What is the average savings rates for bogleheads?
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Re: What is the average savings rates for bogleheads?
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Re: What is the average savings rates for bogleheads?
Pre-covid we were about 55-60% savings rate after tax.
Now we are around 65-70% savings rate after tax.
In our 20s, I think we separately (didn't know each other at the time) had slightly negative savings rates around -0.5% to -1%.
In our 30s, about a 10-25% savings rate after clearing out debt in our early 30s.
First hit over 50% after tax savings at 40.
Increased income was a primary factor, secondary factor is learning, understanding, and prioritizing wealth building for the goal of early retirement.
We also each have a modest pension.
Now we are around 65-70% savings rate after tax.
In our 20s, I think we separately (didn't know each other at the time) had slightly negative savings rates around -0.5% to -1%.
In our 30s, about a 10-25% savings rate after clearing out debt in our early 30s.
First hit over 50% after tax savings at 40.
Increased income was a primary factor, secondary factor is learning, understanding, and prioritizing wealth building for the goal of early retirement.
We also each have a modest pension.
Re: What is the average savings rates for bogleheads?
Mine is 46.5% (late 40s, single).
This savings rate works for me. More would not allow me to live my best life now; less would not allow me to live my best life in retirement.
This savings rate works for me. More would not allow me to live my best life now; less would not allow me to live my best life in retirement.
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Re: What is the average savings rates for bogleheads?
I've done it in Southern California, Salt Lake City, Mesa, Houston, Austin, and finally Utah County, Utah over the last 18yrs. In 2013, the year before I got married, my total expenses were ~$11k. Now as a family of 4 we were at <$30k last year (Utah County), this year will be higher because we made 3 large totally discretionary "want" purchases (a new truck, pair of e-bikes) but still under what most on here consider a baseline for a decent life in a MCOL area for a family of 4 (~$60k). It's a choice for us, we save ~60% of gross income, but are perfectly content with our lifestyle and want for nothing. Our lifestyle does not include a ton of things most people (here) consider "needs", but it's happiness for us and a far higher quality of life than wife and I experienced growing up in California. I guess we make a habit out of the "nearly impossible".fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 1:59 pmTo be clear, living on $20k per person ($80k for a family of four) is completely different from living on $20k as an individual. I tend to agree with 59Gibson here. Yes, it can be done in some LCOL or VLCOL areas, but it is nearly impossible in most places with average or greater population (assuming the individual is paying all of his/her expenses and not living with family or relying on government/charity assistance).AerialWombat wrote: ↑Sun Jul 25, 2021 1:45 pmI respectfully disagree. Again, as somebody that did it (in my mid-30’s, not that long ago).59Gibson wrote: ↑Sun Jul 25, 2021 1:16 pmKlangfool,KlangFool wrote: ↑Sun Jul 25, 2021 11:58 am59Gibson,59Gibson wrote: ↑Sun Jul 25, 2021 11:30 am
There should be no question..the higher the income the easier it is to save higher multiples, whether the person decides to is another question. It's also nearly impossible for someone in America making $40k/ yr to save 1 yrs expenses. Sorry not realistic at all.
My 20+ years old daughter was doing it. Now, she earn more and still doing it. Ditto for my son. But, he earn more at above 50K level. It is actually not that hard.
No, they do not live with me.
KlangFool
I think it's a severe disservice to members and visitors to BH website looking for legitimate info, support, and/or motivation to suggest $19-20k/yr is a "not that hard" amount to live on in America per year. This IMO would be classified as Extreme. One can come up w/ anecdotal 20 yr olds doing it and folks living in rooms in basements, and many other non traditional scenarios. I maintain it's not realistic or reasonable to expect to save 1 yrs expenses at 40k/yr income level.
There are plenty of places still left in America where a single person can live comfortably on $20k and, in fact, millions of people do just that. It’s quite common, if you examine income data around the nation.
Thus, the person making 40k but living on 20k is quite reasonable.
The extreme end are the folks living on $7k a year. E.g., the Mr. Money Mustache crowd. I lived most of my life in poverty, and would not voluntarily choose that extreme.
There have been numerous threads on BH about this topic. There is also an entire sub-Reddit about living on 20k or less per person (r/leanFIRE).
This is my most frequent criticism of the BH crowd: The tendency to project one’s own lifestyle cost expectations on to others.
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Re: What is the average savings rates for bogleheads?
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Re: What is the average savings rates for bogleheads?
Does the less than $30K expenses include non-Medicaid health insurance for your family, a mortgage or monthly rent at market rates, standard payroll taxes for at least one wage earner, and the cost of insuring, fueling, and repairing one vehicle?stoptothink wrote: ↑Sun Jul 25, 2021 2:55 pmI've done it in Southern California, Salt Lake City, Mesa, Houston, Austin, and finally Utah County, Utah over the last 18yrs. In 2013, the year before I got married, my total expenses were ~$11k. Now as a family of 4 we were at <$30k last year (Utah County), this year will be higher because we made 3 large totally discretionary "want" purchases (a new truck, pair of e-bikes) but still under what most on here consider a baseline for a decent life in a MCOL area for a family of 4 (~$60k). It's a choice for us, we save ~60% of gross income, but are perfectly content with our lifestyle and want for nothing. Our lifestyle does not include a ton of things most people (here) consider "needs", but it's happiness for us and a far higher quality of life than wife and I experienced growing up in California. I guess we make a habit out of the "nearly impossible".fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 1:59 pmTo be clear, living on $20k per person ($80k for a family of four) is completely different from living on $20k as an individual. I tend to agree with 59Gibson here. Yes, it can be done in some LCOL or VLCOL areas, but it is nearly impossible in most places with average or greater population (assuming the individual is paying all of his/her expenses and not living with family or relying on government/charity assistance).AerialWombat wrote: ↑Sun Jul 25, 2021 1:45 pmI respectfully disagree. Again, as somebody that did it (in my mid-30’s, not that long ago).59Gibson wrote: ↑Sun Jul 25, 2021 1:16 pmKlangfool,
I think it's a severe disservice to members and visitors to BH website looking for legitimate info, support, and/or motivation to suggest $19-20k/yr is a "not that hard" amount to live on in America per year. This IMO would be classified as Extreme. One can come up w/ anecdotal 20 yr olds doing it and folks living in rooms in basements, and many other non traditional scenarios. I maintain it's not realistic or reasonable to expect to save 1 yrs expenses at 40k/yr income level.
There are plenty of places still left in America where a single person can live comfortably on $20k and, in fact, millions of people do just that. It’s quite common, if you examine income data around the nation.
Thus, the person making 40k but living on 20k is quite reasonable.
The extreme end are the folks living on $7k a year. E.g., the Mr. Money Mustache crowd. I lived most of my life in poverty, and would not voluntarily choose that extreme.
