When you are in your twenties, the world is at your feet. Life seems full of possibilities.
Traveling and seeing how far you can push yourself is the order of the day. Every day presents new challenges and lessons.
Saving is not at the top of the list for most folks in their 20s. The Transamerica Centre for Retirement Studies found that the median retirement savings for Americans in their 20s is just $16,000. According to BLS data, the median salary of 16- to 19-year-olds is $26,312 per annum. A good chunk of change for a younger person. It divides down into $506 per week.
Of course, saving for ten years will affect that saving balance, but many folks only really start seriously saving a bit later in life. Compare this to folks in their 30s who say they have $45,000 stashed away.
As you get older and work your way into more responsibilities you start to get higher salaries. For others, they have spent years studying in college and are now entering the workforce with professional degrees from graduate schools. Americans between the ages of 25 and 34 earn far more than their younger counterparts. Their median salary is $918 per week or $47,736 per year.
Not saving early is an easy situation to remedy. Start setting aside small amounts every week or every month. Do it paycheck by paycheck. If you are between the ages of 18 and 24 and have $4,700 saved you are right on track with the average retirement saving, according to Federal Reserve SCF data. By the time you are in your late 30s the average shows as $48,710.
Are you on track, or are you under-earning or under-saving for your age group?
One way to be more financially stable is to minimize your debt. Using credit and living above your means will only end in pain later. Playing the long game is essential if you want to live a life of financial freedom.
Driving a fancy car for a few years might feel good at the time, but it’s money you could be saving and interest you could be earning on investments, rather than the interest you are paying on a debt.
It doesn’t matter if you are in your 20s or your 30s — you still have to think about your later years and saving is a necessary part of achieving financial freedom.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
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