of how to fight and get past serious and systemic obstacles like that, and I think we’d be a much better money community if we could help break those chains. I only had ONE of those (supporting my parents) for almost 20 years and I can only begin to scratch the surface of what it cost me in opportunity and money. Definitely hundreds of thousands of dollars, for one thing. I would have been a millionaire a LONG time ago if I hadn’t supported my family for so long! That stings. A lot! And other people don’t have the luxury of breaking off that support like I did this year so I strongly empathize with how it feels to be in that situation. Plus I married an amazing husband who totally pulls his weight in the money department so he and I are doubly blessed.

Literally, doubly blessed, because for the fun part, I added 2x my salary and 4x PiC’s salary. (I have no idea how to separate out one of us in relation to our NW.) We have 2x the combined guideline – not bad!

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33 J. Money March 19, 2018 at 2:16 pm

For sure – our world is full of different scenarios and backgrounds, many of which not very fortunate at all. Not something we get deep into this blog here, mainly due to personal experience and knowledge (I/we are very blessed!), however it’s very much noted and I salute all y’all just killin’ it despite the major obstacles thrown your way. I’ve always been in awe of you :)

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34 PaulM March 19, 2018 at 1:41 pm

Totally agree that the target should be based on expenses not salary. It also doesn’t take into account the length of one’s retirement. I’m assuming that they’re basing it on a retirement age of 65.

If you factor in that many are aiming for a much earlier retirement, this strategy won’t work — if you make $100,00 at age 45 and want to retire that year, 4x your salary won’t stretch far enough.

But for those of us who like to look at our savings several ways, it’s a fun thing to do.

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35 SoberFinance March 19, 2018 at 3:25 pm

Good article, although there should be a separate metric which can measure the expected wealth of those who get advanced degrees (i.e., law or MBA). While an advanced degree may throw your numbers out of whack for five years or so, the expected increase in income over the long run will make up the difference.

That is, of course, assuming you manage to find that high paying job after graduation! Seems like these days the competition coming out of those schools for the high paying jobs makes it less and less worthwhile to pursue those degrees.

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36 J. Money March 20, 2018 at 6:47 am

I can’t even imagine… and just super grateful for my (free) Blogger Degree! ;)

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37 Working Optional March 19, 2018 at 6:08 pm

I’m torn.

For one, it’s obvious that 10x isn’t enough to retire and people believe what they hear on the radio (when its only the internet that they should believe ;) ).

But then, most folks don’t even have that much saved so telling them they should have 25-30x saved by retirement is probably going to scare them. 10x may be “doable” but 30x is “eff it, I might as well live it up now because I’m never going to get there anyway”

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38 J. Money March 20, 2018 at 6:47 am

Pretty much, yup :(

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39 Tonya March 19, 2018 at 6:26 pm

I agree with you that ANY savings recommendations are beneficial for most Americans since we generally aren’t savers. I also think the reason most people base this on salary instead of living expenses is because most peoples living expenses increase when salaries increase. We SPEND ALL OF OUR MONEY (and in some cases more). Giving a spending target at least gets people saving, maybe…

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40 Kris March 19, 2018 at 7:26 pm

I believe that the premise should be based on your yearly expenses instead of your salary, you would guess that would make more sense.
Your suggestion of 25x yearly expenses sounds much better. You have lots of wiggle room for inflation.

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41 Ms ZiYou March 20, 2018 at 3:25 am

25 year old me also failed these targets, but did have fun!

If we’re excluding property equity, 30 years old me also missed them.

I did get it together by 35 tho!

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42 J. Money March 20, 2018 at 6:48 am

Good job :)

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43 James March 20, 2018 at 3:50 am

Surveys in the UK tend to turn up fun facts like – “56% of the population have less then 400 pounds in savings” or similar.
It never ceases to amaze me how many people live so close to the edge.
And that is not just millennials… it’s everyone.
It would be too stressful for me. But, even with the Internet and blogs like yours… most people just don’t think about it.
Retirement is just a word in a dictionary to them.
Early retirement… “sorry, what language is he speaking?”

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44 J. Money March 20, 2018 at 6:51 am

I know – it’s bad :( You really have to stop and WANT IT BAD to get your finances in order because everything around us is in cahoots to take it from us! And the longer the spending becomes habit the harder it is to break those chains too :( Although still very much possible! I love seeing people in their 50s or 60s coming to this blog to start paying attention as much as it kills me.

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45 Robert March 20, 2018 at 12:30 pm

Does this mean if I get a super low paying job nearing retirement that all my financial worries are solved?

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46 J. Money March 21, 2018 at 6:56 am

Apparently! :)

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47 Loonie Sue March 20, 2018 at 2:17 pm

The LEGO movie!!!
I agree this is a weird metric but at 41yo, I have about 5x my salary (including current pension value), so I guess I’m doing ok by their standards! More importantly, we’re not spending nearly as much as we take in (we have a savings rate of about 40%), so we’re doing ok by more reasonable standards as well!

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48 J. Money March 21, 2018 at 7:00 am

Hell yeah you are!! 40% is no joke!

(And you win the prize for the LEGO movie – click here to receive it ;))

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49 [HCF] March 21, 2018 at 5:15 am

I would not jump into the comparison part (because you should not bring a knife into a gunfight), but taking into account the US standards and responsible planning these targets should be easily achievable and more. It says basically that you should have a 20% savings rate which I don’t see as a “mission impossible”.

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50 B.C Kowalski March 22, 2018 at 12:46 pm

Locally in Wisconsin, a finance “expert” offered some advice on how to save more, but at the end mentioned their $220 cable bill. Prime candidate for a financial face punch! After reading blogs such as this, MMM, Frugalwoods and others, most of the financial “expert” advice I read now drives me insane. And I would say one of the most common offenses is substituting annual “salary” when they mean “expenses.” I know of course that I am preaching to the choir here, but I had to rant somewhere! lol

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51 J. Money March 23, 2018 at 6:43 am

You’re welcome to speak your mind at all times here, sir :) You know we love it!

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