There have been numerous threads on BH about this topic. There is also an entire sub-Reddit about living on 20k or less per person (r/leanFIRE).
This is my most frequent criticism of the BH crowd: The tendency to project one’s own lifestyle cost expectations on to others.
Because for most families, those are significant, unavoidable expenses. For example, if your employer fully subsidizes your family insurance premium, then you are receiving a benefit of at least of $20,000 that otherwise would be a personal expense.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: What is the average savings rates for bogleheads?
I have absolutely no idea what our savings rate is. We put away the maximum amount possible in the 401(k) and IRAs and after that, it is anybody's guess what is saved versus what is spent. Spending is a lot easier to track than investing. I literally have no idea how I would go about determining how much of my compensation I invested in non-retirement accounts on an annual basis.
I suppose I could log on to Schwab, E*Trade, M1Finance and Merrill and scour for deposits less withdrawals, and that would give me some idea, but I think that would be more time consuming than it is worth. I try to focus on keeping the spending down and when the cash piles up, invest it.
I suppose I could log on to Schwab, E*Trade, M1Finance and Merrill and scour for deposits less withdrawals, and that would give me some idea, but I think that would be more time consuming than it is worth. I try to focus on keeping the spending down and when the cash piles up, invest it.
Re: What is the average savings rates for bogleheads?
Boy, a lot of very judgemental posts on this thread. So who got the award for most savings percent?
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Re: What is the average savings rates for bogleheads?
Our home is paid off and my property taxes are ~$1500/yr (in an area above the median for COL), healthcare premiums are $0/yr (completely covered by my wife's employer, they would be ~$1k/yr through my employer), and all vehicle costs are included. Why would I include payroll taxes What percentage of people are paying anywhere remotely close to $20k/yr for health insurance premiums (self-employed and who else?)?delamer wrote: ↑Sun Jul 25, 2021 3:57 pmDoes the less than $30K expenses include non-Medicaid health insurance for your family, a mortgage or monthly rent at market rates, standard payroll taxes for at least one wage earner, and the cost of insuring, fueling, and repairing one vehicle?stoptothink wrote: ↑Sun Jul 25, 2021 2:55 pmI've done it in Southern California, Salt Lake City, Mesa, Houston, Austin, and finally Utah County, Utah over the last 18yrs. In 2013, the year before I got married, my total expenses were ~$11k. Now as a family of 4 we were at <$30k last year (Utah County), this year will be higher because we made 3 large totally discretionary "want" purchases (a new truck, pair of e-bikes) but still under what most on here consider a baseline for a decent life in a MCOL area for a family of 4 (~$60k). It's a choice for us, we save ~60% of gross income, but are perfectly content with our lifestyle and want for nothing. Our lifestyle does not include a ton of things most people (here) consider "needs", but it's happiness for us and a far higher quality of life than wife and I experienced growing up in California. I guess we make a habit out of the "nearly impossible".fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 1:59 pmTo be clear, living on $20k per person ($80k for a family of four) is completely different from living on $20k as an individual. I tend to agree with 59Gibson here. Yes, it can be done in some LCOL or VLCOL areas, but it is nearly impossible in most places with average or greater population (assuming the individual is paying all of his/her expenses and not living with family or relying on government/charity assistance).AerialWombat wrote: ↑Sun Jul 25, 2021 1:45 pmI respectfully disagree. Again, as somebody that did it (in my mid-30’s, not that long ago).59Gibson wrote: ↑Sun Jul 25, 2021 1:16 pm
Klangfool,
I think it's a severe disservice to members and visitors to BH website looking for legitimate info, support, and/or motivation to suggest $19-20k/yr is a "not that hard" amount to live on in America per year. This IMO would be classified as Extreme. One can come up w/ anecdotal 20 yr olds doing it and folks living in rooms in basements, and many other non traditional scenarios. I maintain it's not realistic or reasonable to expect to save 1 yrs expenses at 40k/yr income level.
There are plenty of places still left in America where a single person can live comfortably on $20k and, in fact, millions of people do just that. It’s quite common, if you examine income data around the nation.
Thus, the person making 40k but living on 20k is quite reasonable.
The extreme end are the folks living on $7k a year. E.g., the Mr. Money Mustache crowd. I lived most of my life in poverty, and would not voluntarily choose that extreme.
There have been numerous threads on BH about this topic. There is also an entire sub-Reddit about living on 20k or less per person (r/leanFIRE).
This is my most frequent criticism of the BH crowd: The tendency to project one’s own lifestyle cost expectations on to others.
Because for most families, those are significant, unavoidable expenses. For example, if your employer fully subsidizes your family insurance premium, then you are receiving a benefit of at least of $20,000 that otherwise would be a personal expense.
Certainly my/our situation is not the norm, but is far from "nearly impossible".
There is no greater example of how many posters on this board are totally out of touch then when budgets are discussed.
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Re: What is the average savings rates for bogleheads?
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This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
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Re: What is the average savings rates for bogleheads?
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This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
Re: What is the average savings rates for bogleheads?
fatcoffeedrinker,fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 3:47 pm
I also think that if you are saving half of your income at $40,000, and thinking you are saving 1x expenses per year, there may be some false hope in that belief. It's one thing to be single with no spouse or kids, and company paid health insurance, but if those aspects of your life change, your retirement savings calculated as a multiple of your expenses is going to be a much lower number than what you previously thought.
A) And, why would that matters? This person is still in a better shape than 90+% of people out there. Aka, the normal people that save less than 5% of their gross income.
Save early and save more is still a better answer than save less than 5% and hope that a recession and/or a bad sequence of events will not wipe the person out.
B) My kids started with 20K to 30K of savings that they saved over 20+ years since they were born. Then, they add about 20K per year when they started working. Whatever the life may come at them next, they are better prepared.
<< It's one thing to be single with no spouse or kids, and company paid health insurance,>>
C) The reality is even with those favorable circumstances, most folks save close to nothing too.
KlangFool
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Re: What is the average savings rates for bogleheads?
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Re: What is the average savings rates for bogleheads?
I this this entire thread is just for people to stroke their own egos. “I make a bazillion dollars, but live on McDonalds ketchup packets. Everybody else should too!”fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 6:01 pmIt matters because people make decisions based on their finances. Someone might retire thinking they have 25x or 30x expenses saved, to later find out that they weren't even close based on new life occurrences. Sure, save whatever you can, and you are probably better off than the masses, but you shouldn't fool yourself into thinking that your current poverty-level expenses will remain that low forever.KlangFool wrote: ↑Sun Jul 25, 2021 5:37 pmfatcoffeedrinker,fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 3:47 pm
I also think that if you are saving half of your income at $40,000, and thinking you are saving 1x expenses per year, there may be some false hope in that belief. It's one thing to be single with no spouse or kids, and company paid health insurance, but if those aspects of your life change, your retirement savings calculated as a multiple of your expenses is going to be a much lower number than what you previously thought.
