What is the average savings rates for bogleheads?

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retire2022
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Location: NYC

Re: What is the average savings rates for bogleheads?

Post by retire2022 »

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?
Hi I am 61, and will be retiring shortly, my savings rate is approx 23% net income.

My Pretax 457 balance is 64% versus Roth at 33.35% , the remaining account is Inherited IRA and small position in taxable.

Yes some years needed more cash to pay down mortgage.

I am two time homeowner, traveled across the USA eight times by car, I don't regret spending vacation.

I should had done more Roth in my 457 plan, but that is life whatca going to do?

I think I am killing it, total 35 year contributions pretax and Roth combined approx 528K which resulted in portfolio is up to 2.584 million

Saving early in pretax contributed to large pretax balance.
KlangFool
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Re: What is the average savings rates for bogleheads?

Post by KlangFool »

Folks,

1) Saving 1 year of expense per year is not impossible.

2) But, it is HARD when all your income peers save less than 5% of their gross incomes. You have to be anti-social and choose to be abnormal among your peers. You have to say no to a lot of stuffs that others expected you to say yes.

3) It is HARD when you are at a lowered income because you have to watch your expense carefully. You have to make substantial sacrifices.

4) It is HARD when you are at a higher income because you have the choice to spend more. There is nothing there to stop you from spending more except yourself.

5) In any case, it is HARD to do.

KlangFool
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stoptothink
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Re: What is the average savings rates for bogleheads?

Post by stoptothink »

getthatmarshmallow wrote: Mon Jul 26, 2021 9:41 am
Jags4186 wrote: Mon Jul 26, 2021 8:46 am
stoptothink wrote: Mon Jul 26, 2021 8:36 am :confused 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 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.
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.

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.
FWIW, the cost of my school and truck were counted in my annual expenses. My post-grad education costed me $0 (my undergrad, not much more than that) and I drove a truck for 9yrs that I bought for $2k (and I did not own a car in undergrad). Of course having most of my education covered by scholarships and grants provided me options others didn't have.

This started with another poster stating that it is "nearly impossible" for an adult to live off $20k/yr in most areas of the country, which several of us will counter because we've done it. As far as I saw, there was no preface whether or not it was necessity or choice. Certainly there is a level of comfort that comes from doing it out of choice, I don't think anybody has suggested otherwise. As one who lived a very simple ("poverty"- level spending) lifestyle out of necessity for the first 22-ish years of their life, and out of choice (despite our spending, nobody is coming to my home and thinking we are "poor") for the last 17 or so; I can confirm that doing it while being "wealthy" is a heck of a lot better.
Last edited by stoptothink on Mon Jul 26, 2021 11:00 am, edited 1 time in total.
mceagle555
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Re: What is the average savings rates for bogleheads?

Post by mceagle555 »

39yr old. Single. MCOL.

- Pretax savings rate: 47%
- Posttax savings rate: 60%

That equates to:

- Saving 1.4x expenses per year (If you include mortgage)
- Saving 2.5x expenses per year (If you don't include mortgage)
phinanciallyfit
Posts: 365
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Re: What is the average savings rates for bogleheads?

Post by phinanciallyfit »

fatcoffeedrinker wrote: Sun Jul 25, 2021 3:47 pm
stoptothink wrote: Sun Jul 25, 2021 2:55 pm
fatcoffeedrinker wrote: Sun Jul 25, 2021 1:59 pm
AerialWombat wrote: Sun Jul 25, 2021 1:45 pm
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.
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.
To 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).
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".
For a family of four, the poverty level is around $25k. So for you to be under $30k, you are basically living at the poverty level. That's fine, and I'm certainly not here to criticize you for it, but for posters to come on this board and say it is easy to live at that level is poor advice. I think most people would agree that living in poverty is not easy.

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.
There is a big difference between living on $30k (expenses) and living in poverty with a low income (even if said income is $30k). For one, the non-spent expenses provides a security for things that come up and stress has a major impact on health and wellbeing. Second, when one's income is higher they often have access to lower rates AND can save more by spending in different ways. For example, I can afford to buy things in bulk and purchase items that I know I will need in the future when I see them on sale, which allows me to spend less overall. If my income was far lower, I would be limited to what I have this paycheck and it maybe harder for me to capitalize on discounts, bulk purchases, etc. Consequently, one may not be making much of a sacrifice living on $30k as a choice.

That said, I do think it is possible to save money on a lower income (we had an income of $40k just a few years ago and managed to save, but at a lower rate then now), but not at the rate we save now. It also helped knowing that my husband's family could help us if something happened, which gave us the freedom to save in our retirement accounts. My family, in contrast, could not help and if his family were like mine, we'd have been less inclined to save in tax advantaged spaces, as this would make it harder to access the money if needed. Consequently, we would have lost out on the growth that that money has seen in the past 5 years. There are many ways in which family background and income become intertwined to impact financial health that are not limited to values or financial responsibility.
phinanciallyfit
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Re: What is the average savings rates for bogleheads?

Post by phinanciallyfit »

stoptothink wrote: Sun Jul 25, 2021 4:47 pm
delamer wrote: Sun Jul 25, 2021 3:57 pm
stoptothink wrote: Sun Jul 25, 2021 2:55 pm
fatcoffeedrinker wrote: Sun Jul 25, 2021 1:59 pm
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.
To 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).
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".
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?

