Saving More: How Much?

BOSTON (CBS) - Yesterday we talked about starting to save and setting up a budget.  I am often asked how much money should I save. And my answer is usually "I don't know". Then I ask how much do you need?

In doing some research for this segment CNBC had an article about saving and they interviewed several experts.

Here's how much their experts recommend you should have saved at every age.

In your 20s: Aim to save 25% of your overall gross pay.
By age 30: Have the equivalent of your annual salary saved.
By age 35: Have twice your annual salary saved.
By age 40: Have three times your annual salary saved.
By age 45: Have four times your annual salary saved.
By age 50: Have five times your annual salary saved.

Now let's take that one step further. In our example, your annual income is $50,000 with a 3% increase each year.

In your 20s: Aim to save 25% of your overall gross pay, at $50,000 you would need to be saving $12,500 a year. Not impossible to do but certainly hard.
By age 30: Have the equivalent of your annual salary saved. You would need over $60,000 saved. If you can do the 25% in your 20s you will be successful.
By age 35: Have twice your annual salary saved. You would need $156,000 in savings. Again doable, especially if you are in a 401(k) with a company match.
By age 40: Have three times your annual salary saved. You would need $270,000 in savings.
By age 45: Have four times your annual salary saved. $400,000.
By age 50: Have five times your annual salary saved. Over $600,000.

At age 50 with a 3% increase each year you would be earning $121,000.

Is it doable? Certainly! But will require a lot of discipline.

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You can hear Dee Lee's expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

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