How Much Should Immigrants in the U.S. Save In Their 20s, 30s, 40s, and Beyond

9 min readDec 6, 2020


“How much money should I be saving in my 20s, 30s, 40s and beyond?”

This is an age-old question that everybody wants to know the answer to, especially so for immigrants in a new country who need the financial security in the event of any emergencies. Now, there’s no “one-size-fits-all” answer to suit every immigrant, as everyone comes from a different background, with factors like family, education, wealth, current commitments, etc. playing a role in who they are today, and who they’re likely to be in future. For instance, some immigrants who are the only child would need to provide support for their parents back home; older siblings in the U.S. pay for their younger siblings’ education and other expenses; and younger immigrants sometimes have the financial backing of their parents during their studies, which means that they can graduate debt-free — a luxury that many students in the U.S. don’t have. All these realities play a role in how much a person needs to save, in addition to other factors like current lifestyle, expected future lifestyle, family setup, expected retirement age, etc.

But whether you’re a fresh graduate, well set in your career, or already blazing your own life path in your new country, one thing will always remain the same for everyone — it’s important to save. And it’s never too late to start. By following some general guidelines, you can be better prepared to achieve your goals and confidently navigate through your new life in the U.S..

Ready to start thinking about saving some moolah?

Why Every Immigrant in the U.S. Must Save

How much money should you save if you’re a youngster in your 20s with few responsibilities and commitments? And what is the “right” amount if you’re in your 50s and making retirement plans?

Before finding the answers to these questions, it’s important to answer the question of why you need to save and why identifying an ideal amount can be helpful. To start with, remember that regardless of your current age, lifestyle or aspirations, the future is always uncertain. Aiming for an ideal amount to set aside can help you prepare for whatever the future may hold for you — good or bad — including:

  • Emergencies such as medical troubles, accidents, job losses or natural disasters
  • Pursuing new hobbies
  • Making large purchases, such as a retirement home, a foreign holiday or family car
  • Supporting your family members, say, with education or medical expenses
  • Retirement

How much money should you save by age?

First, keep in mind that savings and savings goals are subjective. This means, they’re different for different people. Second, you should think about savings from two aspects — your annual income, and an emergency fund.

Regarding the first, there are no hard and fast rules about how many dollars you should have in the bank, but based on your annual income, here are some figures for you to aim towards:

Table 1

So if you’re 25 and earning a salary of $50,000 per year, by your 30th birthday, you should have saved at least $50,000. Similarly, if you’re 65, and earn $125,000, and plan to retire at 67, you should have savings of at least $1,250,000 tucked away.

These savings include anything you may have in a retirement account, like a 401(k) or Roth Individual Retirement Account (IRA), as well as investments in things like index funds. Also, if you have worked in the U.S. for at least 10 years, and have accumulated 40 U.S. work credits, you may qualify for monthly Social Security benefits starting at age 62. These payments, along with your retirement account can be used to supplement your savings.

Let’s consider an example using data from the U.S. Census Bureau. According to the 2018 American Community Survey (ACS)[1], between 2017 and 2018, the real median household income in the United States was $61,937. This figure is for all households, not just immigrant households, but the figures will still give you a good starting point to create your own savings plan. Based on Table 1, here’s what you will need to save if your annual income is $61,937.

Table 2

Do remember that these numbers are only guidelines. The actual amount you save will vary based on:

  • Your income
  • Your current financial commitments
  • Aging parents
  • Supporting a non-working spouse
  • School-going children
  • Supporting other relatives back home
  • Current expenses including rent or mortgage, food, travel, etc.
  • Leisure activities including vacations and hobbies
  • Your planned retirement age
  • The kind of lifestyle you want to have after retirement

The second part of your savings should be an “emergency fund” which you should have, regardless of your current age. This fund should cover unexpected or sudden expenses, and must be between 3 to 6 months’ worth of your current expenses.

For instance, if your average monthly expenses are $5,000, your emergency fund should be somewhere between $15,000 to $30,000. This fund should be liquid and easily accessible, such as tucked in an online high-yield savings account instead of a certificate of deposit (CD) or an investment account where your money gets “locked in” (and is therefore difficult to access).

