What percentage of income do you save/invest?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
User avatar
Bogle7
Posts: 1984
Joined: Fri May 11, 2018 9:33 am
Location: In the Witness Protection Program

Why save?

Post by Bogle7 »

Zero.
Why save when you can spend?
Old fart who does three index stock funds, baby.
cshell2
Posts: 1204
Joined: Thu May 09, 2019 10:29 am

Re: What percentage of income do you save/invest?

Post by cshell2 »

With overtime, my annual income is usually around 50K, but if I want to be realistic, I also receive about 10K/year in child support, 7K/year in refundable tax credits, and 1K from employer into my HSA so really 68K household income.

68K HH income.
19,500 401K
7,000 - Roth
7,200 - HSA
1,200 - 529

So, 34,900/68000 = 51%

I've also been paying a lot extra on my mortgage every month, but I think I need to stop that. It's an emotional hurdle I haven't been able to get over.
azanon
Posts: 3142
Joined: Mon Nov 07, 2011 9:34 am

Re: What percentage of income do you save/invest?

Post by azanon »

This question always means different things to different people:

I've averaged probably 20% of Gross income saved exclusively for retirement during my working career (so north of 20% from a net income POV).
My amount of "savings" for shorter or mid term things (such as college, cars, etc) varies from year to year depending on what I want/need. And I also saved for an emergency fund many years ago so that's been done for a while.

And I spend the rest for either just living, or pay taxes with the rest..... Yeah that went without saying I know.

With a Federal pension, that puts me easily on track for a full retirement in my late 50s.
Last edited by azanon on Fri Sep 17, 2021 12:04 pm, edited 1 time in total.
User avatar
pennsylvania211
Posts: 189
Joined: Tue Feb 18, 2020 7:51 pm
Location: Pittsburgh

Re: What percentage of income do you save/invest?

Post by pennsylvania211 »

50%, since my first job at 13.

A dollar for today, a dollar for tomorrow. Easy and simple motto for me to adhere to.
EddyB
Posts: 2431
Joined: Fri May 24, 2013 3:43 pm

Re: What percentage of income do you save/invest?

Post by EddyB »

spdoublebass wrote: Fri Sep 17, 2021 10:41 am
EddyB wrote: Fri Sep 17, 2021 10:10 am
spdoublebass wrote: Thu Sep 16, 2021 11:57 pm
AK59 wrote: Thu Sep 16, 2021 11:46 pm I am curious to where everyone is with this.

With your monthly or yearly income how much do you save or invest each year?

After maxing out my retirement accounts I put the rest in my brokerage account which is coming out to about 40% of my income this year, up from 25% last year.

My emergency fund is strong, but I drop about another 5% of my monthly income in it to build some cash reserves for that "f you" money or fun purchase.
Percentages aren’t everything.
I’m much more impressed when someone saves 25% of $50K than $500k
I understand the sentiment, but many are responding in terms of gross pay, so I also give some credit (in assessing how impressed I am!) for the fact that the higher earner is likely spending a much lower percentage of after-tax income. That takes discipline, at least.
The same would apply to the person spending 25% of their gross pay of $50K. That takes more discipline.
OK, but that’s not the number people have been posting or even what you used in your earlier statement. The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income.
Rainmaker41
Posts: 733
Joined: Tue Apr 26, 2016 11:34 am

Re: What percentage of income do you save/invest?

Post by Rainmaker41 »

2021 Disposable household income after taxes and including employer retirement contributions: about $114k.

Spending: about $30k.

Saving: about $84k, or 73%.

If we were to use “normal” non-pandemic spending of $34k, our saving would be $80k, or about 70%.
85% Global Stock, 15% US Fixed Income
User avatar
spdoublebass
Posts: 889
Joined: Thu Apr 27, 2017 10:04 pm
Location: NY

Re: What percentage of income do you save/invest?

Post by spdoublebass »

EddyB wrote: Fri Sep 17, 2021 12:08 pm
spdoublebass wrote: Fri Sep 17, 2021 10:41 am
EddyB wrote: Fri Sep 17, 2021 10:10 am
spdoublebass wrote: Thu Sep 16, 2021 11:57 pm
AK59 wrote: Thu Sep 16, 2021 11:46 pm I am curious to where everyone is with this.

With your monthly or yearly income how much do you save or invest each year?

After maxing out my retirement accounts I put the rest in my brokerage account which is coming out to about 40% of my income this year, up from 25% last year.

