6 Min Read | July 1, 2022

How Much Savings Should You Have?

How much should you really have in your savings account? Experts say it depends on many things – your age, income, lifestyle, and more. Find out how to think about your savings.


There are two common reasons everyone should save money: unexpected emergencies and retirement

But how much you should save depends on your age, income, lifestyle, and more.

Understanding your financial situation can help you get your savings goals on track.

“How much savings should I have?” sounds like a question that would be easy enough to answer, but – like all things personal finance – it depends. There are many factors that contribute to what experts suggest your savings goals should be, like your age, lifestyle, income, and overall financial goals. But how much you should have in savings also usually depends on what you’re saving for – a house, a car, a lavish vacation, or the most common savings goals: an emergency fund and retirement fund.

Wrapping your head around how much you should have in savings may not be as hard as you think, as long as you carefully consider your personal financial situation. This article explores the “how much savings” question by focusing on emergency and retirement funds, since those are the two common savings goals experts suggest we all should have.

How Much Should You Save for the Unexpected? 

Life is full of surprises. While it’s exciting to think about a last-minute trip to London, it’s not so fun to ruminate on situations like medical troubles, natural disasters, or layoffs. Good or bad, it’s important to recognize life’s possibilities and plan your savings accordingly. Enter the emergency fund.

What is an emergency fund? An emergency fund is money set aside in an easily accessible savings account so you can comfortably manage a major unexpected expense. Emergency funds don’t have to be reserved strictly for worst-case scenarios. Unexpected expenses can be fun too, as long as you make sure you always have the essentials covered.

How much savings should you have for emergencies? How much you should save for emergencies depends on your personal circumstances and risk tolerance. To establish an initial emergency fund goal, the Consumer Financial Protection Bureau (CFPB) recommends thinking about any common unexpected expenses you’ve had in the past and adding up how much they cost.1

At the same time, some sources suggest setting aside at least three to six months’ worth of essential expenses. Essentials include rent or mortgage payments, food, utilities, insurance, transportation, and any loans or credit card payments. If three to six months seems like a large spread, it is. Consider it a rough guideline. Exactly how much savings you should have will depend on your particular financial situation. For example:


  • In your 20s: Let’s say you’re a 20-something who has $3,000 worth of essential expenses each month. By some standards, it’s suggested you have between $9,000 and $18,000 in your emergency fund. But it can be hard to save at this age – especially while repaying student loans. Don’t worry, it’s okay to start small. The CFPB suggests it may be a good idea to have at least $400 tucked away for emergencies, perhaps to cover a small, unexpected expense.2 Meanwhile, try to get into the habit of consistently contributing to your emergency fund, even if it’s just $5 to $10 every week.
  • In your 30s, 40s, and 50s: According to conventional emergency savings wisdom, a 30-something with $5,000 a month of essential expenses should have between $15,000 and $30,000 saved. To zero in on a more concrete number, consider this: the longer you think it would take you to get a new job if need be, the more savings you should have to cover essential expenses like housing payments, food, and utilities.
  • In your 60s: By the time you reach retirement, the amount you need in your emergency fund will likely decrease. Why? Chances are, your mortgage is paid off, your car insurance is cheaper, and if you’re retired you don’t have to worry about money to hold you over between jobs. Still, it’s a good idea to tuck away some savings for any sudden home repairs or medical costs.

Of course, no matter your age, using any of your emergency fund means you should start saving again to replenish it. You never know what life has in store next!

How Much Savings Should You Have in Your Retirement Fund?

It’s safe to say that most people plan to retire. But if you don’t have a pension, where your employer guarantees a certain amount of retirement income, you’ll need a source of monthly income in order to retire comfortably. This is where a retirement fund comes in.

What is a retirement fund? A retirement fund is meant to take the place of work income after you retire so you can maintain your lifestyle. Retirement funds are usually built up over the course of your life through an investment account like a 401(k) or IRA. For more information, read “Explaining 6 Key Types of Retirement Plans.”

How much savings should you have for retirement? There are a few ways to think about how much you should save for retirement. Some experts say you should start in your 20s and contribute about 12–15% of your gross income into a retirement account each year.3 But take note: if you start saving in your 30s or 40s, you’ll have to set aside a larger portion of your annual income to catch up.

Another way to think about how much you’ll need to save for retirement is by age.4 According to some experts,

  • By age 30, aim to have at least your annual salary saved.
  • By 40, aim to have at least 3X your annual salary saved.
  • By 50, aim to have at least 6X your annual salary saved.
  • By 60, aim to have at least 8X your annual salary saved.
  • By 67, aim to have at least 10X of your final salary saved.

While these guidelines can be helpful, exactly how much you should save depends on your own income, the age at which you plan to retire, and the lifestyle you want to live in retirement. This means it’s important to do some calculations to get a solid understanding of what you’ll need to retire comfortably.

The Takeaway

Although you might be itching to set aside some money to save up for a house, car, wedding, or new TV, there are two crucial reasons that experts agree everyone should save for: emergencies and retirement. How much you should save will depend on a few key factors like your age, income, location, and goals – but one thing is for sure: it’s never too early – or too late – to start saving.

Megan Doyle

Megan Doyle is a business technology writer and researcher whose work focuses on financial services and cross-cultural diversity and inclusion.


All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

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