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Your time and money, if managed well, can elevate your quality of life significantly. Finding ways to make the most of these two valuable resources can enhance how financially secure and enjoyable your days are.

Read on to understand the time and money relationship and how to make it work as well as possible.

What Does the Phrase “Time Is Money” Actually Mean?

The phrase “time is money” means that a person can translate their available hours into money by getting paid to work. If you’re sitting around relaxing, for instance, you could instead be working and earning cash.

Of course, it’s every person’s decision about how much they want to work or enjoy their free time as they see fit. Some people are driven to work 60 or more hours a week and are focused on how much they can deposit in their checking account. Others, craving work-life balance or, say, taking care of children, may work much less (if at all).

The True Opportunity Cost: How Time Means Money

“Time is money” can be further explained in terms of opportunity cost. Opportunity cost is the value of the option an individual gives up when they make a choice. Because time and money are both limited resources, choosing one typically means sacrificing the benefits of the other.

Here’s how it works: Say a person has an hour to spend. That person can choose to work and earn money for that hour if, for instance, they’re working on building wealth in their 30s. Or they can choose to do something that does not yield any income, like reading a book. The person who reads the book loses the opportunity to earn income for that hour. If they could have earned $50 an hour instead, the opportunity cost of choosing to read a book is $50. Thus, time is money and money is time.

Understanding the Deep Relationship Between Time and Money

Balancing time and money can involve a trade-off. To make more money, some people spend more hours on their careers and have less time for the other obligations and pleasures in life, whether that means being with family, relaxing, or pursuing hobbies and passion projects. Working long hours can also mean less time to clean, shop, and otherwise handle chores. If one makes enough by working, they can perhaps delegate those duties and hire someone to handle them.

For example, an individual might be able to afford to pay a painter $25 an hour to paint their dining room while they earn $50 an hour working at their job in marketing. The individual essentially nets $25 an hour by doing this, which they could use to boost the savings in their bank account. If the person paints the dining room themselves, they lose the $50 they could have earned doing marketing work.

Seen through a financial lens, it might be sensible to embrace strategies that maximize your earning power with the limited time you have. If, however, you are a person who earns less and you enjoy painting and caring for your home, you might well decide to do the paint job yourself.

9 Actionable Tips to Maximize Your Time and Money Today

As you see from the painting example above, good time management is not just about working every waking hour. It’s about allocating time for tasks wisely and balancing work and personal lives. Otherwise, your health, mood, and personal relationships could suffer.

Here are some time and money management tips to get you started.

Prioritizing High-Value Tasks Over Busywork

You only have so many hours in a day to get things done, so prioritizing is critical. Work, picking children up from school or daycare, grocery shopping, and preparing food are daily and weekly priorities. So too are things like exercise, seeing loved ones, and doing whatever feeds your spirit, from rafting to reading. Plan your priorities daily, and focus on accomplishing them over busywork like cleaning out the junk drawer in your kitchen.

Time-Blocking to Protect Your Financial Goals

Your daily schedule is critical, but planning your time weekly and monthly can also keep you on-task and organized, especially when it comes to financial goals like saving for your children’s college fund or retiring early.

Block out time for reviewing your bank accounts and any retirement accounts you have. Likewise, schedule time to go over your budget and pay your bills. Organizing your time and your finances can make you much more efficient and focused on your goals.

There are many calendar-keeping tools available, from journals to apps. Using alerts on your mobile phone can also help you keep track of the “musts” on your daily schedule.

Recommended: How Much to Have Saved By 30

Valuing Your Time: Knowing When to Delegate or Outsource

Your time is valuable, and you can literally put a price tag on it. To find out what your time is worth, divide your annual after-tax income by the number of hours you work in a year. The resulting amount is how much per hour of your time is worth, and it can help determine whether it makes more sense to do a task yourself or delegate or outsource it to someone else.

If outsourcing a task costs less than your hourly rate, you may consider it worth the money. For instance, let’s say you earn $60 an hour and typically spend four hours of your time off on weekends cleaning your house. If you could hire someone to do the cleaning for $55 an hour, it may be worth it to you to regain four hours of your time and still be ahead money-wise by $15. The same goes for other chores like yardwork and lawnmowing.