My emergency fund is strong, but I drop about another 5% of my monthly income in it to build some cash reserves for that "f you" money or fun purchase.
Percentages aren’t everything.
I’m much more impressed when someone saves 25% of $50K than $500k
I understand the sentiment, but many are responding in terms of gross pay, so I also give some credit (in assessing how impressed I am!) for the fact that the higher earner is likely spending a much lower percentage of after-tax income. That takes discipline, at least.
The same would apply to the person spending 25% of their gross pay of $50K. That takes more discipline.
OK, but that’s not the number people have been posting or even what you used in your earlier statement. The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income.
It's actually exactly what I said in my original statement which was:
Percentages aren’t everything.
I’m much more impressed when someone saves 25% of $50K than $500k
I'm comparing two people who save 25% of their gross income. One makes $50K gross, the other $500K.
I'm trying to think, but nothing happens
smitcat
Posts: 13300
Joined: Mon Nov 07, 2016 9:51 am

Re: What percentage of income do you save/invest?

Post by smitcat »

EddyB wrote: Fri Sep 17, 2021 12:08 pm
spdoublebass wrote: Fri Sep 17, 2021 10:41 am
EddyB wrote: Fri Sep 17, 2021 10:10 am
spdoublebass wrote: Thu Sep 16, 2021 11:57 pm
AK59 wrote: Thu Sep 16, 2021 11:46 pm I am curious to where everyone is with this.

With your monthly or yearly income how much do you save or invest each year?

After maxing out my retirement accounts I put the rest in my brokerage account which is coming out to about 40% of my income this year, up from 25% last year.

My emergency fund is strong, but I drop about another 5% of my monthly income in it to build some cash reserves for that "f you" money or fun purchase.
Percentages aren’t everything.
I’m much more impressed when someone saves 25% of $50K than $500k
I understand the sentiment, but many are responding in terms of gross pay, so I also give some credit (in assessing how impressed I am!) for the fact that the higher earner is likely spending a much lower percentage of after-tax income. That takes discipline, at least.
The same would apply to the person spending 25% of their gross pay of $50K. That takes more discipline.
OK, but that’s not the number people have been posting or even what you used in your earlier statement. The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income.
"The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income."

And the typical $500K earner who saves 25% of gross income is saving a higher percentage of their net income.
Not sure what the point is with these facts though....
sailaway
Posts: 8215
Joined: Fri May 12, 2017 1:11 pm

Re: What percentage of income do you save/invest?

Post by sailaway »

smitcat wrote: Fri Sep 17, 2021 12:34 pm [
And the typical $500K earner who saves 25% of gross income is saving a higher percentage of their net income.
Not sure what the point is with these facts though....
The point is it somehow always becomes a competition, rather than a measure of meeting one's own goals. At that point, savings rate becomes useless.
smitcat
Posts: 13300
Joined: Mon Nov 07, 2016 9:51 am

Re: What percentage of income do you save/invest?

Post by smitcat »

sailaway wrote: Fri Sep 17, 2021 12:40 pm
smitcat wrote: Fri Sep 17, 2021 12:34 pm [
And the typical $500K earner who saves 25% of gross income is saving a higher percentage of their net income.
Not sure what the point is with these facts though....
The point is it somehow always becomes a competition, rather than a measure of meeting one's own goals. At that point, savings rate becomes useless.
OK - maybe that is the reason I do not understand.
If it is a competition what makes for a winner? What makes for a loser?
wrongfunds
Posts: 3187
Joined: Tue Dec 21, 2010 2:55 pm

Re: What percentage of income do you save/invest?

Post by wrongfunds »

I think that this topic gets created on average every 17.95 weeks. Is my calculations off?
makeitcount
Posts: 288
Joined: Wed Aug 01, 2018 8:07 pm

Re: What percentage of income do you save/invest?

Post by makeitcount »

I don't worry too much about the percentage we save.
Our goal is to save about as much as we spend. We typically meet that goal and occasionally do a bit better.
"Yeah, well, you know, that's just like, uh, your opinion, man." - J. Lebowski
User avatar
spdoublebass
Posts: 889
Joined: Thu Apr 27, 2017 10:04 pm
Location: NY

Re: What percentage of income do you save/invest?

Post by spdoublebass »

smitcat wrote: Fri Sep 17, 2021 1:02 pm
sailaway wrote: Fri Sep 17, 2021 12:40 pm
smitcat wrote: Fri Sep 17, 2021 12:34 pm [
And the typical $500K earner who saves 25% of gross income is saving a higher percentage of their net income.
Not sure what the point is with these facts though....
The point is it somehow always becomes a competition, rather than a measure of meeting one's own goals. At that point, savings rate becomes useless.
OK - maybe that is the reason I do not understand.
If it is a competition what makes for a winner? What makes for a loser?