A) And, why would that matters? This person is still in a better shape than 90+% of people out there. Aka, the normal people that save less than 5% of their gross income.
Save early and save more is still a better answer than save less than 5% and hope that a recession and/or a bad sequence of events will not wipe the person out.
B) My kids started with 20K to 30K of savings that they saved over 20+ years since they were born. Then, they add about 20K per year when they started working. Whatever the life may come at them next, they are better prepared.
<< It's one thing to be single with no spouse or kids, and company paid health insurance,>>
C) The reality is even with those favorable circumstances, most folks save close to nothing too.
KlangFool
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Re: What is the average savings rates for bogleheads?
+1AerialWombat wrote: ↑Sun Jul 25, 2021 1:45 pm I respectfully disagree. Again, as somebody that did it (in my mid-30’s, not that long ago).
There are plenty of places still left in America where a single person can live comfortably on $20k and, in fact, millions of people do just that. It’s quite common, if you examine income data around the nation.
Thus, the person making 40k but living on 20k is quite reasonable.
The extreme end are the folks living on $7k a year. E.g., the Mr. Money Mustache crowd. I lived most of my life in poverty, and would not voluntarily choose that extreme.
There have been numerous threads on BH about this topic. There is also an entire sub-Reddit about living on 20k or less per person (r/leanFIRE).
This is my most frequent criticism of the BH crowd: The tendency to project one’s own lifestyle cost expectations on to others.
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Re: What is the average savings rates for bogleheads?
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Re: What is the average savings rates for bogleheads?
Congratulations! Also bought a brand new car about 3 months ago, for the first time in 13 years, a BMW X5 M50i. Absolutely stunning inside and out, my savings and investments have now reached a point where it was time to do this. I’ve always done well balancing between saving and living a little, and have no desire to be the richest guy in the graveyard, as the saying goes.Nivek wrote: ↑Sat Jul 24, 2021 4:23 amProbably shouldn’t have worded it that way, it’s a 2021 Mercedes 350 GLE. Both my wife and I have always been frugal when it comes to cars, kept them at least 10 years, mostly all Honda’s. I’ve progressed rather nicely in my career which involved at the time meeting customers and associates who worked for me out in the field and people show up in their Mercedes. BMW, Porsche and I roll up in my Honda CRV. I never bothered me because I knew what I had in the bank but I did want to splurge on a luxury car at least once before I retire. I’m loving it too. My wife is looking at a Tesla now after her 24 years of minivans (2 Honda Odyssey.s - man, those vans can and did taking a beating and kept on chugging along).
One thing this past 18 months have thought me is to never take anything for granted going forward. It doesn’t mean I’m going to all of a sudden start going on crazy impulsive spending sprees, but having just turned 45, I’m not going to delay certain things if I decide I want something now.
To answer the original question, savings rate has been about 40-45% for a few years now, plan is to stay in that range for the next 8-10 years, with an eye towards retirement by age 55.
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Re: What is the average savings rates for bogleheads?
I never said it was nearly impossible; I was trying to understand your circumstances.stoptothink wrote: ↑Sun Jul 25, 2021 4:47 pmOur home is paid off and my property taxes are ~$1500/yr (in an area above the median for COL), healthcare premiums are $0/yr (completely covered by my wife's employer, they would be ~$1k/yr through my employer), and all vehicle costs are included. Why would I include payroll taxes What percentage of people are paying anywhere remotely close to $20k/yr for health insurance premiums (self-employed and who else?)?delamer wrote: ↑Sun Jul 25, 2021 3:57 pmDoes the less than $30K expenses include non-Medicaid health insurance for your family, a mortgage or monthly rent at market rates, standard payroll taxes for at least one wage earner, and the cost of insuring, fueling, and repairing one vehicle?stoptothink wrote: ↑Sun Jul 25, 2021 2:55 pmI've done it in Southern California, Salt Lake City, Mesa, Houston, Austin, and finally Utah County, Utah over the last 18yrs. In 2013, the year before I got married, my total expenses were ~$11k. Now as a family of 4 we were at <$30k last year (Utah County), this year will be higher because we made 3 large totally discretionary "want" purchases (a new truck, pair of e-bikes) but still under what most on here consider a baseline for a decent life in a MCOL area for a family of 4 (~$60k). It's a choice for us, we save ~60% of gross income, but are perfectly content with our lifestyle and want for nothing. Our lifestyle does not include a ton of things most people (here) consider "needs", but it's happiness for us and a far higher quality of life than wife and I experienced growing up in California. I guess we make a habit out of the "nearly impossible".fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 1:59 pmTo be clear, living on $20k per person ($80k for a family of four) is completely different from living on $20k as an individual. I tend to agree with 59Gibson here. Yes, it can be done in some LCOL or VLCOL areas, but it is nearly impossible in most places with average or greater population (assuming the individual is paying all of his/her expenses and not living with family or relying on government/charity assistance).AerialWombat wrote: ↑Sun Jul 25, 2021 1:45 pm
I respectfully disagree. Again, as somebody that did it (in my mid-30’s, not that long ago).
There are plenty of places still left in America where a single person can live comfortably on $20k and, in fact, millions of people do just that. It’s quite common, if you examine income data around the nation.
Thus, the person making 40k but living on 20k is quite reasonable.
The extreme end are the folks living on $7k a year. E.g., the Mr. Money Mustache crowd. I lived most of my life in poverty, and would not voluntarily choose that extreme.
There have been numerous threads on BH about this topic. There is also an entire sub-Reddit about living on 20k or less per person (r/leanFIRE).
This is my most frequent criticism of the BH crowd: The tendency to project one’s own lifestyle cost expectations on to others.
Because for most families, those are significant, unavoidable expenses. For example, if your employer fully subsidizes your family insurance premium, then you are receiving a benefit of at least of $20,000 that otherwise would be a personal expense.
Certainly my/our situation is not the norm, but is far from "nearly impossible".
There is no greater example of how many posters on this board are totally out of touch then when budgets are discussed.
My point was that all those items are expenses. And the specific circumstances/time of life matters. A self-employed family that has to pay double the payroll taxes and the full premium for health insurance is in a different circumstance than the same family with an equivalent income from a W-2 job that covers their health insurance and half their payroll taxes.
And, BTW, most companies don’t pay for the full premium for family heaith insurance. So your situation with free family coverage is not the norm. For many families, their health insurance premiums are a significant expense.
My guess is that you bought a house that had a cost well below what you could have qualified for. And that choice, plus the passage of time, has allowed you to be mortgage free. A family in similar circumstances but 10 years younger might still be carrying the mortgage and so have much larger expenses.