For tasks, compare what the cost is in terms of time and money by doing it yourself vs. outsourcing. If hiring a lawn service costs more than what you earn per hour, you may want to do it yourself. But if you could outsource the chore to the kid down the street (or your own child) for a rate that’s less than what you earn in an hour, it may make sense to do that.

Creating a Realistic Budget That Frees Up Your Time

When it comes to the financial aspect of money and time, creating a budget can help optimize your efforts to wrangle your funds.

A budget helps you account for your income, expenses, and savings so there are fewer surprises and you can hit your goals.

Making a budget typically involves looking at your monthly after-tax income, including keeping track of money from side hustles and the like. Next, subtract the cost of your monthly necessities (housing, food, medical care), as well as debts, and then allocate what’s left to spending and saving. This process should reveal if you are living within your means, or spending more than you earn.

If your expenses exceed your income, look for ways to cut back on spending, such as eating out less, biking to work instead of driving, or canceling your gym membership and working out at home instead. The ultimate goal is to create a budget that you can live with that has room to save for long-term goals, like the down payment for a house or for retirement.

Leveraging Compound Interest By Saving Early

Another possible way to maximize time and money is through the power of compound interest. Compound interest means you earn a return not just on the amount you originally put in a savings account, but also on the interest that accumulates.

Over time, you can potentially end up with much more than you started with, which may be one way to help build generational wealth. And the earlier you start saving, the more time your money has to grow, since compound interest is generally able to work its magic over a longer time horizon.

Here’s how compound interest can help your savings add up. If you have $6,000 in a high-yield savings account with a 4.00% APY that’s earning compound interest monthly, and you add $100 per month to the account, you’ll have $7,467 at the end of the year. After 10 years you’ll have $23,670, and in 20 years, $50,012.96.

You can use a compound interest calculator to see how much you might save over time.

Recommended: Pros & Cons of the FIRE Movement

Investing Time in Your Financial Education

You can also spend time learning about money by educating yourself with financial books, podcasts, and websites. These can teach you about saving, budgeting, paying off debt, and contributing to retirement accounts. A professional financial advisor may also be helpful to talk to as you’re considering different types of financial tools, accounts, and techniques.

It might be worth putting in, say, an hour a day to make yourself more financially knowledgeable if you can learn how to spend less and save more.

Putting Finances on Autopilot to Reclaim Your Time

Automating your monthly bills can be a win-win. Paying bills on time is the biggest single contributor (at 35%) to your credit score, and taking care of those charges before they accrue late fees also makes good money sense.

What’s more, in terms of the time vs. money equation, setting up automated bill payments will also free up some space in your schedule. Your bills will be paid on time each month, without you having to click around websites or write checks and buy stamps to mail them. It will take just a few minutes of work upfront, but the task is then much easier.

Tracking Spending Habitually to Avoid Wasted Hours

Remember that budget you diligently prepared? Stick to it by following the 30-day spending rule. Wait 30 days before purchasing an item to avoid overspending and racking up debt. If you do spend too much, you may end up paying overdraft fees or credit card interest payments, and you’ll have to spend precious time getting yourself back on track.

Using High-Yield Accounts to Let Your Money Work for You

Cutting back on spending and saving more of your cash can be an important strategy to help your money work for you by beating inflation. And where you stash your savings makes a difference. Basically, you want to earn enough interest on your dollars to outpace the rate of inflation.

Putting your cash in a high-yield savings account, as noted above, is one potential way to boost your savings and stay ahead of inflation.

The Takeaway

Time and money are two valuable but limited resources. Making the most of each one requires some smart strategies, such as budgeting, scheduling, reducing overspending, saving, and finding work-life balance. But by respecting the value of time and money — and managing them well — you may enjoy a better quality of life and reach your financial goals.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Is time worth more than money?

