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How much should you have saved for retirement by age 30

how much house payment

Apparently, a 20-year-old could need to have $7 million saved by retirement, so it’s best to start early!

At 27, my retirement nest egg is somewhere in the neighbourhood of $20,000. If you add in my TFSA (and I don’t, because I might spend that on other stuff) it’s even higher. I started saving at 25, which is early or late depending who you talk to in the personal finance community. I started slowly, but this year I’m on some kind of retirement-saving bender because the stats about how little people save for their retirement really freak me out. Essentially very few people save, and those that do aren’t very good at it. I don’t know how anyone in their 40’s sleeps at night with $10,000 or less in the bank, but they probably have a higher pain tolerance than I do, or considerably less FOMO. I know that if I want to maintain my groovy lifestyle into my 70s and 80s — and believe me, I will — I need to make sure I have the funds to do it.

So it’s best to establish milestones and goals so you know you’re on track. I don’t put a lot of thought into my life at age 65 because it’s nearly 40 years away, but age 30 is something I can work with. Word on the street is:

You should have 1x your annual salary saved in your retirement account by age 30.

That seems doable, right? I’m more or less on track, unless my salary jumps significantly in the next year or two, in which case I would need to have more, but that’s not a bad problem to have ;)

This means if you’re making $30,000 per year, you should strive to have $30,000 saved at age 30.

If you’re making $50,000 per year, then strive to have $50,000 saved. 

If you’ve supported yourself through school and entered the workforce late, you might not be able to save 1 year’s salary at thirty. That’s ok! Even if you only get halfway, it’s better than nothing.

The most important thing is that you don’t enter your 30s with nothing.

If you have more than 1x your annual salary saved, awesome! If you have less, you’ve got some work to do. If you have nothing, you have a lot of work to do. If you think saving for retirement when you’re in your 20’s is unimportant, I get it. I’m probably the least concerned of all personal finance bloggers about how wealthy I’ll be when I’m old and grey. I don’t like saving for retirement at all, but I do it anyway because I like the idea of being poor even less. Don’t be a self-saboteur and save nothing for retirement in your 20’s, it’s a huge pain in the ass to play catch up every decade thereafter.

How I save for retirement:

Without choice: work deducts 11% of my gross pay and saves it for me. I never see that money, so I never get to spend it. There’s nothing quite like being volun-told to get stuff done.

Automatically: I have transfers set up every payday that direct a small part of my paycheque to my RRSPs. If I didn’t think the above was already enough, I’ve got my own thing going in the same theme: money in, and money out before you can spend a dime. I like locking money in my RRSPs because I can’t get it out to spend it on dresses.

With time: I may add funds to my accounts grudgingly, but I appreciate the interest and dividends that boost the small sum each month. Starting early and saving regularly means my retirement nest egg has decades to grow, and I’m happy to report that, slowly but surely, that’s what I’m already seeing.

How much you should have saved for retirement by age 30 and how much money you will have saved might end up being two different things — and that’s ok. The point is I’m striving towards something, and gaining traction.

How much have you saved for retirement? How much more did you need? How are you getting there?

Category: Bank

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