Americans are facing a savings crisis. In 2016, 35 percent of American adults had only several hundred dollars in their savings accounts and 34 percent had nothing, according to GOBankingRates.
And the median amount of retirement savings for working-age families in the U.S., those between 32 and 61 years old, is just $5,000. That's a far cry from the recommended $1 million needed to sustain yourself in retirement.
Though it will be more difficult for older Americans to catch up, young people still have time on their side. The best thing you can do — to work toward milestones like buying a home and also ensure you have a sufficiently funded retirement — is to start saving early and take advantage of compound interest, in which any interest earned accrues interest on itself.
How much should you have saved by the time you hit 30? Here's what the experts say.
If you're planning to retire at 67 and maintain a relatively similar lifestyle, a good rule of thumb is to aim to have the equivalent of your annual salary saved by 30, Kimmie Greene, money expert at Intuit and spokeswoman for Mint.com, tells CNBC Make It. That means if you make $60,000 per year, you should have $60,000 in savings on your 30th birthday.
This includes any retirement account contributions, matching funds from your company, cash savings, or money you have invested elsewhere, such as in index funds or robo-advisers.
Financial services company Fidelity agrees, noting that, by 35, you should have twice your salary in the bank.
"Setting up a savings goal linked to your income can help simplify your planning, and help you determine if you are on track throughout your working life," Ken Hevert, Fidelity senior vice president of retirement, said on a recent survey.
To reach these goals, Fidelity recommends saving 15 percent of your income per year starting at age 25 and investing more than 50 percent of your savings over your lifetime.
The simplest way to jump start your retirement fund and start investing is to sign up for your employer's 401(k) plan and take full advantage of any company match, which essentially gives you free money. Regardless of whether your employer offers a 401(k), you can contribute to a Roth IRA or traditional IRA, which are both individual retirement accounts that offers tax breaks.
Once you've set up a retirement account, you can also check online to see if you can set up "auto-increase," which allows you to choose the percentage you want to increase your contributions by and how often. This way, you'll never forget to up your contributions, or talk yourself out of setting aside a larger chunk.
Even if retirement seems far off into the future, padding your savings account early on can help you reach other financial goals as well, such as buying a house or sending your kids to college. To become a homeowner, you'll want to have at least 20 percent of the price of the home saved for a down payment, plus enough to cover all the related costs.
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