You save to mitigate personal disaster.
Let’s zoom out from granular advice on maximizing returns on your taxable and retirement investments, or deep dives on the best CD rates or mortgage rates. At the most basic level, savings enable you and your family to enjoy the freedom associated with money and avoid the pain of debt.
There are two main reasons to set money aside: Insurance against bad financial weather and provision for your retirement. You might also save for a down payment on a house or for your wedding, but the first two are the must-haves.
Bad news: We’re not doing so well on either point. About half of Americans are at risk of lowering their standard of living in retirement, according to the Boston College Center for Retirement Research, while less than 20 percent of people feel very confident they’ll enjoy a comfortable retirement.
Only 39 percent of Americans would pay for an unexpected $1,000 charge out of their savings, according to a Bankrate survey. Americans are struggling to earn more than inflation, the return on savings can barely be felt, and credit card debt is piling up for families of all income levels.
It’s easy to get lost and fall behind. Your day teems with never-ending to-do’s of varying importance. You have to get the oil changed, buy health insurance, call the pediatrician, get the house ready for the in-laws, and so on. It’s difficult to prioritize properly funding hedges against disaster when you can barely get through the day.
Below you’ll find a helpful guide to how much you need in savings right now, and for retirement, over the course of your life. Of course, everyone’s situation is different, so think of this as less of an exact number and more of a guide that you can apply to your own life.
How much do I need in an emergency fund?
Let’s start with the emergency fund. The standard financial advice is that you should aim for three to six months’ worth of essential expenses, kept in some combination of high-yield savings accounts and shorter-term CDs.
An essential expense for me — say, my son’s health insurance — may be something you don’t have to worry about. Moreover, my rent might be less expensive than your monthly mortgage payment.
Broadly speaking, there are six costs to focus on: housing, transportation, food, health care/insurance, utilities and debt, with the first two carrying the biggest punch.
How much do I need in savings by age 30?
Households led by someone between the ages of 25 and 34 earn an average of $66,470 a year, according to the 2016 Consumer Expenditure Survey. If you take conventional wisdom, this household, which has on average one child, should have about that much stocked away in retirement accounts. Check out this calculator to get a more in-depth look into your specific retirement needs.
As for the emergency fund, they spend a monthly average of $1,550 on housing, $758 on transportation, $575 on food, $242 on health care and insurance, and $275 on utilities. Toss in an additional $56 a month for credit card debt, and that monthly essential spending costs $3,456.
(Credit card debt is used as a proxy for debt and assumes you’re paying a 4 percent minimum. Federal student loans are a huge source of debt, especially for millennials, but they typically give you flexibility in the event you lose your job.)
Multiply that by three to six, and you’ve got your emergency fund.
- Retirement savings goal: $66,470
- Emergency savings goal: $10,368 to $20,736
How much do I need in savings by age 40?
Those aged 35 to 44 earn an average income $92,576. Conventional wisdom states this couple should have three times that amount saved.
Their monthly spending consists of $1,908 on housing, $867 on transportation, $725 on food, $342 on health insurance, $358 on utilities and another $100 on credit card debt. That comes to a total of $4,300 a month.
- Retirement savings goal: $277,728
- Emergency savings goal: $12,900 to $25,800
How much do I need in savings by age 50?
This is the time you hit your peak earnings. It’s also when you’ll spend the most money in your life.
Those aged 45 to 54 earn an average yearly income of $99,423. Experts tell these stressed out folks they need six times earnings in their retirement accounts.
That might be difficult due to their spending. Housing costs actually go down slightly, to $1,833 a month, thanks in large part to paying off the mortgage. Nevertheless, you still owe $917 on transportation, $733 on food, $408 on health care and insurance, $383 on utilities and $112 on credit card debt. Or $4,387 a month.
- Retirement savings goal: $596,538
- Emergency savings goal: $13,161 to $26,322
How much do I need in savings by age 60?
Time to wind down. You’ve probably moved on from the most stressful period of your career, either voluntarily or not, and now you’re preparing for the last third of your life. That’s why earnings and spending start to fall.
Those aged 55 to 64 earn an average yearly income of $80,474. You’ll want to have saved at least eight times that for retirement.
Thankfully you need less in your savings account. You spend $1,550 on housing, $808 on transportation, $600 on food, $458 on health care and insurance, $350 on utilities and $100 on debt. That’s a monthly total of $3,867.
- Retirement savings goal: $643,792
- Emergency savings goal: $11,600 to $23,200
What you can do
These numbers can be somewhat misleading. By the time you hit 60, you’re expected to have retirement savings 30 times greater than your emergency fund. How is that supposed to happen?
Remember, your retirement saving has some advantages. The contributions you make aren’t taxed, and you might also get free matching money from your employer. The money itself takes advantage of compounding interest. Save 10 to 15 percent of each paycheck, including any match, and you’ll be on track.
Your emergency savings, meanwhile, is after-tax money that earns barely any return at all and you get no help from your job except for the paycheck. Kids cost $275,000 to raise (and that doesn’t include college), roofs break, family and friends need help, hips break and layoffs happen. Your emergency fund needs to weather all that.
Set up automatic contributions to your savings account — you’ll probably not even notice the money’s missing every two weeks. Bank any bonus or raise, try to live beneath your last salary, and when a debt is paid off, or an ongoing expense evaporates, put that money toward your emergency fund.
Constant vigilance is the only antidote to disaster.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.87% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|1.74% – 6.59%5||Undergrad & Graduate|
|1.90% – 5.25%6||Undergrad & Graduate|
|1.88% – 5.64%7||Undergrad & Graduate|
|1.86% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.44% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates range from 2.49% APR to 6.94% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 6.59% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 11/15/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.75% Fixed APR with AutoPay.
7 Important Disclosures for Navient.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.