Kimmie Greene is one of the best known and most prestigious financial analysts in the world. She developed the so-called ‘Greene Formula’, a model that determines how much money a person should have saved according to their age . Everything is based on percentages based on annual gross salary, not on fixed amounts of money.
If a person is 22 years old, according to this model, they should have saved 25% of their annual salary . It is precisely at the age of 20 that a person’s working life begins approximately and salaries are generally not too high. Let’s say that, for example, a 22-year-old man earns 15,400 euros per year (1,100 euros per month in 14 annual payments). Taking into account the ‘Greene Formula’ it should have saved 3,850 euros.
After turning 30, the person would have to have saved 100% of their annual salary . The average salary in Spain in 2020 was 26,934 euros, so this would be the amount of money you should have in the form of savings.
From this point, according to the ‘Greene Formula’ it says the following: at 35 you must have twice the money saved from your annual gross salary , at 40 triple, at 45 quadruple, at 50 five times , at 55 sixfold, at 60 sevenfold and at 65, when retirement age is about to reach, eight times the annual salary.
Following the example of a person who earns 26,934 euros a year, at 65 he should have saved 215,472 euros . This implies that in practice we would have to save 20% of the annual salary each year.
However, Kimmie Greene herself recognizes that these deadlines do not have to be 100% strictly adhered to as life is not “linear.” At any given time, they can substantially improve economic conditions and compensate in a matter of a short time for several years in which the level of savings has been below what is established.
In an interview with CNBC, the financial analyst explained that if a person considers retiring early, they must, based on this savings system, make some sacrifices: prioritize savings over leisure, live in a city where the cost of living be short and even put aside for a moment the idea of starting a family.