I guess what I was trying to point out that some people get caught up percentages. Specifically what percent of gross pay do you save. The issue with this is that someone could be saving 25% of their gross pay and not be able to afford something say like a car and someone else could be saving 25% of their gross pay and have a Lexus.

Both are fine humans. But I personally give a mental high five to the person who goes without because they value saving.

To be more direct. It was a lot harder for me to save when I made $30K a year gross. I was like how can people actually save 25%?
Maxing my Roth IRA was 20% of my income.

Then I started making more money and realized this higher savings rate stuff isn’t that hard anymore.
I'm trying to think, but nothing happens
Markus003
Posts: 55
Joined: Mon Sep 06, 2021 3:49 pm
Location: Michigan

Re: What percentage of income do you save/invest?

Post by Markus003 »

Saved as much as I could throughout the years.
Averaged around 34% of gross over 25 years or so.
Income around $140k.
Bullhead5829
Posts: 28
Joined: Sun Mar 29, 2020 2:47 pm

Re: What percentage of income do you save/invest?

Post by Bullhead5829 »

pizzy wrote: Fri Sep 17, 2021 8:36 am
Bullhead5829 wrote: Fri Sep 17, 2021 8:29 am I was in my 12th year of retirement in 2020. Saved 53 percent of $114k gross income.
I'm in my 30's so I never really thought about this... but, is it normal for people to save during retirement? Is the $114k income "forced" (e.g. pension) and you just can't find a way to spend it all?
In my case, if it wasn't spent, it was by definition saved/invested, and was the portion of net pension not spent, plus all of the passive income from investments which was either reinvested or deposited in a savings account. Ironically, being single, my largest expense for the past 25 years has been federal and state income taxes. In my last 10 years of employment, those were 3x the annual mortgage expense of my first house, and in these 12 years of retirement over 2x the annual mortgage expense of my first house, which took every other paycheck for 19 years to pay off.
sjl333
Posts: 305
Joined: Sun Apr 20, 2014 2:59 pm

Re: What percentage of income do you save/invest?

Post by sjl333 »

After all taxes, my approximate take home pay is 20K/month, I spend roughly 4-5K (i eat out a lot) and spend quite a bit on the weekends going out / traveling, so approximate savings rate is 75%
afan
Posts: 8191
Joined: Sun Jul 25, 2010 4:01 pm

Re: What percentage of income do you save/invest?

Post by afan »

Last time I checked was years ago.
Based on gross (pretax, before any payroll deductions) earned income.
~ 46% saved
~ 31% paid in taxes
~23% spent.

I count real estate and sales taxes as "spending", rather than "taxes". I could reduce both by buying less and switching to a cheaper house.

At that time, we were still paying tuition.
Since then, expenses have gone down and income up. Maybe 50% savings on gross income now?
Last edited by afan on Fri Sep 17, 2021 1:39 pm, edited 1 time in total.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
BogleHead1008
Posts: 156
Joined: Fri Jul 23, 2021 8:44 am

Re: What percentage of income do you save/invest?

Post by BogleHead1008 »

All the savings you are posting, is it after After-tax (including 529, roth) or pre-tax (including retirement contributions, any IRAs)?

I have no set save spending, but anything not spent goes to saving.. varies by year and expenses (housing is a money pit)...
namajones
Posts: 778
Joined: Sat Aug 08, 2020 12:41 pm

Re: What percentage of income do you save/invest?

Post by namajones »

65.

Not sure what use this info is.
BogleHead1008
Posts: 156
Joined: Fri Jul 23, 2021 8:44 am

Re: What percentage of income do you save/invest?

Post by BogleHead1008 »

namajones wrote: Fri Sep 17, 2021 1:50 pm 65.

Not sure what use this info is.
Someone here said "My expenses have nothing to do with your expenses" ... same goes for saving... but a pattern of savers is what this thread might establish... not that it helps the most... but might help some to start tracking it.
L84SUPR
Posts: 343
Joined: Sat Feb 01, 2014 12:28 pm

Re: What percentage of income do you save/invest?

Post by L84SUPR »

Our savings rate is equal to the way I act...half my age.

This is the best rule of thumb I have ever come across and was instrumental in preventing lifestyle creep for us.
1/3rd VTWAX, 1/3rd Wellington, 1/3rd G Fund | All models are wrong. Some are useful.
tim1999
Posts: 4205
Joined: Tue Dec 16, 2008 6:16 am

Re: What percentage of income do you save/invest?

