Reaching the age of 38 often brings a sense of accomplishment and stability. You’ve likely gained valuable experience in your career, established meaningful relationships, and perhaps even started a family. However, amidst the joys of this life stage, it’s crucial to assess your financial standing and ensure you’re on track to achieve your long-term goals.
This guide will delve into key financial milestones you should aim to reach by the age of 38, providing insights and strategies to help you navigate your financial journey effectively.
Key Financial Goals to Achieve by 38:
1. Emergency Fund:
A robust emergency fund is the cornerstone of financial security. Aim to have at least 6 months of living expenses readily available to cover unforeseen events such as job loss, medical emergencies, or unexpected home repairs.
2. Debt Management:
By 38, you should strive to eliminate high-interest debt, such as credit card balances and personal loans. Prioritize paying off these debts to minimize interest charges and free up your financial resources for other goals.
3. Retirement Savings:
Retirement planning should be a top priority at this stage. Ideally, you should have accumulated a retirement nest egg equivalent to 2-3 times your annual salary. Consider increasing your contributions to your 401(k) or IRA to accelerate your retirement savings growth.
4. Homeownership:
If homeownership is part of your long-term plan, aim to have a significant down payment saved to minimize your mortgage and interest payments. Research different mortgage options and consider seeking professional advice to ensure you secure the right mortgage for your financial situation.
5. Life Insurance:
If you have dependents who rely on your income, consider purchasing life insurance to provide financial protection for your loved ones in the event of your untimely passing. Ensure the coverage amount aligns with your family’s financial needs.
6. Investment Portfolio:
By 38, you should consider diversifying your investment portfolio to include a mix of stocks, bonds, and real estate. This diversification helps mitigate risk and potentially enhance your long-term returns.
7. Estate Planning:
As your assets and responsibilities grow, consider creating an estate plan that includes a will, power of attorney, and living trust. These documents ensure your wishes are followed and protect your assets in the event of incapacitation or death.
8. Financial Education:
Continuously invest in your financial education by reading books, attending seminars, and seeking professional advice. Staying informed about financial concepts and strategies will empower you to make informed decisions and manage your money effectively.
9. Regular Financial Checkups:
Schedule regular financial checkups with a qualified financial advisor to assess your progress towards your goals, adjust your strategies as needed, and address any financial concerns you may have.
10. Embrace Flexibility:
Life is full of surprises, so it’s essential to remain flexible with your financial plans. Be prepared to adapt your strategies as your circumstances and priorities change over time.
Additional Considerations:
- Individual Circumstances:
Remember that these milestones are general guidelines and may vary depending on your individual circumstances, income level, and financial goals.
- Professional Guidance:
Seeking guidance from a qualified financial advisor can provide valuable insights and personalized recommendations tailored to your unique situation.
- Financial Resources:
Numerous online resources and financial literacy programs can help you gain a deeper understanding of financial concepts and strategies.
- Start Early:
The earlier you start planning and taking action, the better positioned you’ll be to achieve your financial goals and secure a comfortable future.
Reaching 38 is an opportune time to assess your financial standing and ensure you’re on track to achieve your long-term goals. By focusing on key areas such as emergency savings, debt management, retirement planning, and investment diversification, you can build a solid financial foundation and navigate your financial journey with confidence. Remember to seek professional guidance when needed and remain adaptable to changing circumstances. By taking proactive steps now, you’ll set yourself up for financial success in the years to come.
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Editors Note: At the time of publication, the APYs mentioned in this article were current. They might change as the Fed rate shifts, either upward or downward. CNBC Select will update as changes are made public.
The question of how much one should save for retirement has always been a popular one.
There are general guidelines that you can follow at any age to help you reach your retirement goals, though the answer largely depends on when you intend to retire and the kind of lifestyle you want to lead.
How much money to have saved at every age
If you want to retire by the age of 67, the general rule is to save ten times your income, according to retirement plan provider Fidelity Investments. If you would like to retire any earlier or later, change this amount. To make up for an extra five years without income, retirees who choose to do so at age 62—the earliest at which they can collect Social Security—will need to save more money. Since they will have worked an extra three years and likely have fewer years left to spend their savings, people who retire at 70 probably won’t need the full ten times their income.
While Fidelitys guideline is a big goal, its more manageable when you start early and have many years to reach it. Fidelity suggests the following age-based savings milestones that would provide enough income for you to continue your current lifestyle in retirement (rather than planning to downsize or spend more).
According to experts, you should have this much money saved up for every age:
- The amount of money you should have saved by the time you turn 30 is equal to your yearly salary, so if you make $55,000, you should have saved $55,000 by then.
- Savings by age 40: three times your income
- Savings by age 50: six times your income
- Savings by age 60: eight times your income
- Savings by age 67: ten times your income
The aforementioned savings recommendations cover all of your investments in index funds and robo-advisers, as well as any money you have in company matches and retirement accounts like 401(k)s or Roth IRAs. Although everyone has different personal savings objectives, these benchmarks can help you stay on course or get things going if you’re not even close.
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FAQ
How much money should a 38 year old have saved?
How much should I have in retirement at 38?
What does the average 37 year old have in savings?
Is 38 too late to start investing?
Are You putting off saving money at age 35?
When you’re behind on saving money at age 35, it’s not the end of the world. But it’s also essential to make catching up a priority. You probably still have at least 25 to 30 years left until retirement. But every day you put off saving, you’re missing out on the power of compound interest.
How much money can a 35 year old save?
The median annual salary for the younger age group is $52,156 and $62,244 for the older demographic, according to U.S. Bureau of Labor Statistics data for the third quarter of 2022. If you earn just above $57,000, then by age 35, you should have saved about $115,000. If you’re nowhere close to that number, don’t panic.
How much money does a 35-year-old have in a retirement account?
Join the club. The average 35-year-old doesn’t have $115,000 saved either. The median retirement account balance is $60,000 for the 35-44 age group, according to the Federal Reserve’s 2019 Survey of Consumer Finances. Many people in this age group are building wealth through homeownership, with 61.4% owning a primary residence.
How can I reach financial independence & hit my savings by age chart?
Save And Save Some More! The only way to reach financial independence and hit my savings by age chart is to live within your means. National average money market accounts are still yielding a pitiful 0.07% as of November 2022. Don’t fall pray to letting your cash sit in a savings account with less than a 0.1% yield.