Whether you’re in your 20s and just landed your first job or you’re just a few years away from retirement, saving for the future is key to achieving financial freedom. And paying yourself first—setting aside part of your income each time you get paid—lays the foundation to help you achieve your personal and financial goals, whatever your ideal future looks like.
However, your priorities and financial challenges will likely change throughout your life, and your savings goals should change too. In this guide, we’ll discuss how to set savings goals depending on your life stage—plus, how to get the support you need to reach your goals.
Savings Goals in Your 20s and 30s
When you’re just starting to plan your financial future, getting into the habit of paying yourself first is the critical first step. From there, consider a range of goals that set you up for lifelong financial security.
Start an emergency fund
An emergency fund is an investment in your peace of mind. It provides a cash buffer to protect you against unexpected expenses. It helps ensure you can pay your bills if you lose your job or have to cut back your hours, and it can also help cover that emergency auto repair or medical expense.
When it comes to emergency saving, start small with a reasonable goal that works for your budget today, with a goal to eventually save three to six months’ worth of expenses. Putting even a few dollars a week into a savings account allows you to steadily build your fund and earn interest on your savings in the meantime.
Open your first retirement accounts
When you’re just starting out, it can be tempting to put off retirement planning until you feel more financially secure. But the earlier you start, the less you’ll have to save overall, because your money will have more time to earn interest or generate returns. As a result, even small savings today can have a big impact once you reach retirement age.
What’s more, your employer may offer a retirement account—such as a 401(k)—and match a percentage of your retirement savings. So if you aren’t contributing to your retirement account, you could be missing out on free money.
Put yourself on track to a strong financial future by opening a retirement account via your employer or opening another registered retirement account, such as an IRA (Individual Retirement Account), and set aside a percentage of your income for retirement.
Save for other priorities
Whether you want to start planning your dream vacation, buy your first home or expand your family, consider setting savings goals for your upcoming life events. Consider using a savings account for smaller and short-term savings goals. For longer-term goals, such as saving for a home, opening a Certificate of Deposit (CD) or Money Market Account (MMA) can help you earn more interest and accelerate your savings.
Savings Goals in Your 40s and 50s
As you enter your 40s and 50s, your financial situation has become increasingly complex. You may be juggling multiple savings goals—for example, planning to upgrade your home or saving for the next generation—while preparing for retirement on the horizon.
Consider opening a Health Savings Account
Your 40s and 50s are often some of your peak earning years, and a Health Savings Account, or HSA, offers a tax-advantaged way to save for medical and healthcare costs. You won’t need to pay federal income tax on money deposited into an HSA, allowing you to save money at tax time. The funds in your account can cover eligible medical expenses, including deductibles, copayments and other out-of-pocket expenses for medical care, medications, medical equipment and more.
Increase your focus on retirement
As you get closer and closer to retirement, it becomes increasingly important to revisit your retirement plan and ensure you’re saving enough to meet your goals.
A general recommendation is to have three years’ salary saved for retirement in your forties and six times your yearly salary in your fifties. However, a financial advisor can look over your income and your projected expenses in retirement to help you create a plan that’s tailored to your needs.
If you find you’re behind on saving for retirement and you’re age 50 or older, consider looking into whether your retirement plan allows for catch-up contributions—that is, additional contributions beyond the plan’s annual standard contribution limit.
Several types of retirement plans—including 401(k)s, 403(b)s and Roth or traditional IRAs—may allow catch-up contributions, and your financial advisor can help you understand if you’re eligible.
Savings Goals in Your 60s and Beyond
In your 60s and beyond, your savings strategy shifts into the last phase of retirement planning, as well as living securely in retirement.
Wrap up retirement saving
With retirement just over the horizon, your financial planner can work with you to ensure you’ll reach your savings goals. At this stage in life, you’ll likely have a firm understanding of your expenses in retirement, so you can begin making a budget—and augment your savings, if you need to, to ensure your financial security.
Transition from saving to paying off
As you create your financial plan, you might also opt to refocus your financial goals around paying off debts to help you retire debt-free. If your mortgage allows it, for example, you might decide to accelerate payments, or plan to pay off the balance in full before you retire.
Save for children and grandchildren
Entering your 60s may also shift your focus to planning your financial legacy and saving for the next generation. Parents and grandparents have a range of options to save for a child’s education and retirement, as well as pass on assets to the next generation. Learn more in our guide to saving for children.
Get support to reach your savings goals
No matter where you are in life, setting savings goals helps you lay the foundation for lifelong financial security. Those goals can serve as a roadmap for financial planning and budgeting, which is what will turn your goals into reality.
That’s where we can help. Byline’s trusted team can help you set goals personalized to your life stage and financial situation, work with you to create budgets and plans to achieve your goals and provide trusted advice to guide you each step of the way.
With options to serve you in each stage of your financial journey, Byline is here to help turn your savings dreams into a reality. Stop by a branch today to learn more.
