This is the average savings balance of a 40-year-old

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How does yours compare?


Key points

  • Personal Capital reports that their average user had approximately $57,000 in savings in 2021.
  • It’s a good plan to have about six months of living expenses saved for emergencies.
  • Beyond this amount, consider investing to potentially earn a higher return.

Many people struggle to save money earlier in their careers. You may have spent your 20s struggling with low-paying jobs and paying off various debts. And you may have spent your 30s earning more money, but spending most of it on a down payment for a house and childcare costs.

But if you’re in your 40s, you may be in a more secure position financially. You hopefully earn more and spend less on childcare (if your kids are school-aged and don’t need full-time care). And you could own or rent a home that you can comfortably afford now. And all of this could mean that you were able to accumulate more money in your savings account.

But if your savings account balance is similar to the average person your age, you may need to assess that number and make sure it’s not too high. So if you’re wondering how your cash savings balance compares to other 40-somethings, Personal Capital has an answer.

How much do 40-somethings save?

According to 2021 data from Personal Capital, based on their users’ average account balances, the typical cash savings balance among adults in their 40s is $56,585. This does not include money from checking accounts or what Personal Capital calls “other” types of money.

Now, at first glance, $56,585 sounds impressive. And that’s considerably higher than the average $35,434 that 30-somethings have saved. But that $56,585 might be a bit too high, believe it or not.

Here’s when investing might make sense

The money you have in savings should be reserved for emergencies and short-term goals. But if you’re saving for longer-term goals, like retirement, you might not want to keep all that money in the bank. On the contrary, you may want to invest it for additional potential growth.

Suppose you want to maintain an emergency fund with enough money to cover six months of essential living expenses. If you spend $6,000 a month, a savings account balance of $36,000 should suffice.

If your only other major goal is to save for retirement and you have about $56,000 in your savings account, you may have too much money in it. In that case, you might consider moving some of that money into a brokerage account and investing it for a potentially higher long-term return.

That said, if you’re worried about saving for an emergency, it makes sense to try to boost your cash reserves. But otherwise, be careful when keeping your money in an account that will only earn you a minimal return on your money.

Does comparing yourself to other forties make sense?

Yes, at least from a curiosity point of view. But at the end of the day, don’t worry about what other people your age have saved up. Instead, make sure you have the right amount of money in savings to meet your Needs. And at the same time, make sure you haven’t gone too far on the cash savings front, because you don’t want to stunt your money growth and struggle with long-term goals, like building a nest egg, all the way.

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