You may have heard that it's never too early to start investing. That's true—but it's also never too late to start saving. And if you're like most Americans, you probably have room to improve. In fact, after the savings highs achieved during the pandemic, our saving rate is on a decline.1
Fortunately, wherever you are on your life (and savings!) journey, it's always the right time to boost your bottom line. Here, we offer tips for how and why to save over the decades. Your reward? Improved peace of mind and financial security.
Roaring 20s
Who you (probably) are in your 20s:
Twentysomethings are bursting into their “real" adult life: starting a career, exploring relationships and identifying their authentic self. As you forge your own path, do some soul-searching to plan for what you want that to look like—today and in the future.
Why you should save in your 20s:
Most twentysomethings don't have a host of commitments, creating an ideal opportunity to build a savings foundation while your life is your own. With fewer obligations, set some short-term goals for what you want to accomplish or experience during this exciting discovery period.
Keep in mind, however, that as a career newbie, your bank account might be a little bleak. So it's a good idea to set aside an emergency fund to cover unexpected bills or a job layoff. Start by making a budget that covers essentials (housing, utilities, insurance, etc.) and savings, and then you'll know how much fun money you can spend guilt-free.
How to save in your 20s:
- • Automate your savings by setting up a monthly transfer from your checking account to your savings account. Choose a high yield savings account and watch it grow even more through the magic of compound interest.
- • Build a substantial emergency fund so you're not caught off-guard by a surprise expense.
- • Designate separate funds for short-term goals (like a trip or wedding) as well as long-term plans (like a down payment for a future house or car). Look into a Certificate of Deposit (CD) that offers a competitive interest rate and is only tied up for a short time, or a money market account that offers even more liquidity.
- • Stash a “windfall" like a tax return or bonus in your savings account to supercharge your savings.
- • If your workplace offers a 401(k) plan, consider saving at least up to the employer match to take advantage of that “free" money, which can help you reach your retirement goals faster.
- • In your 20s, time is on your side. The younger you are when you start investing, the more time your money has to grow through compound interest, which can be a significant accelerant.
Sturdy 30s
Who you (probably) are in your 30s:
In your 30s, you're likely zeroing in on a clearer view of your values and priorities. You might have found a partner or decided to remain happily single. At this stage, many people start getting serious about whether they want to have kids—or maybe lean into being a pet parent.
Why you should save in your 30s:
During this decade, focus on establishing a secure financial foundation, no matter what your situation. If you decide to start a family, adapt your lifestyle to support new and often costly expenses. One or both partners might need to downshift their career, at least temporarily, which means you'll want to build up a cushion to support that decision. Work on designing a new budget to see how it will flex with new commitments.
How to save in your 30s:
- • Make sure you're consistently putting money into your savings accounts for short- and medium-term needs.
- • If you intend to take a leave of absence when you start a family, consider doing a trial run of your reduced income and earmark the extra for savings.
- • Contribute to your 401(k) savings plan at work to reap the tax advantages it offers.
- • Consider investing at least 10% of your after-tax income. Given that the average stock market return has been about 10% per year for nearly 100 years,2 building a diversified, risk-appropriate investment portfolio can help your nest egg grow faster. With a longer horizon until retirement, many people decide they can afford to take more risk to ideally reap more upside.
- • Consult a fee-only financial planner to help you map out where you want to go and how to get there by constructing a risk-appropriate, diversified portfolio that matches your financial objectives.3
Fabulous 40s
Who you (probably) are in your 40s:
The 40s are often considered the busiest decade. You're probably hitting your stride in your career and might have an active family to oversee.
Why you should save in your 40s:
Your day-to-day budget might feel strained by competing needs (Diapers! Childcare! Vacations! Music lessons!), but you also are likely climbing the career ladder and significantly increasing your earning power. This is a logical point to revisit your budget and rework your allocations. Your 40s are also a great time to prioritize retirement planning so your money has sufficient opportunity to grow.
How to save in your 40s:
- • Review your 401(k) and make sure you're taking advantage of any employer matching. If you've gotten a raise, boost the percentage you contribute each month.
- • Look into other retirement options, such as setting up a Roth IRA or investing in annuities. Diversifying your assets can help insulate your nest egg.