There is no one right answer to the question of whether time is worth more than money. It depends on what’s most important to each individual. For example, for a person with a new baby who prioritizes time with their child, time is clearly the most precious commodity; they might rather have less money and more time. In another scenario, however, someone might say money matters more. They might be willing to work extra time for years to ensure they have a successful, well-paying career, even if they don’t have much free time to enjoy their lifestyle.

Who originally said the phrase “time is money”?

The phrase “time is money” is often attributed to Benjamin Franklin, who is said to have originated it in an essay he wrote called “Advice to a Young Tradesman” that was published in a book in 1748.

How can I calculate the actual monetary value of my personal time?

One easy way to calculate the value of your time is to divide your annual after-tax income by the total number of hours you spend working in a year. The resulting number is how much your personal time is worth per hour.

Why is time often considered more valuable than money in finance?

Time is often considered more valuable than money in finance because, unlike money, time is a resource that can’t be replenished. Time is finite — once it’s gone, it’s gone for good. With money, however, there is typically always the possibility to earn or obtain more.

Photo credit: iStock/busracavus

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 5/28/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
*Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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SOBNK-Q226-154

Your 40s can be a pivotal decade. It’s typically a time of peak earnings, growing family responsibilities, and an increased focus on long-term financial stability. You may have a house, kids, and a busy job. College expenses may be looming. Maybe you’re hatching a plan to start your own business or buy a beach house that’ll one day be your empty-nester home.

To navigate these years successfully, it’s essential to make strategic financial moves that can secure your future and make your plans and dreams a reality. Here are some critical financial planning tips to consider as you explore how to build wealth in your 40s.

Where Should I Be Financially at 40?

At 40, people are typically at the midway point between entering the workforce and retirement age. How you save and invest going forward, and the amount you’ve saved so far, can have a big impact on your future financial security.

Common Benchmarks for Net Worth and Savings

By age 40, Fidelity recommends having three times your annual salary saved for retirement. This benchmark could help put you on track to meet long-term financial goals and maintain your desired lifestyle in retirement. (By age 50, aim to have six times your income saved, and by 60, eight times your income.)

In addition, you’ll want to have an emergency fund with at least six months’ worth of living expenses to help pay for unexpected events like your roof needing to be replaced or losing your job.

Why Your 40s Are the Prime Wealth-Building Decade

Your 40s tend to be your peak earning years, which means you may be able to direct more money into your savings. Also, in your 40s, you still have many years before retirement to leverage the power of compound interest, which can help build your savings. Compound interest means you earn a return not just on the amount you originally put in a savings account, but also on the interest that accumulates. Over time, you can potentially end up with much more than you started with.

The sooner you start saving money in an account that earns compound interest, the more time your money has to grow. That’s why financial planning for 40-year-olds is crucial, since this is a key time to focus on your savings to help reach your future goals.

7 Critical Financial Goals By 40 to Help Build Wealth

At this stage of your life you’re old enough to know what you want, and you likely have enough earning years ahead to achieve your financial goals by 40 as long as you manage your money right. The following strategies can help you build wealth in your 40s.

1. Fortify Your Emergency Fund for Life’s Unexpected Turns

Life is full of unexpected twists and turns. Not all of them are fun, such an expensive car or home repair, a medical emergency, or losing your job. An emergency fund offers financial stability during a stressful time. It also saves you from running up expensive debt that could derail your financial goals.

A general rule of thumb is to have six to 12 months’ worth of living expenses stashed away for the unexpected. If you already have an emergency fund but it has been partly or fully depleted, you’ll want to prioritize replenishing it to maintain financial security. An emergency fund calculator can help you figure out how much you need.

Consider setting up automatic transfers into savings to build your emergency fund consistently. Keep these funds in a liquid, easily accessible account, such as a high-yield savings account, to withdraw money when needed.

2. Aggressively Manage and Consolidate High-Interest Debt

Debt management is a crucial aspect of financial planning at any age, but it becomes even more critical in your 40s. Since high-interest debts, like credit card balances, can significantly hinder your ability to save and invest for the future, you’ll want to prioritize paying them off as quickly as possible.