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.
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 :confused What percentage of people are paying anywhere remotely close to $20k/yr for health insurance premiums (self-employed and who else?)?
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.
For illustration purpose about what Delamer said regarding insurance premiums, I work for the largest employer in my state and my premiums for a family of 4 would be over $8000/yr if we weren't fortunate enough to have a HDHP option from my husband's (out-of-state) employer. Paid for premiums is a rare thing.
stoptothink
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Re: What is the average savings rates for bogleheads?

Post by stoptothink »

phinanciallyfit wrote: Mon Jul 26, 2021 11:35 am
stoptothink wrote: Sun Jul 25, 2021 4:47 pm
delamer wrote: Sun Jul 25, 2021 3:57 pm
stoptothink wrote: Sun Jul 25, 2021 2:55 pm
fatcoffeedrinker wrote: Sun Jul 25, 2021 1:59 pm

To 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).
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".
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?

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.
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 :confused What percentage of people are paying anywhere remotely close to $20k/yr for health insurance premiums (self-employed and who else?)?
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.
For illustration purpose about what Delamer said regarding insurance premiums, I work for the largest employer in my state and my premiums for a family of 4 would be over $8000/yr if we weren't fortunate enough to have a HDHP option from my husband's (out-of-state) employer. Paid for premiums is a rare thing.
Certainly fully employer-paid premiums are not the norm, but neither is families paying $20k/yr in premiums. The large majority of families have some sort of employer-subsidized health insurance, which means they are falling somewhere between $0 and $20k/yr.
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AerialWombat
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Re: What is the average savings rates for bogleheads?

Post by AerialWombat »

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Last edited by AerialWombat on Sat Feb 05, 2022 4:19 pm, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
PowderDay9
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Re: What is the average savings rates for bogleheads?

Post by PowderDay9 »

stoptothink wrote: Mon Jul 26, 2021 7:29 am
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.
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.
Agreed. The US has a very high standard of "poverty" compared to the rest of the world. The median world income is around $10k a year and you only need about $35k to be in the top 1%. For perspective, the US is less than 5% of the world population and we have some of the highest standards in the world. Most of the 7B+ people would be ecstatic to spend $20k a year.
msjohn07
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Re: What is the average savings rates for bogleheads?

Post by msjohn07 »

Late 30's - Dual HHI

Savings Rate 40% pre-tax
delamer
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Re: What is the average savings rates for bogleheads?

Post by delamer »

stoptothink wrote: Mon Jul 26, 2021 11:50 am
phinanciallyfit wrote: Mon Jul 26, 2021 11:35 am
stoptothink wrote: Sun Jul 25, 2021 4:47 pm
delamer wrote: Sun Jul 25, 2021 3:57 pm
stoptothink wrote: Sun Jul 25, 2021 2:55 pm

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".
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?

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.
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 :confused What percentage of people are paying anywhere remotely close to $20k/yr for health insurance premiums (self-employed and who else?)?
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.
For illustration purpose about what Delamer said regarding insurance premiums, I work for the largest employer in my state and my premiums for a family of 4 would be over $8000/yr if we weren't fortunate enough to have a HDHP option from my husband's (out-of-state) employer. Paid for premiums is a rare thing.
Certainly fully employer-paid premiums are not the norm, but neither is families paying $20k/yr in premiums. The large majority of families have some sort of employer-subsidized health insurance, which means they are falling somewhere between $0 and $20k/yr.
If you exclude people with Medicare from the population, about 59% of the US population has coverage through an employer (including the military): https://www.kff.org/other/state-indicat ... 2asc%22%7D

I don’t call that a large majority and that’s people not families (which might be different). Anyway, reasonable people can differ on the interpretation of large majority.

The average employee contribution toward family coverage is $5600/year. Deductibles are another couple thousand.

So yes, most families aren’t paying $20,000 a year. But some are, and 5 figures isn’t unusual.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
old medic
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Re: What is the average savings rates for bogleheads?

Post by old medic »

We both have 25% put into our 401Ks each payday.
$200 each month into our Grandsons savings.
BenjaminEsq
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Re: What is the average savings rates for bogleheads?

Post by BenjaminEsq »

35. single, no dependents

46% savings pre-tax income (AGI)
62% savings post-tax income (net income)

I used to think this is absolute stellar savings rate but after reading a few posts in this thread, I'm now realizing I may just be average.
Building software for 🏡 homeowner's to manage their mortgage and home finances — DM me to learn more! 💰
stoptothink
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Re: What is the average savings rates for bogleheads?

Post by stoptothink »

BenjaminEsq wrote: Mon Jul 26, 2021 1:40 pm 35. single, no dependents

46% savings pre-tax income (AGI)
62% savings post-tax income (net income)

I used to think this is absolute stellar savings rate but after reading a few posts in this thread, I'm now realizing I may just be average.
Nearly 4x the national average is not "just average" https://www.statista.com/statistics/246 ... -by-month/
BenjaminEsq
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Re: What is the average savings rates for bogleheads?

