Benchmark for Ideal Savings Amounts at Ages 30, 40, 50 According to Experts

Retirement often feels distant, but financial needs in old age should be prepared for early so they do not become a burden later. Saving and building a retirement fund from now is an important step to ensure old age remains secure and financially independent.

According to Fidelity Investments, one benchmark in preparing for retirement is having savings equivalent to 10 times annual income by age 67. This calculation includes all funds held in retirement accounts and investments.

The recommended savings targets by age are as follows:

• Age 30: equivalent to 1 times annual income. For example, with a salary of Rp10 million per month, the savings target is Rp120 million.

• Age 40: equivalent to 3 times annual income.

• Age 50: equivalent to 6 times annual income.

• Age 60: equivalent to 8 times annual income.

• Age 67: equivalent to 10 times annual income.

These guidelines assume a person wishes to maintain a relatively similar lifestyle after retirement, neither reducing nor increasing their consumption patterns. To achieve these targets, Fidelity suggests setting aside around 15 per cent of annual income starting from age 25.

The earlier the habit of saving begins, the greater the chance that retirement funds will grow optimally. A long time horizon allows compound interest to work and accelerate the growth of accumulated funds.

In addition to saving regularly, retirement funds can also be allocated to investment instruments that match one’s risk profile and investment time frame. When income increases, the portion allocated to savings and investments should also be raised so that lifestyle growth does not erode the ability to prepare for retirement.