Debt payoff strategies include the avalanche method. With this technique, you list your debts in order of interest rate from highest to lowest, then put extra money toward the highest-interest debt, while continuing to pay the minimum on the others. Once that debt is paid off, you put your extra funds toward the debt with the next-highest rate, and so on.

Alternative approaches to paying down high-interest debt include getting a low- or no- interest balance transfer credit card, or consolidating debt, which combines it into one new loan or credit line — ideally with a lower interest rate than the rate on your credit cards.

3. Supercharge Your Retirement Accounts and Investment Portfolios

In your 40s, you’re roughly at the midpoint between entering the workforce and traditional retirement age. How you invest and save for retirement at this point in your career can strongly impact your future assets and ability to one day retire comfortably.

If you’re not currently contributing to a retirement plan, such as a 401(k) or individual retirement account (IRA), now is a good time to start. If you have been, it’s time to assess your progress. Consider how much you will need to retire and, using an online retirement calculator, whether your current plan will get you there.

If you’re behind on your savings, consider stepping up your contributions. If you’re already contributing the max allowed, think about making “catch-up” contributions down the road. Starting at age 50, the IRS allows higher maximums designed to help people catch up on their retirement savings goals. In addition to regular catch-up contributions to workplace plans like a 401(k), people ages 60 to 63 can make “super catch-up contributions” in 2026, to save even more.

4. Strategically Balance Retirement With College Savings Plans

If you have kids, planning for their future education expenses may be top of mind. College costs continue to rise, and early planning can alleviate future financial stress. If you haven’t started saving for college expenses, you may want to explore opening a 529 college savings plan, which offers tax advantages and can be a flexible way to save for educational expenses.

An online college cost estimator can help you determine how much you need to stash away each month or year, based on the year your child will likely attend college and the type of school they might choose.

Just keep in mind that it’s important to balance college savings with other financial goals, like retirement. As kids get closer to leaving the nest, you may also want to encourage them to apply for scholarships and grants, and explore financial aid options.

5. Reevaluate Life, Health, and Disability Insurance Coverage

Insurance is an important component of financial planning in your 40s. You’ll want to evaluate your current insurance coverage and make sure it’s adequate to meet your family’s needs. This includes not only health and home insurance, but also life and disability insurance.

Life insurance provides financial security for your family should you die prematurely. If you don’t currently have a life insurance policy, consider purchasing one. If you do have one, you’ll want to make sure your policy’s coverage amount is sufficient to cover your family’s current living expenses, outstanding debts, and future financial needs, such as college tuition for your children.

It’s also a good idea to review your disability insurance, which protects your income if you’re unable to work due to illness or injury. Many companies provide a policy through work. However, you may want to consider supplementing employer-provided coverage or, if you’re self-employed, getting your own policy. This offers a different, but equally important, safety net for you and your family.

Recommended: Which Insurance Types Do You Really Need? Here Are 6 to Consider

6. Diversify Your Income by Investing Outside of Retirement Accounts

While retirement accounts are important, investing outside of retirement may diversify an individual’s portfolio and help them work toward long-term goals, such as a downpayment on a vacation home or a child’s wedding.

If you’re exploring the option of an investment account, you can use an investment calculator to get a sense of how, hypothetically, contributing money to such an account might make an impact. Just be aware that investing carries risk. A brokerage account is not covered by the Federal Deposit Insurance Corporation (FDIC) like bank accounts are, and it’s possible to lose the principal amount you invested.

When considering investment accounts, different types of investment vehicles, and asset allocation, individuals should keep risk tolerance and financial objectives firmly in mind.

7. Meet with a Financial Professional

Getting expert advice on managing your finances could be helpful at this stage of life. Whether you opt for regular meetings or simply go for a one-time consultation, a financial professional may provide valuable insights and help you navigate complex financial decisions.

An advisor will typically look at your whole financial picture and assist you with creating a comprehensive financial plan. This may include optimizing your investment strategy and ensuring you’re on track to meet your goals, including retirement, investments, and college saving.

Advanced Financial Planning for 40-Year-Olds

Beyond saving and investing, it’s also important to plan for your family’s future and protect your assets with an estate plan.