Post by BenjaminEsq »

stoptothink wrote: Mon Jul 26, 2021 1:43 pm
BenjaminEsq wrote: Mon Jul 26, 2021 1:40 pm 35. single, no dependents

46% savings pre-tax income (AGI)
62% savings post-tax income (net income)

I used to think this is absolute stellar savings rate but after reading a few posts in this thread, I'm now realizing I may just be average.
Nearly 4x the national average is not "just average" https://www.statista.com/statistics/246 ... -by-month/
*The avg bogler. If I compared myself to the avg American then I'm healthy, rich, and handsome. Unfortunately, I'm (slightly) overweight, underearning, and average looking. LOL

ps - I don't trust anything from statista. Not to say this graph you shared is wrong (it looks very accurate)... it's just that their data in general is inaccurate.

pps - My denominator is AGI and net income, theirs is "disposable personal income".... which actually makes me very sad because the chart you shared implies people are effectively saving very very little of their total paycheck :(
Last edited by BenjaminEsq on Mon Jul 26, 2021 2:01 pm, edited 1 time in total.
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Ollie123
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Re: What is the average savings rates for bogleheads?

Post by Ollie123 »

BenjaminEsq wrote: Mon Jul 26, 2021 1:40 pm I used to think this is absolute stellar savings rate but after reading a few posts in this thread, I'm now realizing I may just be average.
Keep in mind average boglehead = Absolutely stellar general population.

Savings rates spiked around the pandemic, but the data I've seen has the personal savings rate was typically around 6-8% over the last couple decades (with a few aberrant time points). I believe that also excludes taxes so for folks reporting gross savings its even higher.
SaucedUp
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Re: What is the average savings rates for bogleheads?

Post by SaucedUp »

28 Married 2 kids

Wife and I both work FT so our incomes are combined for these factors.

Major expenses:
- House - the caveat here is that I have an interest only HELOC that I make lump sum payments at the end of the year. The money I would be paying to principal gets invested and I take out the lump sum at the end of the year and the extra just keeps compounding.
- 3 cars
- my student loans

Post tax "saving" rate is just over 34%

I'm not sure what it would be pre-tax with 401k contributions but I max mine out and she doesn't have one.

We don't save money in the bank, though. Our checking account will hold anywhere from 1-3 months worth of living expenses just based on how many bills came out that pay period. My liquid net worth is 2-3 years worth of living expenses in an absolute emergency.

The money that gets saved is automatically transferred into a brokerage account and is invested by me. The account is split 60% blue chip dividend, 30% swing trading, 10% options trading. I'm sure this may be crazy to a lot of you but it works for us. I'm willing to take a lot of risk to build wealth more quickly because I have a highly in demand job in a well paying industry with excellent upward mobility and earning potential.

The pandemic has not changed our savings habits
stoptothink
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Re: What is the average savings rates for bogleheads?

Post by stoptothink »

BenjaminEsq wrote: Mon Jul 26, 2021 1:47 pm
stoptothink wrote: Mon Jul 26, 2021 1:43 pm
BenjaminEsq wrote: Mon Jul 26, 2021 1:40 pm 35. single, no dependents

46% savings pre-tax income (AGI)
62% savings post-tax income (net income)

I used to think this is absolute stellar savings rate but after reading a few posts in this thread, I'm now realizing I may just be average.
Nearly 4x the national average is not "just average" https://www.statista.com/statistics/246 ... -by-month/
*The avg bogler. If I compared myself to the avg American then I'm healthy, rich, and handsome. Unfortunately, I'm (slightly) overweight, underearning, and average looking. LOL

ps - I don't trust anything from statista. Not to say this graph you shared is wrong (it looks very accurate)... it's just that their data in general is inaccurate.

pps - My denominator is AGI and net income, theirs is "disposable personal income".... which actually makes me very sad because the chart you shared implies people are effectively saving very very little of their total paycheck :(
It was just the first link in my Google search. As the other poster noted, savings actually spiked last year (for several reasons), historically household savings are significantly lower. "Average boglehead" is far from average; you are doing spectacular.
momvesting
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Re: What is the average savings rates for bogleheads?

Post by momvesting »

I just calculated ours at around 40%. For those asking how it could be variable, several items on our list are fixed dollar amounts, regardless of income fluctuations. For example, we drop $12k ($6k each) into IRAs and the state tax deductible amount (around $4k) into a 529. We don't adjust these annually, but we do some sort of "slush fund" type savings where after bills are paid, money is tossed into taxable, CDs, or HYSA. What actually remains in those depends on income, but also on unusual expenses, like this year we refinanced but tossed in close to $10k first to reduce the principle owed.
gogreen
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Re: What is the average savings rates for bogleheads?

Post by gogreen »

Last year we saved whopping ~52% of pretax. Didn't plan for that at all :oops: Had a talk with my wife at New Year eve to start spending more, hope she'll be creative this year :mrgreen:
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Re: What is the average savings rates for bogleheads?

Post by hg064754 »

What is in the denominator?
  • Total Income + 401k match?
  • Total Income? If yes, does the numerator include 401k match?
  • Total income minus taxes? If yes, do I include pretax savings in the numerator?
  • Take home income? If yes, do I include pretax savings in the numerator?
Thanks!
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Re: What is the average savings rates for bogleheads?