We actually are in agreement that many posters are out-of-touch where budgets are concerned. My feeling is there is a lot of judgment on both ends of the spectrum.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: What is the average savings rates for bogleheads?
fatcoffeedrinker,fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 6:01 pmIt matters because people make decisions based on their finances. Someone might retire thinking they have 25x or 30x expenses saved, to later find out that they weren't even close based on new life occurrences. Sure, save whatever you can, and you are probably better off than the masses, but you shouldn't fool yourself into thinking that your current poverty-level expenses will remain that low forever.KlangFool wrote: ↑Sun Jul 25, 2021 5:37 pmfatcoffeedrinker,fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 3:47 pm
I also think that if you are saving half of your income at $40,000, and thinking you are saving 1x expenses per year, there may be some false hope in that belief. It's one thing to be single with no spouse or kids, and company paid health insurance, but if those aspects of your life change, your retirement savings calculated as a multiple of your expenses is going to be a much lower number than what you previously thought.
A) And, why would that matters? This person is still in a better shape than 90+% of people out there. Aka, the normal people that save less than 5% of their gross income.
Save early and save more is still a better answer than save less than 5% and hope that a recession and/or a bad sequence of events will not wipe the person out.
B) My kids started with 20K to 30K of savings that they saved over 20+ years since they were born. Then, they add about 20K per year when they started working. Whatever the life may come at them next, they are better prepared.
<< It's one thing to be single with no spouse or kids, and company paid health insurance,>>
C) The reality is even with those favorable circumstances, most folks save close to nothing too.
KlangFool
A) Are you claiming that a single person that spend 20K per year is living at the poverty-level? If not, please explain what do you mean by that.
B) My current household of two is spending about 60K per year or 30K per person per year. Are you claiming that we are living at the poverty level? If not, please explain what do you mean by that.
I save a lot of money. But, I know that I am not frugal by any mean.
<< Someone might retire thinking they have 25x or 30x expenses saved, to later find out that they weren't even close based on new life occurrences.>>
C) It is obvious to me that we live in a different worlds. In my world, folks choose to control their living expense.
D) My living expense stayed at 50K to 60K per year level over the last 10+ years except when I pay for college education. The household changes from 4 to 3 to 2. But, the annual expense stays the same.
KlangFool
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Re: What is the average savings rates for bogleheads?
About 45%, including retirement accounts, employer match, taxable savings, 529 savings, and the equity portion of our mortgage payment. This is in a VHCOL and high-tax area.
Re: What is the average savings rates for bogleheads?
Chicagoan here. When it was just my wife and I, we spent approximately $3K per month or $36K per year. With 2 kids, it looks like we are up to $5K-6K per month or $60K-$72K per year. The main difference appears to be daycare costs. Our savings rates at these expense amounts have been consistently between between 65%-75% of our net incomes. While our expenses are higher now, our incomes have grown as well.
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Re: What is the average savings rates for bogleheads?
Come on, I save 1% more than everyone. Yes, you. Feel the flex.Mike Scott wrote: ↑Sat Jul 24, 2021 1:42 pm You can't possibly win this game on bogleheads. Pick a savings rate that you are willing and able to accomplish based on your income, family, life and financial circumstances.
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Re: What is the average savings rates for bogleheads?
I use my savings rate for personal finance purposes but I have also found that the percentage is easily manipulated, e.g., I had paid off my mortgage and my savings rate soared and then I took a new loan when rates dropped close to 2% and invested the money in a new investment and my savings rate dropped but now I own another asset that has soared in value but didn’t hit my W-2 so it didn’t earn me much additional income. Also tax rates range. Home prices and the associates costs range. Living in SF to chase a big tech salary is very different than me with a professional income in a MCOL area. My savings rate on net income has ranged around low to high 80%s depending on the above factors. Currently I have a mortgage of half my home value and I include 401k match as income and all deductions from my paycheck as expenses, e.g., healthcare. I also have children now. On income around 800k ish, we are saving over 80% of the take home. It would be hard for me to move that number more than 2-3% bc of fixed expenses like property taxes and my mortgage.
Re: What is the average savings rates for bogleheads?
In these 10 years, did you have big ticket expenses like a new roof or HVAC or driveway or any medical emergencies or extended therapy?
Even if you did not have any of these, if you had to pay say 15k in a particular year, would you consider that irrelevant to your claim that you save one year’s expense during that year?
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Re: What is the average savings rates for bogleheads?
I've been maxing out 401K ($19500) since company matches 40%, I-Bonds 10K and Roth IRA 6K which comes out to like 37% of my gross income.
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Re: What is the average savings rates for bogleheads?
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Last edited by fatcoffeedrinker on Wed Mar 02, 2022 10:04 am, edited 2 times in total.
Re: What is the average savings rates for bogleheads?
lurkman,lurkman wrote: ↑Sun Jul 25, 2021 8:10 pmIn these 10 years, did you have big ticket expenses like a new roof or HVAC or driveway or any medical emergencies or extended therapy?
Even if you did not have any of these, if you had to pay say 15k in a particular year, would you consider that irrelevant to your claim that you save one year’s expense during that year?
My 60K per year expense budget has enough room to handle those lumpy expenses. My only big fixed annual expense is 20K per year on housing (PITI). If you take cares of the big items: house, car, and college education, everything else is small.
KlangFool
P.S.: I was unemployed and we (me and my spouse) had 4 cataract eye surgeries across 1 1/2 years.
P.S.2: I allocate 20K per year on my possible annual medical expense.
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Re: What is the average savings rates for bogleheads?
So it seems your annual expenses are 60k no matter what happens.KlangFool wrote: ↑Sun Jul 25, 2021 8:29 pmlurkman,lurkman wrote: ↑Sun Jul 25, 2021 8:10 pmIn these 10 years, did you have big ticket expenses like a new roof or HVAC or driveway or any medical emergencies or extended therapy?
Even if you did not have any of these, if you had to pay say 15k in a particular year, would you consider that irrelevant to your claim that you save one year’s expense during that year?
My 60K per year expense budget has enough room to handle those lumpy expenses. My only big fixed annual expense is 20K per year on housing (PITI). If you take cares of the big items: house, car, and college education, everything else is small.
KlangFool
P.S.: I was unemployed and we (me and my spouse) had 4 cataract eye surgeries across 1 1/2 years.
P.S.2: I allocate 20K per year on my possible annual medical expense.
From your post above,
20k of the 60k per year is for possible annual medical expense.
15k of lumpy expense (HVAC or roof replacement) is also absorbed in your 60k (you say).
20k is for PITI.
That brings us to 55k already (if you have high medical expenses and a lumpy expense in the same year). If so, you have 5k to live on for the rest of the year (buy food, pay utilities, car, gas etc). I don't understand it. Doesn't add up.