Estate Planning, Wills, and Generational Wealth

If you haven’t yet created an estate plan, your 40s are the time to get started. You’re not alone: According to one estimate, 56% of Americans have no estate planning documents, such as a will or trust. However, no matter what amount of money you have, in the event of your death, these documents are crucial for making sure your family members are taken care of and your estate is handled as you wish. An estate plan is also a way to pass along generational wealth to your children. Otherwise, state laws may determine how your assets are distributed after your death.

Documents you need include a will and/or a trust, power of attorney and healthcare directives, and beneficiaries on your various financial accounts, including bank accounts, investment accounts, and retirement accounts. You can consult an estate attorney to help you with the estate planning process.

Navigating the Financial Impact of Caring for Aging Parents

Many people in their 40s are in the sandwich generation. They’re taking care of their kids while also caring for elderly parents.

While caring for aging parents can be rewarding, it can also be costly. Family caregivers spend approximately 26% of their income on caregiving, according to a study by AARP. That includes paying their loved ones’ home and daily living expenses and their medical expenses. An individual caring for an aging parent might also have to take time off from work or even take a leave of absence, which can be costly.

Having a plan in place to help with the costs of caregiving is essential. Talk with your parents early on to find out about their income, expenses, and debts. Create a budget to make sure their income will cover their expenses and debts as they age, plus any additional care they may need. Consider whether it may make sense to apply for long-term care insurance for them to help cover the cost of their care.

Make sure you have access to any accounts you will need to manage on their behalf as well as all relevant financial information. Keep their finances separate from yours, and keep good records of all transactions.

The Takeaway

It’s never too late to take control of your finances. In your 40s, you are likely entering your prime earning years, so it’s a good time to focus on paying down debt, preparing for the next chapter of your children’s lives, and saving and investing for your future retirement. With some wise money moves, you’ll be set to make the most of this decade and beyond.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Where exactly should I be financially at age 40?

By age 40, having three times your annual salary saved for retirement may help put you on track to meet long-term financial goals and maintain your desired lifestyle in retirement, according to an estimate by Fidelity. In addition, financial professionals suggest having an emergency fund with six to 12 months’ worth of living expenses to help pay for unexpected events like a medical bill or losing your job.

What are the most important financial goals to prioritize by 40?

Important financial goals to prioritize by age 40 include building your retirement savings, perhaps by increasing your contributions if possible; having an emergency fund with six to 12 months’ worth of income in it to cover unexpected events; saving for your children’s college costs; managing and paying off debt, especially high-interest debt; and putting an estate plan in place.

Is it too late to start serious financial planning if I am already in my 40s?

No, it’s not too late to start serious financial planning in your 40s. In fact, for many people, their 40s are often their peak earning years, which means you may be well positioned to save more money for retirement, build a savings emergency fund, and pay off debt. Plus, when you’re in your 40s, your money typically has 20 to 25 years to potentially grow until retirement. The key is to start planning and saving as soon as possible.

How can I build my wealth in my 40s while also raising a family?

To build wealth in your 40s while raising a family, balance saving for retirement with saving for college for your kids. Contribute as much as possible to your 401(k) or IRA, and then put money away for your children’s college expenses. As your kids reach college age, they can apply for scholarships and grants and explore financial aid to help cover college costs.

In addition, automate your finances to ensure that you are regularly and consistently saving, build up an emergency fund with at least six month’s worth of income, and work toward paying off high-interest debt, such as credit card debt.

Should my primary focus in my 40s be paying off my mortgage or investing toward retirement?

Generally speaking, if your mortgage rate is low (say less than 5%), you may want to make investing for retirement your primary focus in your 40s. But if your mortgage is high (say, 7% or more), you may want to prioritize paying off your mortgage. Another option to consider is to focus on both goals. Contribute at least enough to your 401(k) to get your employer match (if there is one) and pay a little extra on your mortgage’s principal balance each month (or as often as you can) to help pay it off faster.