Post by Quirkz »

I almost missed the "after taxes" bit, which helps boost the numbers:

* Strictest -- retirement (no match) and college: 20%

* The one I'd personally take -- retirement w/ match, college, mortgage principal: 37%

* Loosest terms -- retirement w/ match, college, mortgage principal and interest, pension effective equivalent: 67%
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Re: What is the average savings rates for bogleheads?

Post by anon_investor »

Quirkz wrote: Mon Jul 26, 2021 3:24 pm I almost missed the "after taxes" bit, which helps boost the numbers:

* Strictest -- retirement (no match) and college: 20%

* The one I'd personally take -- retirement w/ match, college, mortgage principal: 37%

* Loosest terms -- retirement w/ match, college, mortgage principal and interest, pension effective equivalent: 67%
Match and mortgage principal? After-tax, that is going to push some BHs to like 80-90%.
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Re: What is the average savings rates for bogleheads?

Post by Godot »

AerialWombat wrote: Mon Jul 26, 2021 12:02 pm
phinanciallyfit wrote: Mon Jul 26, 2021 11:27 am
fatcoffeedrinker wrote: Sun Jul 25, 2021 3:47 pm
stoptothink wrote: Sun Jul 25, 2021 2:55 pm
fatcoffeedrinker wrote: Sun Jul 25, 2021 1:59 pm

To 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).
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".
For a family of four, the poverty level is around $25k. So for you to be under $30k, you are basically living at the poverty level. That's fine, and I'm certainly not here to criticize you for it, but for posters to come on this board and say it is easy to live at that level is poor advice. I think most people would agree that living in poverty is not easy.

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.
There is a big difference between living on $30k (expenses) and living in poverty with a low income (even if said income is $30k). For one, the non-spent expenses provides a security for things that come up and stress has a major impact on health and wellbeing. Second, when one's income is higher they often have access to lower rates AND can save more by spending in different ways. For example, I can afford to buy things in bulk and purchase items that I know I will need in the future when I see them on sale, which allows me to spend less overall. If my income was far lower, I would be limited to what I have this paycheck and it maybe harder for me to capitalize on discounts, bulk purchases, etc. Consequently, one may not be making much of a sacrifice living on $30k as a choice.

That said, I do think it is possible to save money on a lower income (we had an income of $40k just a few years ago and managed to save, but at a lower rate then now), but not at the rate we save now. It also helped knowing that my husband's family could help us if something happened, which gave us the freedom to save in our retirement accounts. My family, in contrast, could not help and if his family were like mine, we'd have been less inclined to save in tax advantaged spaces, as this would make it harder to access the money if needed. Consequently, we would have lost out on the growth that that money has seen in the past 5 years. There are many ways in which family background and income become intertwined to impact financial health that are not limited to values or financial responsibility.
This can go back and forth forever, obviously. All I know is that for much of my adult life, I *did* survive at or below the poverty level, because I had to. It was just about making choices. I often made the wrong ones until I learned financial discipline, post-bankruptcy.

I also know that for one year, later in life, I made $40k, but lived on $20k, by choice, living in two of the most expensive cities in the world, with no public assistance and no wealth to back me up. The following year, my income more than doubled, and I increased lifestyle slightly, living on closer to $25k. The savings from those two years is the basis of my entire wealth today. This wasn’t eons ago, either, it was less than 10 years ago. This is my most applicable anecdote to this conversation.

I also know that, with the wealth now backing me up because I had the wherewithal to save in prior years, I can again live at about the $23k mark if I wanted to without sacrificing much of my current lifestyle.

The point is that it is absolutely possible to save half your income as a single person if you make $40k a year. To say it’s impossible when you’re talking to people that have done it is a disservice to future readers of this thread.

I can’t speak to doing that with a family, but stoptothink has covered that angle well.
Agreed, Wombat. Very easy for a single person to live fairly well on little. If you have an already paid for house/condo, it's even easier.
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Re: What is the average savings rates for bogleheads?

Post by AerialWombat »

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Re: What is the average savings rates for bogleheads?

Post by AerialWombat »

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Re: What is the average savings rates for bogleheads?

Post by retire2022 »

all, good article why rich are getting richer by John Rekenthaller of Morningstar, this is indirectly relates to topic of discussion.

https://www.morningstar.com/articles/10 ... ome-richer
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Re: What is the average savings rates for bogleheads?

Post by mervinj7 »

anon_investor wrote: Mon Jul 26, 2021 3:31 pm
Quirkz wrote: Mon Jul 26, 2021 3:24 pm I almost missed the "after taxes" bit, which helps boost the numbers:

* Strictest -- retirement (no match) and college: 20%

* The one I'd personally take -- retirement w/ match, college, mortgage principal: 37%

* Loosest terms -- retirement w/ match, college, mortgage principal and interest, pension effective equivalent: 67%
Match and mortgage principal? After-tax, that is going to push some BHs to like 80-90%.
Seems reasonable, I think (for the purposes of this thread). For example, if one has a interest only mortgage but decided to throw $20k each year at the principal, I would consider that as part of the savings numerator. Extending that logic, even with a standard 30 year fixed mortgage, the amount that goes towards mortgage principal should count.
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Re: What is the average savings rates for bogleheads?