Klangfool, your emphasis on high savings certainly has merit in the land of Bogleheads. However, going by the gestalt of your postings, I think your claim should be rephrased to read, "I save one year of expense every year except when I don't."
Re: What is the average savings rates for bogleheads?
lurkman,
You missed a very important point.
<<"I save one year of expense every year except when I don't.">>
How do someone that earn 60K less handle this kind of situation?
They either borrow money first or spend down their emergency fund first and then save more in future to refill the emergency fund. In the end, they still average out to 60K per year.
<<20k of the 60k per year is for possible annual medical expense.
15k of lumpy expense (HVAC or roof replacement)>>
Isn't the answer obvious for someone that earn 60K less? They do not spend the 20K medical expense and the 15K HVAC at the same year. They prioritize which go first.
It won't matter how much money you have. You have to prioritize your spending. You cannot have it all. How is this any different?
Some people spend first and save later. Some people save first and spend later.
Some people choose to control their spending. Some people don't. It is a choice.
KlangFool
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Re: What is the average savings rates for bogleheads?
Yes just my spouse and I medical ins. is over $15K.delamer wrote: ↑Sun Jul 25, 2021 3:57 pmDoes the less than $30K expenses include non-Medicaid health insurance for your family, a mortgage or monthly rent at market rates, standard payroll taxes for at least one wage earner, and the cost of insuring, fueling, and repairing one vehicle?stoptothink wrote: ↑Sun Jul 25, 2021 2:55 pmI've done it in Southern California, Salt Lake City, Mesa, Houston, Austin, and finally Utah County, Utah over the last 18yrs. In 2013, the year before I got married, my total expenses were ~$11k. Now as a family of 4 we were at <$30k last year (Utah County), this year will be higher because we made 3 large totally discretionary "want" purchases (a new truck, pair of e-bikes) but still under what most on here consider a baseline for a decent life in a MCOL area for a family of 4 (~$60k). It's a choice for us, we save ~60% of gross income, but are perfectly content with our lifestyle and want for nothing. Our lifestyle does not include a ton of things most people (here) consider "needs", but it's happiness for us and a far higher quality of life than wife and I experienced growing up in California. I guess we make a habit out of the "nearly impossible".fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 1:59 pmTo be clear, living on $20k per person ($80k for a family of four) is completely different from living on $20k as an individual. I tend to agree with 59Gibson here. Yes, it can be done in some LCOL or VLCOL areas, but it is nearly impossible in most places with average or greater population (assuming the individual is paying all of his/her expenses and not living with family or relying on government/charity assistance).AerialWombat wrote: ↑Sun Jul 25, 2021 1:45 pmI respectfully disagree. Again, as somebody that did it (in my mid-30’s, not that long ago).59Gibson wrote: ↑Sun Jul 25, 2021 1:16 pm
Klangfool,
I think it's a severe disservice to members and visitors to BH website looking for legitimate info, support, and/or motivation to suggest $19-20k/yr is a "not that hard" amount to live on in America per year. This IMO would be classified as Extreme. One can come up w/ anecdotal 20 yr olds doing it and folks living in rooms in basements, and many other non traditional scenarios. I maintain it's not realistic or reasonable to expect to save 1 yrs expenses at 40k/yr income level.
There are plenty of places still left in America where a single person can live comfortably on $20k and, in fact, millions of people do just that. It’s quite common, if you examine income data around the nation.
Thus, the person making 40k but living on 20k is quite reasonable.
The extreme end are the folks living on $7k a year. E.g., the Mr. Money Mustache crowd. I lived most of my life in poverty, and would not voluntarily choose that extreme.
There have been numerous threads on BH about this topic. There is also an entire sub-Reddit about living on 20k or less per person (r/leanFIRE).
This is my most frequent criticism of the BH crowd: The tendency to project one’s own lifestyle cost expectations on to others.
Because for most families, those are significant, unavoidable expenses. For example, if your employer fully subsidizes your family insurance premium, then you are receiving a benefit of at least of $20,000 that otherwise would be a personal expense.
During Covid, we were spending 40K after not counting home improvements,health ins. , Charitable giving, car replacement or saving for retirement. We didn't travel anywhere. We did have
some takeout to keep the restaurants we like open, but little more
I didn't have commuting costs,but did have higher costs associated with working from home.
Re: What is the average savings rates for bogleheads?
lurkman,
1) If you receive a 60K per year pay cut, how would your spending changes?
2) If you receive a 60K per year pay raise, how would your spending changes?
3) What if you give yourself a 60K pay cut by deducting 60K of savings from your pay check? You just assume that you earn 60K less. How would your spending changes? Your assumption about what you can afford or not afford will change too.
4) This is the DIFFERENCE between those
A) "Pay Yourself First" -> Save first and spend later
versus
B) Pay others first and yourself last -> Spend first and save whatever remains.
5) This is the NORM in the country where I came from. The average gross saving rate is 30+%. Folks save 1/3 of their gross income first and then spend the rest.
KlangFool
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Re: What is the average savings rates for bogleheads?
+1 for experiencing high savings rate on not a monstrous income. I make about 70k gross in HCOL area (DC) and I live with about 2k month everything included, and far from feeling I live "cheap". Lifestyle choices do matter, such as owning a car/house which are for me a money mistake living in HCOL (and very personally no kids planned).
No student loan since I am a foreigner and that probably makes a big difference, great non profit benefits. I do save about 35k between 401k, Roth ira and taxable, so about 50% of my gross, which is close to 2*yearly expenses.
Kal
No student loan since I am a foreigner and that probably makes a big difference, great non profit benefits. I do save about 35k between 401k, Roth ira and taxable, so about 50% of my gross, which is close to 2*yearly expenses.
Kal
Re: What is the average savings rates for bogleheads?
Some good points about the usefulness of this exercise given wide disparities in income and cost of living.
I'd posit that you may get more useful information with the following income information -
Your gross income as a % of MHI for your neighborhood, township, zip code, city, county, or metro area. I'd go with whatever seems to better represent you/your area of those, especially relating to area COL, but I'd typically go with the smallest geographical area whose data you can get your hands on. I went with County because of some expensive housing editions by a golf course mucks up zip, township, & nearby town numbers up a bit IMO. So $60k in a $40k MHI area is 150% of MHI. That would seem to better capture some COL stuff and demonstrate when high-earners - who likely have an easier time saving a larger % of income - are talking about high savings rates and how it may not be comparable to someone looking at this from a personal perspective. Still not a great perspective necessarily - there can be some disparity - but probably more useful.
TL:DR - Easier to get a feel when you compare income @ 300% of MHI with a savings rate of 75% to someone with income @ 50% of MHI with a savings rate of 30%.
