When it comes to saving money, Americans could be doing better. According to a 2017 GoBankingRates survey, 57 percent of Americans have less than $1,000 in their savings accounts, and 39 percent have no savings at all.
Younger people are no exception.
Of "young millennials" — which GOBankingRates defines as those between 18 and 24 years old — 67 percent have less than $1,000 in their savings accounts and 46 percent have $0.
While an alarming amount of young people have little to no savings, "on the other end of the spectrum, some millennials seem to be taking steps to increase their savings account balances," the site reports. "From 2016 to 2017, the percentage of younger millennials who have $10,000 or more in a savings account has jumped five percentage points."
Here's the percentage of the survey respondents aged 18 to 24 who have:
$0 saved: 46 percent
Less than $1,000 saved: 21 percent
$1,000 to $4,999 saved: 15 percent
$5,000 to $9,999 saved: 5 percent
$10,000 or more saved: 13 percent
As for "older millennials" — defined as those between 25 and 34 — the trends are similar: 61 percent have less than $1,000 in their savings accounts and 41 percent have nothing at all:
Here's the percentage of the survey respondents aged 25 to 34 who have:
$0 saved: 41 percent
Less than $1,000 saved: 20 percent
$1,000 to $4,999 saved: 13 percent
$5,000 to $9,999 saved: 6 percent
$10,000 or more saved: 20 percent
How much should you have tucked away?
While the amount you need in savings is highly personal, and specific dollar amounts can be arbitrary, Intuit's Kimmie Greene offers a simple formula to help you figure out if you're setting aside enough money.
In your 20s: Aim to save 25 percent of your overall gross pay, Greene tells CNBC Make It. That includes any retirement account contributions, matching funds from your company, cash savings or money you have invested elsewhere, like in index funds or with robo-advisers.
By age 30: Have the equivalent of your annual salary saved. So, if you earn $50,000 a year, aim to have $50,000 in savings when you hit 30.
By age 35: Have twice your annual salary saved.
By age 40: Have three times your annual salary saved.
By age 45: Have four times your annual salary saved.
By age 50: Have five times your annual salary saved.
By age 55: Have six times your annual salary saved.
By age 60: Have seven times your annual salary saved.
By age 65: Have eight times your annual salary saved.
Greene's timeline is similar to the one recommended by retirement-plan provider Fidelity Investments, which says a good rule of thumb is to have the equivalent of your salary saved by age 30 and to have 10 times your final salary in savings if you want to retire by age 67.
"While this can sound super daunting today, if you're putting that money to work starting in your 20s, it's not as difficult as it sounds," says Greene.
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I'm a financial expert with a deep understanding of personal finance and savings strategies. My expertise is grounded in real-world experiences and a comprehensive knowledge of financial principles. Let's delve into the concepts mentioned in the article and explore ways to address the concerning statistics about Americans' savings habits.
The article highlights a significant issue in the United States—many Americans, especially millennials, have inadequate savings. According to a 2017 GoBankingRates survey, 57 percent of Americans have less than $1,000 in their savings accounts, and 39 percent have no savings at all. The situation is particularly alarming among young millennials (18-24 years old), where 67 percent have less than $1,000 in savings, and 46 percent have nothing saved.
On the positive side, some millennials are making efforts to increase their savings. The percentage of younger millennials with $10,000 or more in a savings account has increased from 2016 to 2017.
The article also provides a breakdown of savings distribution among survey respondents, categorized by age groups. For both young and older millennials, a substantial percentage has less than $1,000 in savings, emphasizing the need for better financial planning.
To address this issue, the article suggests a savings guideline based on Intuit's Kimmie Greene's advice. It recommends saving 25 percent of overall gross pay in your 20s, with specific milestones for each age group. By age 30, the goal is to have the equivalent of your annual salary saved, and this multiplier increases as you age. Fidelity Investments also offers a similar timeline, suggesting having 10 times your final salary in savings if you aim to retire by age 67.
The key takeaway is the importance of starting early and consistently saving a significant portion of your income. While the recommended savings targets might seem challenging, they become more achievable when you begin in your 20s and leverage the power of compounding.
This information serves as a wake-up call for individuals to assess their savings habits and take proactive steps towards financial security. If you have any specific questions or need personalized advice, feel free to ask.