Post by elle »

Since all these numbers are ridiculously high, I'm going to post mine to even the playing field in hopes this will make others feel like they aren't terribly behind in life: 20%. :D

I have nothing to say besides survival mode with two under five - pay for conveniences to keep my sanity. :beer
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Re: What is the average savings rates for bogleheads?

Post by WhiteMaxima »

Save as mush as I could (like 50% pretax) until I found my future RMD might push me into much higher tax bracket and too old to enjoy my saving. Then I reduce my saving rate.
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Re: What is the average savings rates for bogleheads?

Post by Normchad »

elle wrote: Tue Jul 27, 2021 4:05 pm Since all these numbers are ridiculously high, I'm going to post mine to even the playing field in hopes this will make others feel like they aren't terribly behind in life: 20%. :D

I have nothing to say besides survival mode with two under five - pay for conveniences to keep my sanity. :beer
This is a absolutely perfectly wonderful amount to be savings. Keep it up and you will be in great shape….. and you will end up with more money than the vast majority of people.

There were a lot of years I couldn’t save 15%, and they were the early years; I.e. the ones that benefit the most from compounding.
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Re: What is the average savings rates for bogleheads?

Post by susan123 »

In 40s, both working, 2 kids.

We currently save about 50%+/- of our annual income (max out everything possible, then DCA an after-tax account bi-monthly), or ~2x our annual expense. We saved less in the after-tax account when we had mortgage, but always max out pre-tax 401k and always backdoored Roth.
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Re: What is the average savings rates for bogleheads?

Post by softmax »

How is the savings rate determined?

Savings / pretax or aftertax?
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Re: What is the average savings rates for bogleheads?

Post by SnowBog »

Normchad wrote: Tue Jul 27, 2021 4:15 pm
elle wrote: Tue Jul 27, 2021 4:05 pm Since all these numbers are ridiculously high, I'm going to post mine to even the playing field in hopes this will make others feel like they aren't terribly behind in life: 20%. :D

I have nothing to say besides survival mode with two under five - pay for conveniences to keep my sanity. :beer
This is a absolutely perfectly wonderful amount to be savings. Keep it up and you will be in great shape….. and you will end up with more money than the vast majority of people.

There were a lot of years I couldn’t save 15%, and they were the early years; I.e. the ones that benefit the most from compounding.
Agreed!

When we were getting started, we couldn't even do 15% of one salary. We prioritized savings by putting 50% of pay raises/promotions into increasing 401k contributions - until we "maxed out" annual contributions into one of our retirement accounts (which I want to say was around 15% of gross income at one point). The "plan" was to start doing the same with the other spouses account - but we forgot - and then "life" (house, children, etc.) got in the way...

Now we are at a different stage of our life, income has increased substantially (blessed with lots of promotions over the years), no longer have "childcare" expenses (just the expenses of a teenager :wink: ), and we are able to ramp up our savings in a massive way. But we are in such a better position now for "saving early and often" - even if it wasn't a massive amount (by BH standards anyway).
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Re: What is the average savings rates for bogleheads?

Post by Broken Man 1999 »

We never saved even 15%, but I had a very secure pension that was vested in my 40ties.

$50,000 pension. in the 1990ties, though I didn't take it until age 62, lump-sum. I received a like amount per year on LTD, exclusive of SSDI.

I never thought we needed to be uber savers, so we weren't.

A DD who has no pension saves 15% + ?% match. She told me that is what I suggested, so she has always put 15% in a 401k plan beginning with her first job after college.

Lo and behold, she listened!

She should have a very comfortable retirement, even with no pension.

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Re: What is the average savings rates for bogleheads?

Post by bigfry »

Over the past 3 years my savings rate has hovered around ~25%. I'm pretty happy with that savings rate. Obviously I'd love to increase it but it's not happening living in a HCOL area with a baby on the way.
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Re: What is the average savings rates for bogleheads?

Post by tomsense76 »

When I was in grad school, was basically broke all the time. Barely above the poverty line. Only focused on keeping some money in a checking account. Didn't worry about anything further out.

First job out of grad school. Spent my first year focused solely on paying off my student loans. The interest on the loans was 6.8% and it was hard to even justify investing in 100% stocks, which may return ~6% vs. a guaranteed 6.8% return of paying down the loans. Of course looking back the US stock market did 10% a year. In retrospect, I probably could have saved a little while not being as aggressive with my student loans, but it felt good to get that debt out of the way. It took ~1yr to pay them off (this is basically where all of my money outside rent & the essentials went).

Then spent every year after saving 20% pre-tax. Had a very generous employer contribution (not match) of 10%, which helped get things going even while I was focused on student loans. State and Federal taxes were 30% of my income. Was in a HCOL area so rent was ~30%. So had about ~20% left over to live on. Whatever I didn't spend stayed in my bank account. Felt pretty good with ~30% being saved (20% from me & 10% from my employer). In retrospect would have been nice to sock a little more away in an IRA, but was a little confused as to whether this was an option in my case & felt like I was already saving super aggressively anyways (20% of my paycheck in HCOL area was not much and it needed to cover food, utilities, car, etc.).