We have, for example, a gross income @ MHI of like 99%, our savings rate is 37%. Savings rate goes up to about 47% if you include the annual employer contribution value of my pension/401a. Could be a bit higher in the future - recently took out a HELOC and a car loan that ate into savings rate.
I'd posit that you may get more useful information with the following income information -
Your gross income as a % of MHI for your neighborhood, township, zip code, city, county, or metro area. I'd go with whatever seems to better represent you/your area of those, especially relating to area COL, but I'd typically go with the smallest geographical area whose data you can get your hands on. I went with County because of some expensive housing editions by a golf course mucks up zip, township, & nearby town numbers up a bit IMO. So $60k in a $40k MHI area is 150% of MHI. That would seem to better capture some COL stuff and demonstrate when high-earners - who likely have an easier time saving a larger % of income - are talking about high savings rates and how it may not be comparable to someone looking at this from a personal perspective. Still not a great perspective necessarily - there can be some disparity - but probably more useful.
TL:DR - Easier to get a feel when you compare income @ 300% of MHI with a savings rate of 75% to someone with income @ 50% of MHI with a savings rate of 30%.
We have, for example, a gross income @ MHI of like 99%, our savings rate is 37%. Savings rate goes up to about 47% if you include the annual employer contribution value of my pension/401a. Could be a bit higher in the future - recently took out a HELOC and a car loan that ate into savings rate.
Re: What is the average savings rates for bogleheads?
I live in the county with the highest median household income in the USA. I am at 100% MHI. And, I save 1 year of expenses every year.brajalle wrote: ↑Sun Jul 25, 2021 10:56 pm Some good points about the usefulness of this exercise given wide disparities in income and cost of living.
I'd posit that you may get more useful information with the following income information -
Your gross income as a % of MHI for your neighborhood, township, zip code, city, county, or metro area. I'd go with whatever seems to better represent you/your area of those, especially relating to area COL, but I'd typically go with the smallest geographical area whose data you can get your hands on. I went with County because of some expensive housing editions by a golf course mucks up zip, township, & nearby town numbers up a bit IMO. So $60k in a $40k MHI area is 150% of MHI. That would seem to better capture some COL stuff and demonstrate when high-earners - who likely have an easier time saving a larger % of income - are talking about high savings rates and how it may not be comparable to someone looking at this from a personal perspective. Still not a great perspective necessarily - there can be some disparity - but probably more useful.
TL:DR - Easier to get a feel when you compare income @ 300% of MHI with a savings rate of 75% to someone with income @ 50% of MHI with a savings rate of 30%.
We have, for example, a gross income @ MHI of like 99%, our savings rate is 37%. Savings rate goes up to about 47% if you include the annual employer contribution value of my pension/401a. Could be a bit higher in the future - recently took out a HELOC and a car loan that ate into savings rate.
37% of what income in your case? gross?
KlangFool
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Re: What is the average savings rates for bogleheads?
I started saving later than most. When the mood struck, I went all out and saved everything possible. I maxed out all tax advantaged and I Bonds. I don't know what the percentages were. My only regret is that I didn't start earlier.Havoner wrote: ↑Fri Jul 23, 2021 10:28 pm So lots of different ways of calculating this I am sure but just to keep it consistent would like to hear what people's savings rates are as a percentage of net pay after taxes. Mine averages about 25%-35% depending on bonuses and expenses. Would like to collect some rough data from the group but please feel free to share if there has been a survey or something similar in the past that collects this.
What sort of rate do you normally have?
Has it varied that much over the years or been fairly consistent?
Do you regret having too much of one and not enjoying more or saving too little and wish you had put back more?
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Re: What is the average savings rates for bogleheads?
And "poverty" is a totally subjective term, which seems quite ridiculous when you compare the U.S. version to most of the rest of the world. Many people who fall into that category in the U.S. are perfectly happy with their quality of life.fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 8:23 pm
You need to reread what I wrote above. I was responding to stoptothink saying his family of four was living on less than $30k. Poverty level under ACA is $26.4k for family of four. I think he also mentioned living on $11k as an individual. That is below the poverty level of $12.9k. That was this context of my comment. I don't define poverty, the government does.
Re: What is the average savings rates for bogleheads?
30% of gross for retirement, which comes out before any spending. A variable additional amount (10-20%) is leftover after taxes and expenses and builds up - currently this is being saved for a big home reno, but once that's done it'll go into taxable investments to accelerate early retirement.
This has been our plan and practice since we married 3 years ago. Before that we both saved but didn't have a clear plan.
I think the point above about savings rate in context of median area income is important. We live in a town in an MCoL area (expensive housing, cheap everything else) and a household income which has increased to 3.5x the local median for households.
This has been our plan and practice since we married 3 years ago. Before that we both saved but didn't have a clear plan.
I think the point above about savings rate in context of median area income is important. We live in a town in an MCoL area (expensive housing, cheap everything else) and a household income which has increased to 3.5x the local median for households.
Re: What is the average savings rates for bogleheads?
Around 40% of grossmor net when accounting for taxes. That was has been traditionally taken off the top (Roth, TSP, HSA). Additional savings have occurred, so actual rate is higher 5 years from earliest retirement date I am trying to save less and spend more.
Re: What is the average savings rates for bogleheads?
But the difference is you already own a home and have a place to live and you probably have a mode of transportation that's paid for. Many folks who live at the poverty line have nothing. They have difficulty coming up with a security deposit for rent. You might forgo any repairs to your home for a year or two to keep expenses that low, but my guess is if the furnace went and the temperatures were in the 20s for a few days, you'd have a technician out to replace the furnace.AerialWombat wrote: ↑Sun Jul 25, 2021 5:15 pmAgain, respectfully disagree. Millions of people in high-cost cities do it every day. I personally did it in cities such as Sydney (Australia) and Seattle, with zero family or public assistance. It’s not even that difficult.fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 1:59 pm Yes, it can be done in some LCOL or VLCOL areas, but it is nearly impossible in most places with average or greater population (assuming the individual is paying all of his/her expenses and not living with family or relying on government/charity assistance).
For kicks and grins, I did some math. If I sold my boat and RV, refinanced my primary residence back to a 30 year, unplugged the hot tub, and stopped eating out literally every day, then I could continue living alone in my current home just fine on $23k a year. That includes utilities and groceries— I would just need to stick to free hobbies.
My current health insurance plan would drop to $23/mo after PTC, just so I don’t get accused of ignoring this expense.
Since I actually use less than half my house (literally, empty rooms with doors always shut), I could get two roommates that attend a local trade school quite easily. $600/mo each and 1/3 of utilities would go a long ways towards making my life even cheaper.
For the roommate, they could easily be living on $1,000 a month or less, if they have no debt. I was that roommate most of my life.
This is illustrative of how most single Americans live.