Photo credit: iStock/shapecharge

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 5/28/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
*Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBNK-Q226-148

The average retirement age in the US is age 62, but that number doesn’t reveal the wide range of ages at which people can and do retire.

Some people retire in their 50s, some in their 70s; other people find ways to keep pursuing their profession and thus never completely “retire” from the workforce. The age at which someone retires depends on a host of factors, including how much they’ve saved, their overall state of health, and their desire to keep working versus taking on other commitments.

Still, having some idea of the average age of retirement can be helpful as a general benchmark for your own retirement plans.

What Is the Average Age of Retirement in the US?

The average age of retirement from the workforce in the U.S. is 62, according to at least two recent studies.

Age 65 may be what many of us think of as the traditional age to retire, and according to 2024 research by the Employee Benefit Research Institute^[1], more than half of workers surveyed expect to retire at age 65 or older. Yet 70% of the retirees in that study reported retiring before age 65.

In addition, the age of retirement by state varies widely. According to the U.S. Census Bureau’s American Community Survey, these are the states with the highest and lowest average U.S. retirement ages:

A lower cost of living may be what’s helping West Virginia residents retire so young. West Virginia was one of the 10 states in the country with the lowest costs of living, according to the latest Cost of Living Index.^[2]

While those previously mentioned states give a look at two ends of the average retirement age spectrum in the U.S., many states have an average retirement age that falls closer to what one might expect.

Colorado, Connecticut, Iowa, Kansas, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, Rhode Island, Texas, Utah, Vermont, and Virginia all have an average retirement age of 65.

Factors Influencing Retirement Age

There are many different factors that affect the typical retirement age. Some key factors include:

Retirement Expectations vs. Reality

Expectations can lead to disappointment. Anyone who has ever planned for a sunny beach vacation only to see it rain every day knows that.

Now imagine a person spending most of their adult life expecting to retire at 65 or earlier, and then realizing their retirement savings just isn’t enough.

According to the Employee Benefit Research Institute’s 2024 Retirement Confidence Survey, the expected average age of retirement is 65 or older. However, as noted previously, the actual average retirement age in the U.S. is 62, according to that same survey as well as other research. Retiring at 62, or earlier than planned, could lead to not having enough money to retire comfortably.

How to Know When to Retire

Not everyone retires early by choice. Six in 10 people retired earlier than they expected, mostly because of health problems, disabilities, or changes within their companies, according to a 2024 survey by the Transamerica Center for Retirement Studies.^[4]

It can be difficult for workers to exactly predict at what age they will retire due to circumstances that may be out of their control. For example, among adults who save regularly for retirement, 33% say they won’t have enough money to be financially secure in their post-employment years, and 31% don’t know if they will have enough, the AARP survey found.

In order to bridge any financial gap caused by not having enough retirement savings, 75% of pre-retirees in the Employee Benefit Research Institute’s survey expect they will earn an income during their retirement by working either full time or part time.

The survey found that half of respondents have calculated how much money they will need in retirement, and 33% estimate they will need $1.5 million. However, there is a gap between their expectations and their actions. One-third of respondents currently have less than $50,000 in retirement savings.

Common Misconceptions About Retirement Age

There are some misconceptions about the typical retirement age. These are two of the more common ones:

How Much Should You Have Saved for Retirement?

To retire comfortably, the IRS recommends that individuals have up to 80% of their current annual income saved for each year of retirement. With the average Social Security monthly payment being $1,177, retirees may need to do a decent amount of saving to cover the rest of their future expenses.^[5]

This is something to keep in mind when choosing a retirement date.

Retirement Savings Benchmarks by Age

To have enough savings for a comfortable retirement, one common rule of thumb is to save 10 times your income by the age of 67. To stay on track toward that goal, these are some retirement savings benchmarks individuals can aim for along the way.

Calculating Your Personalized Retirement Goal

To help determine how much money you’ll need for retirement, look at how much you currently have in retirement savings, what your Social Security benefit will be at the age you plan to retire — you can use the Social Security calculator to find this number — and any other income sources you may have, such as a pension or inheritance funds.

