Financial information website MarketWatch has published an article providing some guidelines on how much money one should have saved at varying ages through your life.
MarketWatch said that one should take stock of their finances at the age of 30, “especially as short-term financial obligations solidify, such as continuing to pay off the last of student loans, living on your own (or maybe starting a potentially three-decade stretch of mortgage payments) and raising children”.
“By 30, you should have a decent chunk of change saved for your future self, experts say — in fact, ideally your account would look like a year’s worth of salary, according to Boston-based investment firm Fidelity Investments,” it said.
By way of an example, if you earn R300,000 annually, you should have R300,000 saved by the age of 30, and double that, so R600,000 by the age of 35, MarketWatch said. “By 35, you should have twice your salary,” it said.
And according to Fidelity, one should aim to save at least one times your income at 30, three times at 40, seven times at 55, and 10 times at 67.
According to Shaun Ruiters, executive of business development at PPS Investments, planning for a comfortable retirement is split into three key phases: the accumulation phase; pre-retirement stage; and managing your post-retirement finances.
“While each phase is unique, these phases are inter-linked and, if managed carefully, they should collectively result in a positive outcome at retirement,” he said.
In the accumulation phase – saving in your 20s, 30s, 40s – Ruiters said that the individual’s main focus should be on building adequate savings.
Closely aligned to this would be choosing appropriate investment options for your investment horizon.
It is advisable to choose growth assets, such as equities, during this phase particularly if you have more than 10 years to retirement, the advisory expert said.
“Taking a conservative approach in your investment strategy during this phase poses the risk of not allowing your savings the opportunity to grow as much as they could,” he said.