How Much Money Should You Have Saved by Age 40 and How Do You Do It?

The other day I was surprised when I read that more than 1,000 people a month search “how much money you have to have saved at age 40?” … literally these words.

As I started researching, I discovered that there are formulas to calculate how much money you should have saved according to your age.

This article will give you my opinion on how much money you should have saved up to and beyond age 40.  While I will give you the exact figures, it is impossible to generalize.  What really matters is the path you are following and the steps you are taking to save. You are saving; that will be what will really mark your economic well-being.

Statistics on Saving are Grim

The average savings of someone living in America is 7.9% of their income, but 45% of the American population does not save and has no financial safety net to face unforeseen events.  With some families saving between 30% and 50% of their salary, it is clear that there are many others that save 0% to have an average of only 7.9%. Given these statistics, it is logical why there are so many people looking for an amount they should save by 40.

When someone starts working, he enters the rat race headfirst, and usually, when he gets close to 30-35, he begins to think that it is time to save. It is at that moment when he looks for how much to save at 40, and he realizes that he is late.

How Much Must be Saved at 40 According to Experts

How much money should be saved according to age? There are many theories, but there is a formula I found simple enough to highlight. According to the formula prepared by finance expert Kimmie Green, at 40 years old, someone should have saved the equivalent of 3 times their annual salary.

That is, if your annual salary is \$20,000, then you should have saved \$60,000. According to Green, at 30, you should have saved your annual salary, and then you should add that amount to your account every five years. Thus, at 40, you will have three times your salary, at 50, you will have five times your salary, and at 65, you will have eight times your salary. To achieve that savings without investing your money, you must save 20% of your annual salary.

However, the amount of money you have saved at age 40, or any other age, is not the only important thing; what you do with that savings is also very important.  Saving in the long term without doing anything with that money is unwise because inflation causes your money to lose half its value every 25 years or so.

Important to Note

• What really matters is not the amount you have but the freedom that it gives you.
• Having money gives you freedom and peace of mind, and that is priceless.
• Do not try to only follow formulas that tell you how much money you must have depending on your age.
• Make a plan, control your finances, and save and invest money to be freer every day.