Post by tim1999 »

For me, 30% of gross is basically "automated" savings/investment via payroll deductions and automatic transfers. I receive about another 5% of gross in employer matching. Above that, there is usually another 2-8% of what I'd call "discretionary savings" depending on what unforeseen expenses, splurges, or bonuses may arise in a given year. Sometimes even more than 8% if I get a good bonus at work, since I tend to save at least half of those. Some of this "discretionary savings" gets spent later for car purchases, major home improvements/repairs, etc. I'd guess my income is very likely in the bottom half of the actively-employed Bogleheads, maybe even bottom third.
Last edited by tim1999 on Fri Sep 17, 2021 2:49 pm, edited 1 time in total.
Glockenspiel
Posts: 2438
Joined: Thu Feb 08, 2018 12:20 pm

Re: What percentage of income do you save/invest?

Post by Glockenspiel »

Approximately 30-35%. We're currently 37 and on track to retire by our early 50s.
User avatar
cflannagan
Posts: 1208
Joined: Sun Oct 21, 2007 11:44 am
Location: Working Remotely

Re: What percentage of income do you save/invest?

Post by cflannagan »

As much as I can. 15% easily, but I try to push that up to 20%, 25% of our household salary.
emu1351
Posts: 8
Joined: Sun Jun 07, 2020 8:11 pm

Re: What percentage of income do you save/invest?

Post by emu1351 »

We’re investing 25% on gross of $230k. Employer match adds another 9% of gross for total of 34%. Have steadily increased this and hope to hit 40% in next 2-3 years as we are close to paying off all debt outside the mortgage.
Topic Author
AK59
Posts: 140
Joined: Fri Aug 16, 2019 7:52 pm

Re: What percentage of income do you save/invest?

Post by AK59 »

spdoublebass wrote: Thu Sep 16, 2021 11:57 pm
AK59 wrote: Thu Sep 16, 2021 11:46 pm I am curious to where everyone is with this.

With your monthly or yearly income how much do you save or invest each year?

After maxing out my retirement accounts I put the rest in my brokerage account which is coming out to about 40% of my income this year, up from 25% last year.

My emergency fund is strong, but I drop about another 5% of my monthly income in it to build some cash reserves for that "f you" money or fun purchase.
Percentages aren’t everything.
I’m much more impressed when someone saves 25% of $50K than $500k
Percentages are not, but they are a good metric to work off, especially when factoring in AA.

I don't think there is a right way or wrong way, just a way for you. I was simply asking in terms of how I view everything/
Topic Author
AK59
Posts: 140
Joined: Fri Aug 16, 2019 7:52 pm

Re: What percentage of income do you save/invest?

Post by AK59 »

KlangFool wrote: Fri Sep 17, 2021 11:30 am
AK59 wrote: Thu Sep 16, 2021 11:46 pm I am curious to where everyone is with this.

With your monthly or yearly income how much do you save or invest each year?

After maxing out my retirement accounts I put the rest in my brokerage account which is coming out to about 40% of my income this year, up from 25% last year.

My emergency fund is strong, but I drop about another 5% of my monthly income in it to build some cash reserves for that "f you" money or fun purchase.
AK59,

I am curious as to how many percents of your current annual expense do you save every year?

<<After maxing out my retirement accounts I put the rest in my brokerage account which is coming out to about 40% of my income this year, up from 25% last year. >>

The problem with saving rate based on income is which income do you refer to?

A) Gross income?

B) After-tax income?

C) Any other definition of income as anyone like.

KlangFool
Good point, this is after tax income.

As my after-tax income grows I try to maintain the percentage I save/invest and/or increase it slowly over time. This allows me to manage the lifestyle creep a bit more while still enjoying life and not being too bound to the numbers while setting up for the future.
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: What percentage of income do you save/invest?

Post by KlangFool »

AK59 wrote: Sat Sep 18, 2021 10:37 am
Good point, this is after tax income.

As my after-tax income grows I try to maintain the percentage I save/invest and/or increase it slowly over time. This allows me to manage the lifestyle creep a bit more while still enjoying life and not being too bound to the numbers while setting up for the future.
AK59,

Then, how do you account for

1) Pre-tax savings like 401K/HSA?

2) Employer matching contribution?

The bottom line is it is meaningless. Gross income makes a lot more sense than after-tax income. But, saving rate based on annual expense is a lot more useful.

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
pizzy
Posts: 4339
Joined: Tue Jun 02, 2020 6:59 pm

Re: What percentage of income do you save/invest?

