Savings by Age – Are You Saving Enough?


Have you considered the amount of cash savings by age you should have?  As you navigate through life, it’s probably a given your savings goals will change. Your needs and wants will evolve.

So will your “sleep at night” factor. We know, we’ve been there and continue to think about money too.

Based on our experiences and from the interactions we’ve had with tens of thousands of Canadians, no matter what stage of life you’re in: it’s never too soon (or too late) to save some money.

If you’re searching for some hard and fast rules that apply to everyone, you won’t find them and we don’t suggest you try. 

That’s because we believe personal finance is always personal. 

What works for Mark, or Joe, or you could be different. At the end of the day, the only savings goals that really matter are yours.

How much should you save?

The authors of this site both started our savings journey very early and it was likely our biggest key to financial success. We’ll show you in future articles how much you need to retire at various ages. Point blank: getting into the habit of saving money is critical.

Yet it’s also important to save money, keep some cash on the side because life is and will always be somewhat unpredictable. So, plan for that financially. 

It has been written many times that investing or other major financial commitments should only commence after you have saved up a minimum of six months (or so) of living expenses in an emergency fund. We believe for younger investors that’s a bit excessive. As you get older, however, having a modest amount of cash in the bank is very helpful to manage risk. 

So, starting with and focused on just cash savings, let’s have a look to see what we feel is reasonable savings by age and why.

Savings by Age

Here are some savings by age considerations for you:

By Age…Target Amount ($) SavedRationales
25$5,000Keep a small slush fund on hand to cover any emergencies. You never know when your car might break down, there is a layoff at work, or other funds might be required to see you through a short-term financial mess. You’re just starting your work career – so try and avoid major financial mistakes even though you have many decades to recover. We have assumed you have no student loan debt or credit card debt at this time. If you do, pay off those liabilities first. Then, you can really get other savings beyond this value invested – the sooner the better. We tell you why in this post: When Should I Start Investing.
35$10,000Keep a modest amount of cash savings on hand to cover emergencies – typically earmarked to any urgent household or children’s needs. Changes in the workplace can and do happen; this money will likely cover any essential day-to-day spending needs for at least 2-3 months until you get things sorted out financially.
45$20,000Keep a healthy amount of cash readily available to cover major life changes and/or unplanned events. Beyond workplace changes, as you approach your peak earning years, you may need this amount to work through any employment changes or major capital repairs at home.  You can certainly do with “less” savings but we don’t advise it based on our own experiences and experiences shared with us! Worse case, if you still feel this is too much cash on hand, you can deploy some savings into investments when you feel the time is right!
55+$30,000As we quickly approach semi-retirement ourselves, we are targeting to keep at least $30,000 in cash on hand. This amount should not only cover household or other emergencies but also cover multiple months of expenses should a major financial meltdown occur. Stock markets can be volatile short-term, which means having some cash on hand to invest or to ride out bearish times can be a good risk mitigation approach. If fact, we’ll go on record to say we’ll probably keep closer to $50,000 cash on hand, readily available in semi-retirement or retirement. We feel some cash on hand when you are no longer working full-time is smart financial risk management. 

As you can see, the size of your savings account may fluctuate quite a bit throughout your life based on your current operating expenses/needs but also as a function of risk.

Typically, the younger you are, the less fixed costs you may have and the more financial risk you can incur. This is because you have time on your side to make up for any financial losses later in life. The older you are, the more catastrophic taking on too much financial risk can become. That risk is compounded by the fact you have less time to recover from any major money losses incurred.

Of course, these are just our guidelines based on what has worked successfully for us but we’ve also arrived at these targets above based on the positive experiences that many financially successful readers have shared with us over the years. 

How much should you save by your age?

What should be a clear takeaway for you is to consider what savings-level is important to you and why, and how that money is as accessible as possible in a financial emergency. That latter point is key because it’s inevitable: life will throw us a financial curveball now and then.

This is when your cash savings can help save the day.

After you get some cash savings in place and keep it there, we strongly encourage you to put any additional savings hard to work – as part of an investment plan. If you missed our post, check out When Should I Start Investing here. You’ll read about some of the major differences between saving and investing and why investing is so important after any basic emergency fund is in place.

A reminder, if you haven’t already subscribed, please do and download our FREE cashflow spreadsheet to see where your money goes and see if it lines up with what you’d expect!

Feeling ready to invest? Check out our comprehensive post about how to Build Long-Term Wealth using our Diversified ETF Model Portfolios.

We look forward to sharing more new content soon!

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2 thoughts on “Savings by Age – Are You Saving Enough?”

  1. Good stuff! We’re rounding 30 now and we like to keep around $15k in emergency funds, and anywhere between $2 – $5k in our chequing accounts. I think this number can also depend on whether you rent or own, as well. If you own, your liabilities for any given month can be higher than if you rent.

    • That’s a great target Loonie and by the sounds of it, you’re doing so many things right! Well done and great points for others as well.


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