It's disingenuous for folks (and I'm not claiming you are) who have wealth but choose to live with very low expenses to claim poverty level is "doable" when in reality, they aren't living at poverty levels. Yes, it's doable, millions do it every day, but it is incredibly difficult. A simple example to explain the difference is the grocery store. When I notice a good sale on certain products I might stock up -- buying 9 or 10 lbs of chicken at a time for example. Same thing with paper products, disposables, cleaning supplies, etc. If you only have $25 to shop with for groceries that week, you can't afford to stock up at cheaper prices.
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Re: What is the average savings rates for bogleheads?
He has a mortgage, which is certainly more expensive than renting a single room. AerialWombat didn't mention that his mode of transportation was paid for, and there are many areas where a car is nice but not necessary (my sister is 37, she bought her first car last year after living in Providence RI, Oxford England, LA, NYC, and Salt Lake without one). I did it, in 5 different metro areas, without owning a home and with a truck that I bought for $2k ('97 Nissan pickup) which I would go months without driving because I cycled virtually everywhere. I could have bought a home or a new car at any point, I was saving at least half my gross income, but it just wasn't a concern because I was either in school or not sure I was sticking around where I was currently living.Jags4186 wrote: ↑Mon Jul 26, 2021 8:20 amBut the difference is you already own a home and have a place to live and you probably have a mode of transportation that's paid for. Many folks who live at the poverty line have nothing. They have difficulty coming up with a security deposit for rent. You might forgo any repairs to your home for a year or two to keep expenses that low, but my guess is if the furnace went and the temperatures were in the 20s for a few days, you'd have a technician out to replace the furnace.AerialWombat wrote: ↑Sun Jul 25, 2021 5:15 pmAgain, respectfully disagree. Millions of people in high-cost cities do it every day. I personally did it in cities such as Sydney (Australia) and Seattle, with zero family or public assistance. It’s not even that difficult.fatcoffeedrinker wrote: ↑Sun Jul 25, 2021 1:59 pm Yes, it can be done in some LCOL or VLCOL areas, but it is nearly impossible in most places with average or greater population (assuming the individual is paying all of his/her expenses and not living with family or relying on government/charity assistance).
For kicks and grins, I did some math. If I sold my boat and RV, refinanced my primary residence back to a 30 year, unplugged the hot tub, and stopped eating out literally every day, then I could continue living alone in my current home just fine on $23k a year. That includes utilities and groceries— I would just need to stick to free hobbies.
My current health insurance plan would drop to $23/mo after PTC, just so I don’t get accused of ignoring this expense.
Since I actually use less than half my house (literally, empty rooms with doors always shut), I could get two roommates that attend a local trade school quite easily. $600/mo each and 1/3 of utilities would go a long ways towards making my life even cheaper.
For the roommate, they could easily be living on $1,000 a month or less, if they have no debt. I was that roommate most of my life.
This is illustrative of how most single Americans live.
Because that lifestyle makes you uncomfortable doesn't mean that a lot of people don't do it. Yes, in most cases it is necessitated by a lack of income, but not always. That's the great thing about keeping low living expenses, even when not necessitated; you can change that at any time.
Re: What is the average savings rates for bogleheads?
That lifestyle would be uncomfortable for me, I don't care if others choose to live it. I am saying that there's a difference between living on $20k a year when you have lots of money in the bank, and lots of income coming in you're not spending and spending $20k a year while only making $20k a year and have $100 in your checking account. People living at the poverty line aren't in a position to buy a home or new car at any point and aren't cycling to work or school because they love riding a bicycle.stoptothink wrote: ↑Mon Jul 26, 2021 8:36 am He has a mortgage, which is certainly more expensive than renting a single room. AerialWombat didn't mention that his mode of transportation was paid for, and there are many areas where a car is nice but not necessary (my sister is 37, she bought her first car last year after living in Providence RI, Oxford England, LA, NYC, and Salt Lake without one). I did it, in 5 different metro areas, without owning a home and with a truck that I bought for $2k ('97 Nissan pickup) which I would go months without driving because I cycled virtually everywhere. I could have bought a home or a new car at any point, I was saving at least half my gross income, but it just wasn't a concern because I was either in school or not sure I was sticking around where I was currently living.
Because that lifestyle makes you uncomfortable doesn't mean that a lot of people don't do it. Yes, in most cases it is necessitated by a lack of income, but not always. That's the great thing about keeping low living expenses, even when not necessitated; you can change that at any time.
Last edited by Jags4186 on Mon Jul 26, 2021 8:47 am, edited 1 time in total.
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Re: What is the average savings rates for bogleheads?
Wow this post has a lot of feelings. Some of y’all are cray cray.
Anyway, I do 15% from my 401k. Then roughly around 52% post tax. I’m too lazy to figure out my true savings rate after calculating deductions, health insurance, etc.
I make decent money. Thing with me is I find a lot of the luxurious things to be boring. Mom and pop restaurant in queens >>>>> bougie brooklyn hip place. Hiking >>>> resort. So my tastes are naturally a bit more frugal than my others in my peer group.
Anyway, I do 15% from my 401k. Then roughly around 52% post tax. I’m too lazy to figure out my true savings rate after calculating deductions, health insurance, etc.
I make decent money. Thing with me is I find a lot of the luxurious things to be boring. Mom and pop restaurant in queens >>>>> bougie brooklyn hip place. Hiking >>>> resort. So my tastes are naturally a bit more frugal than my others in my peer group.
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Re: What is the average savings rates for bogleheads?
Over my adult working life most years my wife and I saved on average approx 25% of our gross income every year. In some years when kids were in college that number went down, but in other periods it went up to as much as 50%. Our savings rate was at this high range during most of my last 10 years of working, largely because my salary/bonus income was at career high. I think the trick (quite obvious, and stated 100 times in this forum by others before) is to consistently live below your means. Also part of our savings strategy was to always pay mortgage off early, making double or triple principle payments every month. Some of our ability to save has to do with deliberately choosing to live in MLCOL cities, buying used cars for cash and keeping them for 10 years, doing a lot of diy car and home projects, being very careful savvy consumers, and probably most important - being lucky enough to earn a relatively high end IT industry salary.
One primary reason we could always save at a high rate is that we always placed a very high value on attaining financial security. It was a clear goal early on and we were determined to achieve it.
Saving on a lower income is obviously going to require much harder choices but it can be done. I have a relative who never earned more than $35k in their life - they worked some extra years but retired with apprx $750k in savings and equity investments.
One primary reason we could always save at a high rate is that we always placed a very high value on attaining financial security. It was a clear goal early on and we were determined to achieve it.
Saving on a lower income is obviously going to require much harder choices but it can be done. I have a relative who never earned more than $35k in their life - they worked some extra years but retired with apprx $750k in savings and equity investments.