In general, monthly expenses tend to vary depending on many factors, including the individual’s age:

  • 20s: Leisure, shopping, food and drink, rent
  • 30s, 40s, 50s: Family expenses, food and drink, rent/mortgage, leisure
  • 60s: Food and drink, medical expenses, leisure

A good way to figure out your expenses is to track your own spending for a few months, and then calculate the average amount you need month-to-month. Then make sure you have at least 3–6 times this amount in a savings account.

If you can’t put aside a large amount yet, start small. Even $5 per day can help accumulate to a savings of $1825 in a year. If in certain months, your expenses are lower, you can put aside a greater amount into your emergency fund.

When should you start saving?

The answer to this question is simple — as early as possible! The sooner you start saving, the longer you have to take advantage of the power of compound interest, which allows your money to grow over years and decades.

If you’re starting in your 20s, aim to save at least 15% of your annual gross paycheck for retirement. Put it into your 401(k), 403(b), or a similar tax-advantaged retirement account like an IRA. If this is not possible, say, because you just got married and spent a majority of your savings on the wedding, or have just bought a house for your expanding family, start with a percentage that’s more manageable for you. Then try to increase savings by 1% each year until you reach 15%. If possible, you should also invest more than 50% of your savings in stocks to get a higher return on your money.

In general, the older you are when you start saving, the more you will likely need to save in order to meet your financial goals. You should also save more if you plan to retire early (don’t we all?). For example, if you want to retire at 62 and travel the world, you will need a bigger retirement account than if you plan to work until you’re 70.

How to increase your savings

When you start to save, it’s important to have a plan in place. Review your current savings and monthly expenses, and see if you can cover unexpected costs like medical bills. When you understand where you spend your money, you can identify savings opportunities and also start building your emergency fund.

Next, put aside at least 15% of your annual salary into your retirement fund. If you can put aside a higher amount, say 25%, even better. If you’re currently paying back loans or other debts, don’t panic. Stick to your repayment schedule, and put away what you can. Once you’ve paid off a debt, transfer that monthly payment amount into your retirement fund.

You can turbocharge your 401(k) if you save enough to qualify for your employer’s full match. For example, if you’re 35 years old and your annual salary is $50,000, set aside 5% in your 401(k). If your employer matches your contribution by 100%, this is what your retirement fund will look like when you turn 40:

Table 3

Remember that this is just the minimum that you must save from your annual income. Ideally, your savings should be more closely aligned with the figures shown in Table 1.

If you expect to have large expenses in future, say, a new home or your wedding, start saving early. If you expect to have multiple expenses, prioritize both your savings and your expenses. Say you’re 30. You want to get married in the next two years and purchase a home back in your hometown for your parents within three years after that. Both will be large expenses but your priorities based on timelines are different. However, you can try to save $1,500 a month towards both items, say $1000 for the home and $500 for the wedding. After you get married, you can redirect the $500 to your home savings fund.

Also check where you can lower your expenses. Looking at the average cost of each expense can give you an idea of how much you can save, and how much you need to set aside. For example, instead of visiting your home country twice a year, can you make a trip once a years? If you support your parents, can they move in with you so you don’t have to pay the expenses for two households? Can you move into a smaller family home in a less-upscale part of your city?

When saving, automate monthly transfers from your checking account to a savings account or an IRA. This method enables your money to grow automatically and takes the stress out of reaching your goals. It also reduces the temptation of spending your cash.

Save more with Rayo

For immigrants in the U.S., “savings” can be a challenging endeavor. But it doesn’t have to be. Yes, everyone has different priorities, lifestyles and values, and understanding your own priorities, lifestyles and values can help you better manage your money and be more financially responsible. Rayo can support you in this regard by providing financial products and services that are specifically designed to meet the needs of immigrants in the U.S.

From savings accounts and credit cards, to fast money transfers and even personal loans, Rayo can help you kick-start your financial journey and meet your short-, medium- and long-term financial goals in the U.S. Rayo also offers other unique services such as relocation assistance, concierge services, immigrant attorney access, pre-arrival account opening and immigrant help center. If you’re an immigrant, you can join Rayo’s waitlist to become a founding member. Founding members receive unique benefits such as a special edition debit card, dedicated customer support and lifetime fee-free money transfers.

When you emigrated to the U.S., you brought with you many dreams of a better or different life — not only for yourself, but for your loved ones in the U.S. Make these dreams come true through financial planning and saving with Rayo — set up by immigrants to help fellow immigrants navigate the financial world better. Contact Rayo to know more.






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