People from all age groups often wonder how much money they should have in the bank to retire comfortably. But based on your age, responsibilities and liabilities, there are savings benchmarks that you could refer to.
These benchmarks for retirement savings by age can help you get from where you are to where you should ideally be. Naturally, you will need efficient money saving strategies to get to this ideal retirement savings figure.
Savings Amount For Retirement By Age
The savings amount for retirement in your 20s, 30s, 40s, 50s, and 60s will vary based on your goals, financial condition, and other such factors.
However, this benchmark could be an ideal comparison metric:
Retirement Savings Goal (x annual salary)
As much as possible
Note: The figures mentioned above are estimates and will vary from person to person based on multiple factors.
Planning your savings for retirement at a young age has its benefits. When you’re in your 20s, you can save more and invest aggressively due to minimal responsibilities and liabilities.
But this is a double-edged sword. Statistically, working professionals earn less in their 20s compared to their 50s. The average salary for working professionals in their 20s in India is ₹619,000 and for professionals in their 50s, it is ₹3,360,300.
7 Best Money Saving Tips For A Comfortable Retirement
1. Create A Budget
At the start of each month, pull out that unused diary or an excel sheet and plan your expenses. The 50/30/20 rule could be useful for this.
What Is The 50/30/20 Rule?
1. Spend 50% of your income on needs: Rent, groceries, upkeep, subscriptions, fees, and other such essentials.
2. 30% on wants: Movies, clothes, a new music system, fancy dinner, and other such personal expenses.
3. 20% on savings: Allocate a portion of this for retirement. Invest in options like mutual funds, Indian stocks, US stocks, National Pension Scheme based on advice from a Wealth Coach.
If you’re young, you might be able to invest aggressively in options that can help you manage your post-retirement expenses. Speak to a Wealth Coach to find out the perfect savings strategy for a comfortable post-retirement life.
2. Pay Yourself First
This should be non-negotiable. Most people struggle with saving money from their salary because they fall into the trap of spending first before paying themselves. Move 20% of your income into savings and investments as soon as you get your salary.
3. Set Up An Automatic Transfer
Digital wallets and even bank accounts have auto-debit features that you can use to transfer money to a savings account. If you’re investing in stocks or mutual funds, you can set up a NACH auto-debit to invest in SIPs. Use this to your advantage and let automation work its magic.
4. Keep A Track Of Your Spending
It’s important to assess your spending habits. One way to do this is to maintain an excel sheet or a notebook to review your spending.
Pay attention to your daily expenses
Review your budget Vs money spent at the end of each month
The best way to create a healthy financial habit is to invest. If you’re left with surplus cash at the end of each month, speak to a wealth coach to invest that money in a stock or fund.
This will help your money grow as opposed to lying dormant in a bank account. Or worse, being wasted on decaf coffee.
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