Changed jobs a couple years back and got what felt like to me a lot more income. Started saving everything I could. While there has been some lifestyle creep, it has been relatively modest. Despite changes in taxes & income, am still paying ~30% in taxes. That said, since my lifestyle hasn't increased that much and my income has increased, have been saving ~50% pre-tax. Idk how long I will be able to keep that up as other expenses may enter the picture (kids, house, helping parents, etc.), but am trying to save as aggressively as possible. The more money I can sock away now in my 30s. The more time it has to compound and grow. Hopefully that will make up for any cutback in savings that might need to happen along the way.
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Re: What is the average savings rates for bogleheads?

Post by 22twain »

softmax wrote: Tue Jul 27, 2021 5:19 pm How is the savings rate determined?

Savings / pretax or aftertax?
For the purposes of this thread, from the very first post:
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.
Just to throw in a data point from the "low end"... I'm retired now (since my early 60s), but in my early 50s, in 2007-08, I was saving about 30% after taxes, or 20% before tax. In my 30s and 40s it was lower. I briefly increased it to about 45% after taxes, or 33% before taxes, before retiring.

All my savings from salary went into my 403b plan, so the exact calculation is as follows:

G = gross salary
M = my 403b contribution
E = employer 403b contribution
T = income tax (Fed + state) + Soc Sec + Medicare

% after tax = (M + E) / (G + E - T)
% before tax = (M + E) / (G + E)

During that period, my salary was about $65k-$70k in today's dollars. My wife made a similar amount (same kind of job as mine), and saved somewhat more, although not all in her 403b.

I should also note that our employer 403b contribution was rather large, 8.5% of gross salary.
Last edited by 22twain on Sat Jul 31, 2021 2:57 pm, edited 2 times in total.
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Re: What is the average savings rates for bogleheads?

Post by dboeger1 »

As for many, ours has fluctuated from negative to well over 50%, so it's hard to pin down an exact value. In the 2 years prior to buying our house last Fall, we were saving 60% or more. If we ignore our house down payment (I generally do as it's part of net worth, we were able to buy under market value right before the craziness of the market picked up, and our long-term retirement plans will likely involve moving to a LCOL area), we still had a number of one-time expenses that naturally followed buying a first home, such as furniture, tools, cleaning supplies, air conditioning, etc. We also have baby #1 on the way and have been buying some baby items and taking more vacations while we're still unencumbered by children. I don't have exact figures, but a rough estimate of our savings rate since buying the house would be around 40%.

If we go back further though, I was unemployed for a while and my wife was working a much lower-wage job, so we were actually very slowly depleting our savings in that time. That was an interesting experience, but definitely not financially comforting, lol. Before marriage, I was probably around 40%. It was more like 50%, but the first big splurge I made shortly after starting my career was buying a new car. It had 0% financing but obviously the payments cut into my savings rate for a while.
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Re: What is the average savings rates for bogleheads?

Post by elle »

Normchad wrote: Tue Jul 27, 2021 4:15 pm
elle wrote: Tue Jul 27, 2021 4:05 pm Since all these numbers are ridiculously high, I'm going to post mine to even the playing field in hopes this will make others feel like they aren't terribly behind in life: 20%. :D

I have nothing to say besides survival mode with two under five - pay for conveniences to keep my sanity. :beer
This is a absolutely perfectly wonderful amount to be savings. Keep it up and you will be in great shape….. and you will end up with more money than the vast majority of people.

There were a lot of years I couldn’t save 15%, and they were the early years; I.e. the ones that benefit the most from compounding.
Thanks normchad! When our kids were younger and we made less, there were definitely sub 15% years too. This is our first year with recurring 529 savings for the kids, so I’m pretty happy. Baby steps!
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Re: What is the average savings rates for bogleheads?

Post by tomsense76 »

elle wrote: Tue Jul 27, 2021 11:24 pm
Normchad wrote: Tue Jul 27, 2021 4:15 pm
elle wrote: Tue Jul 27, 2021 4:05 pm Since all these numbers are ridiculously high, I'm going to post mine to even the playing field in hopes this will make others feel like they aren't terribly behind in life: 20%. :D

I have nothing to say besides survival mode with two under five - pay for conveniences to keep my sanity. :beer
This is a absolutely perfectly wonderful amount to be savings. Keep it up and you will be in great shape….. and you will end up with more money than the vast majority of people.

There were a lot of years I couldn’t save 15%, and they were the early years; I.e. the ones that benefit the most from compounding.
Thanks normchad! When our kids were younger and we made less, there were definitely sub 15% years too. This is our first year with recurring 529 savings for the kids, so I’m pretty happy. Baby steps!
Yeah that's really good actually! :happy

At my old job they had financial planners come in once every few months as a covered service. Could book 1hr with them (though sometimes longer as not everyone took advantage of it). Was just starting to get out from under the weight of student loans and had a few questions. They did some modeling just based on the 10% savings my employer was putting forward and determined things looked reasonably good with Social Security. Started saving more once the student loans cleared, but its amazing how just saving 10% can even be meaningful.

Also this reminds me of a recent Animal Spirits episode on this topic. This blogpost from Ben Carlson is relevant. In it Ben says...
I think the most important thing for young people to get right eventually is their savings rate. In my retirement book, I say the target savings rate for everyone should be a double-digit percentage of their income.