Then, draw up a retirement budget to get a sense of how much money you may need. Be sure to include estimated living expenses, housing, and health care costs. Plugging those numbers into a retirement calculator can help you determine how much money you might need per year.

Comparing what you’ll need annually for approximately 30 years of retirement with your savings, Social Security benefit, and other income sources will help you see how much money you still need to save in order to get there — and give you a target goal to aim for.^[6]

It’s Never Too Early to Start Saving for Retirement

Since retirement can last 30 years or more, financial security is key to enjoying your golden years.

Any day is a good day to start saving, but saving for retirement while a person is young could help put them on the path toward a more secure retirement. The more years their savings have to grow, the better.

You could even use something like automated investing if you think it could be helpful. Whatever you do, be sure to start saving as soon as possible. The longer you wait to save for retirement, the more you will need to save in a shorter period of time.

Benefits of Starting Early with Compounded Growth

Starting retirement saving early can be powerful because of a process called compounding returns.

Here’s how it works: Say you have money invested in your retirement account, or maybe you even do self-directed investing, and that money earns returns. As long as those returns are reinvested, you will earn money on your original investment and also on your returns.

Compound returns can be a way for your money to grow over time. The returns you earn each period are reinvested to potentially earn additional returns. And the longer you invest, the more time your returns may have to compound.

Late to the Retirement Savings Game?

Starting to save for retirement late is better than not starting at all. In fact, the government allows catch-up contributions for those aged 50 and over. Catch-up contributions of up to $7,500 in 2025 and up to $8,000 in 2026 are allowed on a 401(k), 403(b), or governmental 457(b). In both 2025 and 2026, those aged 60 to 63 can make a catch-up contribution up to $11,250 (instead of $7,500 or $8,000), thanks to SECURE 2.0.

A catch-up contribution is a contribution to a retirement savings account that is made beyond the regular contribution maximum. Catch-up contributions can generally be made on either a pre-tax or after-tax basis. However, under a new law that went into effect on January 1, 2026, individuals aged 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their 401(k), 403(b), or 457(b) catch-up contributions into a Roth account. Because of the way Roth accounts work, these individuals will pay taxes on their catch-up contributions upfront, but can make eligible withdrawals tax-free in retirement.

As retirement gets closer, future retirees can plan their savings around their estimated Social Security payments. While this estimate is not a guarantee, it might give a retiree — or anyone planning when to retire — an idea of how much they might consider saving to supplement these earnings.

Social Security benefits can begin at age 62, which is considered the Social Security retirement age minimum. However, full benefits won’t be earned until full retirement age, which is 66 to 67 years old, depending on your birth year.

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FAQ

Does the average retirement age matter?

The age at which you retire affects your Social Security benefit. For instance, if you retire at age 62, your benefit will be about 30% lower than if you wait until age 67.^[7]

What is the full retirement age for Social Security?

The full age of retirement is 67 for anyone born in 1960 or later. Before that, the full retirement age is 66 for those born from 1943 to 1954. And for those born between 1955 to 1959, the age increases gradually to 67.^[8]

How long will my retirement savings last?

One strategy you could use to help determine how long your retirement savings might last is the 4% rule. The idea behind the rule is that you withdraw 4% of your retirement savings during your first year of retirement, then adjust the amount each year after that for inflation. By doing this, ideally, your money could last for about 30 years in retirement.

However, your personal circumstances and market fluctuations may affect this number, which means it could vary. It’s best to use the 4% rule only as a general guideline.

Is early retirement realistic for most people?

While early retirement can sound enticing, for most people, it is not realistic because they don’t have enough retirement savings. For example, one-third of respondents to a survey by the Employee Benefit Research Institute said they have only $50,000 saved for retirement. And according to an AARP survey, 33% of adults who save regularly for retirement say they won’t have enough money to be financially secure in their retirement years.

What’s the difference between early and full retirement age?

When it comes to receiving Social Security benefits, early retirement age is 62 and full retirement age is 66 or 67, depending on your birth year. However, retiring early at age 62 and starting these benefits can result in a benefit that’s as much as 30% lower than waiting until the full retirement age of 67.