- • Maintain various savings accounts so you won't be blindsided by big-budget hits like vacations, holidays and annual home maintenance.
- • Consider a 529 plan for upcoming higher education expenses. A new provision in the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act gives 529 accounts even more flexibility, allowing you to transfer qualified “leftover" 529 account funds to a Roth IRA tax-free and penalty-free.4
- • Verify that you have adequate life insurance to take care of your family in the event of a tragedy.
Nifty 50s
Who you (probably) are in your 50s:
If you raised a family, they've likely started their own lives and you're enjoying the well-earned slower pace of an empty nest. That gives you the chance to explore new hobbies and consider how you want to live this next chapter. Often the 50s involve reinvention, both in your career and your relationships.
Why you should save in your 50s:
During your 50s, concentrate on paying down debt and saving for the future. Review your budget and consider ways to reduce expenses as you choose new financial milestones for the near term, whether it's rebuilding a travel fund or pursuing a new hobby.
How to save in your 50s:
- • Make sure you're consistently putting money into your savings account and paying down any outstanding debts.
- • Don't delay in boosting your deposits. If you have a 401(k) or an IRA, take advantage of a catch-up contribution. This allows people age 50 and over to contribute an additional $1,000 to an IRA or an extra $7,500 to a 401(k).5
- • Talk to a financial advisor about whether you should adjust your mix of investments as you inch closer to retirement.
Giddy 60s
Who you (probably) are in your 60s:
As you ease into your 60s, you're likely thinking about retiring, or at least tempering your work obligations. You might have more leisure time to focus on new relationships (or rekindle old ones) and figure out who you want to be for the rest of your life.
Why you should save in your 60s:
Though you may no longer be working, your money can still be working for you. Keep saving to help it work even harder. For those still earning, continuing to save can boost your accounts so you can potentially look forward to retiring at an earlier age. You might even choose a side hustle to earn a little extra cash doing something you enjoy. Dedicate those dollars to paying down debt, or direct them toward an enriching activity or adventure you've always wanted to take.
How to save in your 60s:
- • Add regular contributions to your interest-earning accounts, which can help increase the income they generate. This can also help you outpace rising inflation, which could take a bite out of your savings.
- • Talk to a fee-only financial advisor about your optimal asset allocation. At this stage, you want your money to continue to grow, while protecting against volatility.
- • Consider when to take Social Security to maximize your personal situation. Read up on how benefits are calculated and how to figure out the most advantageous age for you to start drawing funds.6
Make saving a routine part of your financial life
At every age, saving money is a critical part of a healthy financial future. The building blocks at each stage are similar: Set achievable goals, create a realistic budget that fits your age and stage and automate your savings. Taking advantage of various savings and investment vehicles at different points of your financial journey can help keep your path solid. With the right plan, you can start saving money today and give yourself the security you need for a better tomorrow.
Cathie Ericson is an Oregon-based freelance writer who covers personal finance, real estate and education, among other topics. Her work has appeared in a wide range of publications and websites, including U.S. News & World Report, MSN, Business Insider, Yahoo Finance, Market Watch, Fast Company, Realtor.com and more.
RVC Proudly Supports America Saves Week through RVC Saves
As part of our participation in America Saves Week, RVC encourages good savings saving habits among our employees worldwide through our RVC Saves program.
That includes senior leadership level sessions talking about saving and even sharing educational messaging from employees and peers to other employees.
This article's tips are not just for RVC employees. Good saving habits can work for everyone. That’s why we encourage everyone to take the pledge to save at America Saves.
Sources/references
1. "Excess Savings during the COVID-19 Pandemic." FederalReserve.gov. October 21, 2022.
2. "What Is the Average Stock Market Return?" NerdWallet.com. December 8, 2022.
3. "What is Fee-Only Financial Planning?" NAPFA.com.
4. “Families can make a tax-free rollover from 529 plans to Roth individual retirement accounts starting in 2024." CNBC.com. December 23, 2022.
5. “Taxpayers should review the 401(k) and IRA limit increases for 2023. IRS.gov. November 21, 2022.
6. "When to Start Receiving Retirement Benefits." SSA.gov. January 2023.