Last edited by jabberwockOG on Mon Jul 26, 2021 9:10 am, edited 6 times in total.
Re: What is the average savings rates for bogleheads?
I'm interested in your field, I work as a chemical tech. In an oil refinery, what is so rotten? The chemist I work with call them golden handcuffs.sschoe2 wrote: ↑Sat Jul 24, 2021 4:09 pm About 30-40% My spending per year is about $40k I spend very little less than 1% on discretionary. Everything else is savings. I want to be prepared to retire early should anything happen to my job in my rotten career (Chemist). My chances of getting another decent job in my field are low.
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.
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Re: What is the average savings rates for bogleheads?
Deleted
Last edited by fatcoffeedrinker on Wed Mar 02, 2022 10:03 am, edited 1 time in total.
Re: What is the average savings rates for bogleheads?
Leaving aside the discussion on poverty level expenses...
Our annual target is saving 33% of gross income. In contrast to those who think savings rate by income is useless, I suggest that it actually provides for enjoyment of income growth and "good years" (especially for those of us with variable income). 33% is a hearty amount to set aside for future financial independence and reflects the reality of life - that "lifestyle" is an illusion. We enjoy the good times and buckle down in the rough ones.
Our only exception is large windfalls - they are 100% invested, after tax.
Our annual target is saving 33% of gross income. In contrast to those who think savings rate by income is useless, I suggest that it actually provides for enjoyment of income growth and "good years" (especially for those of us with variable income). 33% is a hearty amount to set aside for future financial independence and reflects the reality of life - that "lifestyle" is an illusion. We enjoy the good times and buckle down in the rough ones.
Our only exception is large windfalls - they are 100% invested, after tax.
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Re: What is the average savings rates for bogleheads?
This is a very good point that explains why these threads are so eyerolling. There's also the security of the career, access to health care, stability of income, not being nickel and dimed, not paying rent/mortgage, and the knowledge that if one wants to pay for a truck or college (which don't count in one's annual expense for some reason?) or if the proverbial poop hits the fan one is selling stocks or slowing down the savings rate, not risking being evicted.Jags4186 wrote: ↑Mon Jul 26, 2021 8:46 amThat lifestyle would be uncomfortable for me, I don't care if others choose to live it. I am saying that there's a difference between living on $20k a year when you have lots of money in the bank, and lots of income coming in you're not spending and spending $20k a year while only making $20k a year and have $100 in your checking account. People living at the poverty line aren't in a position to buy a home or new car at any point and aren't cycling to work or school because they love riding a bicycle.stoptothink wrote: ↑Mon Jul 26, 2021 8:36 am He has a mortgage, which is certainly more expensive than renting a single room. AerialWombat didn't mention that his mode of transportation was paid for, and there are many areas where a car is nice but not necessary (my sister is 37, she bought her first car last year after living in Providence RI, Oxford England, LA, NYC, and Salt Lake without one). I did it, in 5 different metro areas, without owning a home and with a truck that I bought for $2k ('97 Nissan pickup) which I would go months without driving because I cycled virtually everywhere. I could have bought a home or a new car at any point, I was saving at least half my gross income, but it just wasn't a concern because I was either in school or not sure I was sticking around where I was currently living.
Because that lifestyle makes you uncomfortable doesn't mean that a lot of people don't do it. Yes, in most cases it is necessitated by a lack of income, but not always. That's the great thing about keeping low living expenses, even when not necessitated; you can change that at any time.
That said, one can live reasonably well as a family in my MCOL with a paid-off house/working cars on $25k. Odds are pretty good, however, that someone *making* $25k doesn't have that paid off house or reliable car or a taxable account, especially if they're supporting a family.
Re: What is the average savings rates for bogleheads?
34 yo, 35%, sahm, 2 kids under 4
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.
Re: What is the average savings rates for bogleheads?
Great question:Havoner wrote: ↑Fri Jul 23, 2021 10:28 pm So lots of different ways of calculating this I am sure but just to keep it consistent would like to hear what people's savings rates are as a percentage of net pay after taxes. Mine averages about 25%-35% depending on bonuses and expenses. Would like to collect some rough data from the group but please feel free to share if there has been a survey or something similar in the past that collects this.
What sort of rate do you normally have?
Has it varied that much over the years or been fairly consistent?
Do you regret having too much of one and not enjoying more or saving too little and wish you had put back more?
20's - 30's 20% (talking 10-15K/year)
40-45 50% (around 70-100K/year)
45-Today (now 50) 70% (around 125-150K/year)
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Re: What is the average savings rates for bogleheads?
I don't calculate savings of net income because that savings is technically accessible if needed and can be spent if expenses arise. Also, with the exception of our emergency savings, these funds are typically saved for a specific purpose (i.e. kitchen renovation, down-payment, etc.), so they are meant to be spent in the future. We do save some, but not a substantial amount because so much of our gross income is already being saved pretax. I have access to a 401a, 403b, and 457b and spouse has access to a 401k and HSA, meaning that we get close to $100k in pretax savings a year. This is roughly 55% of our gross income. We don't have a taxable investment account, but I think we may have enough room in our budget to start one next year.
I'm not exactly sure how people calculate net, but include pretax savings as well, because that obviously impacts how much tax you are paying. I typically consider my net pay as pay after taxes and after pre-tax contributions, but then for a net savings rate that would exclude pretax savings, which seems misleading as well. So, for this exercise, if I remove taxes from our HH gross income, but keep the pre-tax contributions to determine net income. Then I calculated all pre and post tax savings (mortgage or designated savings is excluded, because I dont see those as real savings) and we are left with a net savings rate of 70% of our net income.
I guess that is pretty good, and while our incomes are good, we are definitely not in the top 10% (our hhi with employer 401a contributions is under $200k). I feel fortunate to be able to save what we do and still live very comfortably (per my standards, which I think may be lower than some in this group). We have 2 young kids and it is hard to imagine spending much more than we do now.
I'm not exactly sure how people calculate net, but include pretax savings as well, because that obviously impacts how much tax you are paying. I typically consider my net pay as pay after taxes and after pre-tax contributions, but then for a net savings rate that would exclude pretax savings, which seems misleading as well. So, for this exercise, if I remove taxes from our HH gross income, but keep the pre-tax contributions to determine net income. Then I calculated all pre and post tax savings (mortgage or designated savings is excluded, because I dont see those as real savings) and we are left with a net savings rate of 70% of our net income.
I guess that is pretty good, and while our incomes are good, we are definitely not in the top 10% (our hhi with employer 401a contributions is under $200k). I feel fortunate to be able to save what we do and still live very comfortably (per my standards, which I think may be lower than some in this group). We have 2 young kids and it is hard to imagine spending much more than we do now.
Last edited by phinanciallyfit on Mon Jul 26, 2021 10:55 am, edited 1 time in total.