Post by pizzy »

KlangFool wrote: Sat Sep 18, 2021 10:44 am
saving rate based on annual expense is a lot more useful.
Savings as a % of Spending+Taxes: Savings / (Spending + Taxes)

2020: 108%

2021 YTD (8/31): 126%

2021 Proj: 96%
Vanguard/Fidelity | 76% US Stock | 16% Int'l Stock | 8% Cash
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: What percentage of income do you save/invest?

Post by KlangFool »

pizzy wrote: Sat Sep 18, 2021 11:17 am
KlangFool wrote: Sat Sep 18, 2021 10:44 am
saving rate based on annual expense is a lot more useful.
Savings as a % of Spending+Taxes: Savings / (Spending + Taxes)

2020: 108%

2021 YTD (8/31): 126%

2021 Proj: 96%
Get rid of the taxes in your formula.

It is savings / Spending. No taxes.

When a person is FI or Retired, they do not pay the same amount of taxes. In many cases, it is ZERO or negligible.

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
mettiou
Posts: 1
Joined: Wed Jun 16, 2021 2:43 pm

Re: What percentage of income do you save/invest?

Post by mettiou »

YTD: 77%

Had been aiming for 65% though paying off the mortgage at the beginning of the year has boosted that along with alternate income streams. (I do not live in USA.)
bling
Posts: 1456
Joined: Sat Jan 21, 2012 11:49 am

Re: What percentage of income do you save/invest?

Post by bling »

AK59 wrote: Sat Sep 18, 2021 10:35 am
spdoublebass wrote: Thu Sep 16, 2021 11:57 pm
AK59 wrote: Thu Sep 16, 2021 11:46 pm I am curious to where everyone is with this.

With your monthly or yearly income how much do you save or invest each year?

After maxing out my retirement accounts I put the rest in my brokerage account which is coming out to about 40% of my income this year, up from 25% last year.

My emergency fund is strong, but I drop about another 5% of my monthly income in it to build some cash reserves for that "f you" money or fun purchase.
Percentages aren’t everything.
I’m much more impressed when someone saves 25% of $50K than $500k
Percentages are not, but they are a good metric to work off, especially when factoring in AA.

I don't think there is a right way or wrong way, just a way for you. I was simply asking in terms of how I view everything/
Context matters.

For a high income earner, maxing out their 401k/IRA is a forgone conclusion.

For the average American making the average 50k, they need to choose where their savings go because they can't afford to do it all.

If both these people saved 50%, it's certainly much more impressive for the average earner, but their lifestyle/options won't be comparable.
pizzy
Posts: 4339
Joined: Tue Jun 02, 2020 6:59 pm

Re: What percentage of income do you save/invest?

Post by pizzy »

KlangFool wrote: Sat Sep 18, 2021 11:26 am
pizzy wrote: Sat Sep 18, 2021 11:17 am
KlangFool wrote: Sat Sep 18, 2021 10:44 am
saving rate based on annual expense is a lot more useful.
Savings as a % of Spending+Taxes: Savings / (Spending + Taxes)

2020: 108%

2021 YTD (8/31): 126%

2021 Proj: 96%
Get rid of the taxes in your formula.

It is savings / Spending. No taxes.

When a person is FI or Retired, they do not pay the same amount of taxes. In many cases, it is ZERO or negligible.

KlangFool
Ignoring taxes:

2020: 155%

2021 YTD (8/31): 185%

2021 Proj: 150%
Vanguard/Fidelity | 76% US Stock | 16% Int'l Stock | 8% Cash
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: What percentage of income do you save/invest?

Post by KlangFool »

pizzy wrote: Sat Sep 18, 2021 2:09 pm
KlangFool wrote: Sat Sep 18, 2021 11:26 am
pizzy wrote: Sat Sep 18, 2021 11:17 am
KlangFool wrote: Sat Sep 18, 2021 10:44 am
saving rate based on annual expense is a lot more useful.
Savings as a % of Spending+Taxes: Savings / (Spending + Taxes)

2020: 108%

2021 YTD (8/31): 126%

2021 Proj: 96%
Get rid of the taxes in your formula.

It is savings / Spending. No taxes.

When a person is FI or Retired, they do not pay the same amount of taxes. In many cases, it is ZERO or negligible.

KlangFool
Ignoring taxes:

2020: 155%

2021 YTD (8/31): 185%

2021 Proj: 150%
Great!

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
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: What percentage of income do you save/invest?