Ten percent is a reasonable goal. Fifteen percent would be great. Twenty percent or more would put you in the upper echelon of savers.
So consider yourself in the upper echelon of savers. Of course there are plenty of people here shooting for the moon, but you are doing great! :sharebeer
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Re: What is the average savings rates for bogleheads?

Post by JBTX »

These threads always make me scratch my head. Some of these very high savings percents just seem so highly improbable. If true then I would think they could retire at a very young age. But ultimately I can't know exactly what and how people spend so best not to get too worked up.

If you asked me, I would have said we were at 20-30% of gross income. I just looked, and the actual answer is 15% of gross income over the last 20 years. Would be 18% if you excluded the major remodel we did a few years ago. The highest year was 30% in 2019.

If I guessed 20% for taxes/fica, 18% gross becomes 23% saving after tax.

From this thread we appear to be among the spendthrifts of the Bogleheads. Yet oddly enough we are in our 50's and have 25-30x expenses saved. I suspect this had to do with my single years, just over a decade leading up to 2000. Lived in apartment, always with roommate, drove moderate cars and aside from some entertainment didn't spend a ton. What was savings rate then? I don't know, 30%? Perhaps more some years? I don't have constructed records going back that far.

I'm guessing about half our current savings comes from that first 10-12 years, with the benefit of market growth during the 90s to present. Saving and investing early can make a big difference.
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Re: What is the average savings rates for bogleheads?

Post by stoptothink »

JBTX wrote: Wed Jul 28, 2021 2:08 am These threads always make me scratch my head. Some of these very high savings percents just seem so highly improbable. If true then I would think they could retire at a very young age.
I can only speak to our situation. School (I finished my PhD 8yrs ago at 31, my wife just finished undergrad last year at 34) and a pair of failed first marriages means our 20's were basically a wash financially; we were lucky to get out of them with our head above water. Also, I've always been a prodigious saver, but income wasn't really solid until I switched industries 6yrs ago. We've only had a handful of years to really stash it away - saving >50% of gross is a lot more when you are making $225k/yr rather than $75k/yr. Despite pretty much starting from nothing when we married (at 32 and 27), we're close to 30x expenses at 40 and 35, but we're counting on working another decade (for now).
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Re: What is the average savings rates for bogleheads?

Post by CyclingDuo »

JBTX wrote: Wed Jul 28, 2021 2:08 am These threads always make me scratch my head. Some of these very high savings percents just seem so highly improbable. If true then I would think they could retire at a very young age. But ultimately I can't know exactly what and how people spend so best not to get too worked up.

If you asked me, I would have said we were at 20-30% of gross income. I just looked, and the actual answer is 15% of gross income over the last 20 years. Would be 18% if you excluded the major remodel we did a few years ago. The highest year was 30% in 2019.

If I guessed 20% for taxes/fica, 18% gross becomes 23% saving after tax.

From this thread we appear to be among the spendthrifts of the Bogleheads. Yet oddly enough we are in our 50's and have 25-30x expenses saved. I suspect this had to do with my single years, just over a decade leading up to 2000. Lived in apartment, always with roommate, drove moderate cars and aside from some entertainment didn't spend a ton. What was savings rate then? I don't know, 30%? Perhaps more some years? I don't have constructed records going back that far.

I'm guessing about half our current savings comes from that first 10-12 years, with the benefit of market growth during the 90s to present. Saving and investing early can make a big difference.
Plenty of variables revolving around household income, household expenses, budget, cost of living area, number of dependents, some outlier years of higher expenses (repairs/maintenance) etc... to explain why threads like these always report such a wide variety for rate of savings in any given thread (or year).

We know from the BLS Data what households spend their money on...

Image

Image

And we know what household incomes are in the US...

Image

And we know that all of the above leads to certain labels regarding the type of saver...

Image

Without more detailed information from each response as to the figures behind their rate of savings, the door is opened for a lot of guesswork which leads to incorrectly pitting your household against another's without knowing all of the math behind it.

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Re: What is the average savings rates for bogleheads?

Post by HootingSloth »

JBTX wrote: Wed Jul 28, 2021 2:08 am These threads always make me scratch my head. Some of these very high savings percents just seem so highly improbable. If true then I would think they could retire at a very young age. But ultimately I can't know exactly what and how people spend so best not to get too worked up.
For our part, we sort of stumbled backwards into saving ~75% after tax (~50% pre tax). When we were in our 20s, we had hundreds of thousands of dollars of student loan debt. I was also in a job (biglaw) where the typical outcome is a massive reduction in salary after a few years. It didn't make sense to spend a ton of money. As the years went on, the debt was paid off, and the salary more than doubled instead of being slashed. We found that the amount we spent in our 20s was plenty to live a good life, so we did not see any point in significantly increasing spending.
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Re: What is the average savings rates for bogleheads?

Post by smitcat »

JBTX wrote: Wed Jul 28, 2021 2:08 am These threads always make me scratch my head. Some of these very high savings percents just seem so highly improbable. If true then I would think they could retire at a very young age. But ultimately I can't know exactly what and how people spend so best not to get too worked up.

If you asked me, I would have said we were at 20-30% of gross income. I just looked, and the actual answer is 15% of gross income over the last 20 years. Would be 18% if you excluded the major remodel we did a few years ago. The highest year was 30% in 2019.

