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Has Your Family Hit These Money Milestones?

One of the biggest concerns financial planners talk about is the possibility of an impending retirement crisis. Many Americans have very little money squirreled away for their golden years. When it comes to retirement, hope alone won’t cut it. People need to start planning as early as possible for the later years. Here are some money milestones future retirees should begin working on sooner, rather than later.

Get to A Positive Net Worth

Whatever age you are should be the age when you aim for this milestone if you’ve not already reached it. Many millennials are graduating college with massive amounts of student debt. Those who find themselves in this situation should work on paying this off as soon as possible. It’s hard to build wealth when you’re tens of thousands of dollars under water.

Pay Off Your Car

This should be another goal that should have a time frame of “as soon as possible”. Every dollar of debt that you owe on a car is a dollar you’re paying interest on. Once your car is paid off, you can drop full coverage. Along with paying off big investments like your house and car, be sure you are insured on both. Being underinsured can become a bigger problem down the line should things go wrong.

Save Up Your Annual Salary

Experts recommend you save the equivalent of your annual salary by the time you hit 30 years of age. This can probably be exceeded by saving 15 percent of your income from the time you start working as long as you don’t have a massive salary increase over this time frame. Of course, there are worse problems to have than a huge raise.

Pay Off Your College Loans

Unfortunately, many millennials in their twenties are burdened by college debt and don’t have any money to spare. So you might consider setting a goal of having your college loans paid off by the time you are 30.

Save Three Times Your Annual Salary By 40

The same experts that recommend saving up your annual salary by the time you’re 30 recommend saving up three times your annual salary by the time that you reach 40. This amount of savings should help you have adequate income for your retirement. This is about the age that your income should peak, so you should be putting away a nice amount each year. Slow and steady will win this race to retirement.

Continue Saving for Retirement

When it comes to saving for retirement, age 40 is not the time to slow down. You should have the following amounts saved to prepare for retirement:

Age 50: Six times your salary

Age 60: Eight times your salary

By the time you are ready to retire you should have your house paid for. This will drastically reduce your expenses in retirement while also guarantee you a place to live. You might also consider downsizing to further reduce your monthly expenses and free up some cash from your home’s equity.

By saving throughout your working life, you should wind up with a nice nest egg by the time you come to retirement. Compounding returns will help build this wealth. Failure to get to these levels could make it less likely you’re able to really enjoy your golden years. The time to get started is now. As you are planning for retirement you should use a Retirement Planning Calculator to help you decide how much you need to save.

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