Post by KlangFool »

spdoublebass wrote: Fri Sep 17, 2021 1:10 pm

Then I started making more money and realized this higher savings rate stuff isn’t that hard anymore.
spdoublebass,

I disagreed.

If that is true, why folks in my affluent neighborhood with a median annual household income of 150K still save less than 5% of their gross income?

It is easy and simple if you live in a country with an average gross saving rate of 30+%. You just have to live like normal people. However, if you live in a country with an average gross saving rate less than 5%, you have to resist peer pressure and live one level below your income peers to achieve high saving rate. You have to choose to be abnormal.

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
User avatar
avg3fund
Posts: 38
Joined: Tue Sep 01, 2020 6:55 am

Re: What percentage of income do you save/invest?

Post by avg3fund »

Currently at 80k income, and currently saving 32k if I don't include the employer match.
User avatar
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: What percentage of income do you save/invest?

Post by AnnetteLouisan »

I track net worth and it goes up by 15-17k per month. I spend about 1/5 of my net.
User avatar
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: What percentage of income do you save/invest?

Post by AnnetteLouisan »

CardioMD wrote: Fri Sep 17, 2021 6:13 am
Bh1984 wrote: Fri Sep 17, 2021 1:12 am
spdoublebass wrote: Thu Sep 16, 2021 11:57 pm
AK59 wrote: Thu Sep 16, 2021 11:46 pm I am curious to where everyone is with this.

With your monthly or yearly income how much do you save or invest each year?

After maxing out my retirement accounts I put the rest in my brokerage account which is coming out to about 40% of my income this year, up from 25% last year.

My emergency fund is strong, but I drop about another 5% of my monthly income in it to build some cash reserves for that "f you" money or fun purchase.
Percentages aren’t everything.
I’m much more impressed when someone saves 25% of $50K than $500k
I'm not sure I totally agree with this logic. Percentages are a great metric especially as income moves. For instance I have saved over 50% of my income over my entire 20 year working period, including when I was a teenager. Point is I have always looked at money in percentages and it's allowed me to always remain in the boundaries.

AA is all percentage based so I'm very curious about your logic.
You’ve never been poor. I understand completely.
“He wasn’t a rich man. He was a poor man who had money. And that’s not the same thing.”

— F. Scott Fitzgerald, The Great Gatsby
Last edited by AnnetteLouisan on Sun Sep 19, 2021 9:50 am, edited 1 time in total.
EddyB
Posts: 2431
Joined: Fri May 24, 2013 3:43 pm

Re: What percentage of income do you save/invest?

Post by EddyB »

smitcat wrote: Fri Sep 17, 2021 12:34 pm
EddyB wrote: Fri Sep 17, 2021 12:08 pm
spdoublebass wrote: Fri Sep 17, 2021 10:41 am
EddyB wrote: Fri Sep 17, 2021 10:10 am
spdoublebass wrote: Thu Sep 16, 2021 11:57 pm

Percentages aren’t everything.
I’m much more impressed when someone saves 25% of $50K than $500k
I understand the sentiment, but many are responding in terms of gross pay, so I also give some credit (in assessing how impressed I am!) for the fact that the higher earner is likely spending a much lower percentage of after-tax income. That takes discipline, at least.
The same would apply to the person spending 25% of their gross pay of $50K. That takes more discipline.
OK, but that’s not the number people have been posting or even what you used in your earlier statement. The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income.
"The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income."

And the typical $500K earner who saves 25% of gross income is saving a higher percentage of their net income.
Not sure what the point is with these facts though....
The point is that if people want to judge this at all (which seems implied by spdoublebass‘s comment about being “impressed”), I (me, personally) would consider saving a higher multiple of spending to be part of the consideration. The higher earner (and tax payer) generally saves a higher multiple of spending than the lower earner who saves the same percentage of gross income. I guess I’m more “impressed” by a faster march toward financial independence (although, while I think about it in terms of my own savings, I don’t really feel like I have reason to make, or sufficient context for making, some kind of judgment about others on the basis of these numbers).
MHA556
Posts: 100
Joined: Wed Sep 01, 2021 8:01 am

Re: What percentage of income do you save/invest?

Post by MHA556 »

Everything we invest is kind of above and beyond- we should meet our expenses just with my decent pension and my wife’s smaller one, but eventually my COLA will fall behind and we will need a bit more. We also will have SS and our retirement savings, plus half paid medical from my former employer after my wife retires (I am already retired), and I have some VEBA money for that.

