This is the money you should have saved at 30, 40 or 50: this is how the ‘Greene Formula’ works

Saving is an obsession more or less common to all mortals, although the saving capacity of each person can be very different from that of another. Income, expenses (both the inalienable and the most superfluous) and even the lifestyle and hobbies of the person in question have an influence, since they can make them more prone to waste. Be that as it may, all people try to follow their particular saving methods and some gurus, in the heat of this problem, try to provide their recommendations.

One of them is the ‘Greene Formula’, coined by economist Kimmie Greene and that takes into account two very specific variables: the age to which the worker arrives and the annual salary of that worker. Combined, the method of this specialist is to calculate what is the annual salary that said worker has to accumulate saved based on his age.

In this way, the ‘Greene Formula’ sheds some light to answer a question that is sometimes uncomfortable: “Have I saved enough for my age?” An answer that, by the way, does not have to be absolute. Kimmie Greene’s method is not rigid, but flexible: at some stage of our life we ​​may have lower income than expected and in the same way in other stages of our career (usually at older ages) we have more options to have salaries superiors.

The ‘Greene Formula’ works by challenging the worker to meet a series of milestones based on their age: when you reach certain times you must have saved certain levels of your annual salary:

-With 20 years the worker must have saved 25% of his current annual salary.

-With 30 years the worker must have saved 100% of his current annual salary.

-With 35 years the worker must have saved twice his current annual salary.

-With 40 years the worker must have saved triple his current annual salary.

-With 45 years the worker must have saved four times his current annual salary.

-With 50 years the worker must have saved five times his current annual salary.

-At 55 years of age, the worker must have saved six times his current annual salary.

-At 60 years of age, the worker must have saved seven times his current annual salary.

-With 65 years, when the retirement age arrives, the worker must have saved an amount equal to eight times his current salary.

The ‘Greene Formula’ for early retirement

In the event that the worker wants to take advantage of some type of early retirement will increase their problems to reach these levels of savings, apart from the fact that in parallel he will suffer cuts in the retirement pension that will depend on the advance with which he carries out that retirement.

For these situations, Kimmie Greene recommends that, along with the savings goals, the worker take somewhat more drastic measures: move the residence to a more affordable city, agree with your partner to delay the idea of ​​starting a family, give up leisure activities or tourist trips… sacrifices that will take place depending on the level of commitment that the person in question have with your savings horizons.