If I guessed 20% for taxes/fica, 18% gross becomes 23% saving after tax.

From this thread we appear to be among the spendthrifts of the Bogleheads. Yet oddly enough we are in our 50's and have 25-30x expenses saved. I suspect this had to do with my single years, just over a decade leading up to 2000. Lived in apartment, always with roommate, drove moderate cars and aside from some entertainment didn't spend a ton. What was savings rate then? I don't know, 30%? Perhaps more some years? I don't have constructed records going back that far.

I'm guessing about half our current savings comes from that first 10-12 years, with the benefit of market growth during the 90s to present. Saving and investing early can make a big difference.
"These threads always make me scratch my head. Some of these very high savings percents just seem so highly improbable. If true then I would think they could retire at a very young age. But ultimately I can't know exactly what and how people spend so best not to get too worked up."
Your savings rate is higher than most and certianly high enough - have you been happy all these years? If yes than nothing else seems to matter much.
Jags4186
Posts: 8198
Joined: Wed Jun 18, 2014 7:12 pm

Re: What is the average savings rates for bogleheads?

Post by Jags4186 »

Savings rates are a means to an end. One thing this thread has made me start investigating is how much I want and how much I need to save in real dollars. At the age of 35, I realized I have hit a number, but notthe number. What does this mean?

I took a look this blog post on SP500 returns:

https://fourpillarfreedom.com/heres-how ... ince-1928/

If I go by the minimum 30 year real return of the SP500 (4.3% real), just based on the investments I have now, I will hit the number I want in 30 years at age 65. If I get median 20 year real returns, I’ll get there in 19 years. Without ever contributing another penny. And fortunately, the number I have in my head is more than double what we currently spend annually. I figure it’s safe because 1) we’ll still have kids on the family dole in 20 years and 2) I expect to significantly increase our spending. I don’t want to drive a Honda Civic LX or stay in budget hotels my entire life 8-)

Makes me consider if I should continue to keep the pedal to the metal or if I should loosen purse strings a little bit. Of course, this all presupposes I can continue to be employed and earn enough to cover my expenses for at least 20 more years.
MathWizard
Posts: 6542
Joined: Tue Jul 26, 2011 1:35 pm

Re: What is the average savings rates for bogleheads?

Post by MathWizard »

JBTX wrote: Wed Jul 28, 2021 2:08 am These threads always make me scratch my head. Some of these very high savings percents just seem so highly improbable. If true then I would think they could retire at a very young age. But ultimately I can't know exactly what and how people spend so best not to get too worked up.

If you asked me, I would have said we were at 20-30% of gross income. I just looked, and the actual answer is 15% of gross income over the last 20 years. Would be 18% if you excluded the major remodel we did a few years ago. The highest year was 30% in 2019.

If I guessed 20% for taxes/fica, 18% gross becomes 23% saving after tax.

From this thread we appear to be among the spendthrifts of the Bogleheads. Yet oddly enough we are in our 50's and have 25-30x expenses saved. I suspect this had to do with my single years, just over a decade leading up to 2000. Lived in apartment, always with roommate, drove moderate cars and aside from some entertainment didn't spend a ton. What was savings rate then? I don't know, 30%? Perhaps more some years? I don't have constructed records going back that far.

I'm guessing about half our current savings comes from that first 10-12 years, with the benefit of market growth during the 90s to present. Saving and investing early can make a big difference.
You may also have more time in the market.

I'm in my 60's and about where you are in investments vs expenses, but I had a negative net worth at 31.

I saved 15 to 25% of gross for many years while I built up my saving rate slowly while also
building up assets,
getting my kids through college, and
paying off the house mortgage.

Then I could divert huge amounts to retirement savings.
KlangFool
Posts: 31426
Joined: Sat Oct 11, 2008 12:35 pm

Re: What is the average savings rates for bogleheads?

Post by KlangFool »

JBTX wrote: Wed Jul 28, 2021 2:08 am
These threads always make me scratch my head. Some of these very high savings percents just seem so highly improbable. If true then I would think they could retire at a very young age. But ultimately I can't know exactly what and how people spend so best not to get too worked up.
JBTX,

I cannot speak for others. But, in my case, I was not lucky enough to be fully-employed continuously. I was unemployed for more than 1 year a few times. My high saving rate was born out necessity aka survival.

1) Going to college during Houston Oil Bust. Many classmates were laid off ex-Oil workers.

2) Graduated into Texas Saving & Loan Crisis -> Bank branches turned Subway sandwich shops.

3) Move to Asia and ended up in the Asian Currency Crisis -> Unemployed

4) Move back to the USA and ended up in Telecom Bust -> Laid off

5) 2008/2009 GFC -> Laid off 201X

6) 2020 -> Laid off

I save enough to be FI in 2020 and fully paid my kids' college education. But, it was just enough because I lost 50% of my portfolio during Telecom Bust.

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
MindBogler
Posts: 1446
Joined: Wed Apr 17, 2013 12:05 pm

Re: What is the average savings rates for bogleheads?

Post by MindBogler »

Somewhere around 30-35% of gross family income here. It varies a bit from year to year. The 401k + backdoor Roth contributions are maxed and consistent while taxable investment is variable.
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