My pension plan got messed with, for the worse, but they eventually started sending my 6% contributions to an account which was returned to me around 15 yrs later. I did a 457 account also and tried to at least match the 6% amount but sometimes it was more, other times less, it probably was an average of 5-6%. VEBA was 1%. I ended up with more money in my 457 than in the state account, not sure if I saved more though or just invested it better.

Wife will get a smaller pension with a better COLA in about 10 yrs. Her retirement plan additionally requires her to save into a 403 like fund, she used to contribute just the minimum 5% into the other part of her retirement plan, but I was able to get her to bump that to 15% some years back.

If we did not have the pensions and SS, we would be somewhat short of being able to meet our expected expenses, but likely could do it if we had to without a significant downgrade in quality of life. Having multiple income streams is a good thing.

My savings varied a lot due to sustaining some serious injuries over the years and having income with major changes over some years. My advice is to save as much as you can ASAP, that way if something happens it does not totally derail your retirement date and plans.
smitcat
Posts: 13300
Joined: Mon Nov 07, 2016 9:51 am

Re: What percentage of income do you save/invest?

Post by smitcat »

EddyB wrote: Sun Sep 19, 2021 4:50 am
smitcat wrote: Fri Sep 17, 2021 12:34 pm
EddyB wrote: Fri Sep 17, 2021 12:08 pm
spdoublebass wrote: Fri Sep 17, 2021 10:41 am
EddyB wrote: Fri Sep 17, 2021 10:10 am

I understand the sentiment, but many are responding in terms of gross pay, so I also give some credit (in assessing how impressed I am!) for the fact that the higher earner is likely spending a much lower percentage of after-tax income. That takes discipline, at least.
The same would apply to the person spending 25% of their gross pay of $50K. That takes more discipline.
OK, but that’s not the number people have been posting or even what you used in your earlier statement. The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income.
"The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income."

And the typical $500K earner who saves 25% of gross income is saving a higher percentage of their net income.
Not sure what the point is with these facts though....
The point is that if people want to judge this at all (which seems implied by spdoublebass‘s comment about being “impressed”), I (me, personally) would consider saving a higher multiple of spending to be part of the consideration. The higher earner (and tax payer) generally saves a higher multiple of spending than the lower earner who saves the same percentage of gross income. I guess I’m more “impressed” by a faster march toward financial independence (although, while I think about it in terms of my own savings, I don’t really feel like I have reason to make, or sufficient context for making, some kind of judgment about others on the basis of these numbers).
I believe a metric of savings vs expenses in life is a valuable one to tract if that helps.
At the same time I have never understood why there would be any value of tracking a % of savings to gross or net income.
There is even less value of knowing what someone elses % off savings to gross or net income is - does not tell you much of anything that has to do with your life.
A few reasons why...
- do these other folks have the same goals to live like yours?
- are these other folks % of savings on gross income at all relative to FI or FIRE?
- are these other folks self employed?
- will these other folks also collect a pension?
etc
dcabler
Posts: 4539
Joined: Wed Feb 19, 2014 10:30 am
Location: TX

Re: What percentage of income do you save/invest?

Post by dcabler »

I don't target any sort of percentage. But what I do is as follows:

1. I front-end load my 401K such that I achieve the max withholdings by March. This is mainly because, historically, my industry has layoffs the second half of the year and I wanted to layoff-proof my 401K withholdings. I end up with a true-up deposit from my employer for the previous year which happens anywhere from April to June. I don't treat it as a deposit, but equivalent to returns just as I do with the matching I do achieve before I max out. It does mean that I need to keep a few months living expenses in my checking account during this time.
2. On the first of each month I transfer a fixed dollar amount from my checking to my Fidelity Brokerage account and purchase my favorite ETF.
3. Any RSU's that vest are immediately sold and, unless we happen to have some big dollar spending need, all proceeds are deposited into my Fidelity brokerage account.
4. Each quarter, I sell ESPP shares as soon as they appear at E-trade and all proceeds are deposited into my Fidelity brokerage account.
5. HSA withholdings are set up to be evenly spread over the course of the year and are set at the maximum for a family. My company doesn't contribute anything additional.

Again, I don't target a percentage and I suppose I could go back and calculate it, but it wouldn't change anything I'm doing which at this point in my career is to just save as much as I can.

Cheers.
catlady
Posts: 235
Joined: Sat Mar 26, 2016 8:31 pm

Re: What percentage of income do you save/invest?

Post by catlady »

1.5-3x annual expenses depending on RSUs and bonuses or around 45-55% of gross.
User avatar
spdoublebass
Posts: 889
Joined: Thu Apr 27, 2017 10:04 pm
Location: NY

Re: What percentage of income do you save/invest?

Post by spdoublebass »

EddyB wrote: Sun Sep 19, 2021 4:50 am
smitcat wrote: Fri Sep 17, 2021 12:34 pm
EddyB wrote: Fri Sep 17, 2021 12:08 pm
spdoublebass wrote: Fri Sep 17, 2021 10:41 am
EddyB wrote: Fri Sep 17, 2021 10:10 am

I understand the sentiment, but many are responding in terms of gross pay, so I also give some credit (in assessing how impressed I am!) for the fact that the higher earner is likely spending a much lower percentage of after-tax income. That takes discipline, at least.
The same would apply to the person spending 25% of their gross pay of $50K. That takes more discipline.
OK, but that’s not the number people have been posting or even what you used in your earlier statement. The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income.
"The hypothetical $50k earner who saves 25% of income is generally spending a much higher percentage of gross income than the hypothetical $500k earner who saves 25% of gross income."

And the typical $500K earner who saves 25% of gross income is saving a higher percentage of their net income.
Not sure what the point is with these facts though....
The point is that if people want to judge this at all (which seems implied by spdoublebass‘s comment about being “impressed”), I (me, personally) would consider saving a higher multiple of spending to be part of the consideration. The higher earner (and tax payer) generally saves a higher multiple of spending than the lower earner who saves the same percentage of gross income. I guess I’m more “impressed” by a faster march toward financial independence (although, while I think about it in terms of my own savings, I don’t really feel like I have reason to make, or sufficient context for making, some kind of judgment about others on the basis of these numbers).
I probably shouldn't have used the word impressed.
My only point was that I would prefer a metric that would be valuable both ways. If you make less than someone does it benefit you to know that they save 50% for retirement? Also if you make a lot more money than someone, does it benefit you to know they save 20%?

All I was trying to say is that if you made $50K a year (or $30K whatever), you might not be able to save 50% and live, especially if you have kids. If you make $500K a year you can find a way to save 50%, if you choose not to, that's a choice that the person making $50K doesn't get to make. Which is what Klangfool was pointing out above, people who make more money have other pressures.
I'm trying to think, but nothing happens
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: What percentage of income do you save/invest?

Post by KlangFool »

spdoublebass wrote: Sun Sep 19, 2021 8:28 am
I probably shouldn't have used the word impressed.
My only point was that I would prefer a metric that would be valuable both ways. If you make less than someone does it benefit you to know that they save 50% for retirement? Also if you make a lot more money than someone, does it benefit you to know they save 20%?

All I was trying to say is that if you made $50K a year (or $30K whatever), you might not be able to save 50% and live, especially if you have kids. If you make $500K a year you can find a way to save 50%, if you choose not to, that's a choice that the person making $50K doesn't get to make. Which is what Klangfool was pointing out above, people who make more money have other pressures.
spdoublebass,

<<you might not be able to save 50% and live>>

And, we are conditioned by our culture and upbringing as to what "live" mean. My ancestor came from a place that had 800+ famines across 800+ years. They were conditioned to save even if they starved. The alternative was not to survive. After 800+ years, not many of those did not save survived the multiple famines. Meanwhile, for some other culture, saving while starve would not be acceptable.

In summary, the level of income as what we considered as able to save 50% and live is different. If someone in the USA had lived in the third world countries, they would had a major eye opening as to what others means by living. The standard of living of poverty in the USA would had been considered as luxury living in other part of the world.

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
sailaway
Posts: 8215
Joined: Fri May 12, 2017 1:11 pm

Re: What percentage of income do you save/invest?

Post by sailaway »

spdoublebass wrote: Sun Sep 19, 2021 8:28 am

I probably shouldn't have used the word impressed.
My only point was that I would prefer a metric that would be valuable both ways. If you make less than someone does it benefit you to know that they save 50% for retirement? Also if you make a lot more money than someone, does it benefit you to know they save 20%?

What does it benefit me to know what someone else is saving at all?? I mean, I know I worry about my siblings and ILs that I know aren't saving anything at all, so it benefits my peace of mind to know that one sibling is saving, even without knowing the %. But other than that, what benefit is there to knowing someone else's savings rate?
Nicolas
Posts: 4923
Joined: Wed Aug 22, 2012 7:41 am

Re: What percentage of income do you save/invest?

Post by Nicolas »

AnnetteLouisan wrote: Sun Sep 19, 2021 4:30 am “He wasn’t a rich man. He was a poor man who had money. And that’s not the same thing.”

— Ernest Hemingway, The Great Gatsby
Wasn’t that F. Scott Fitzgerald?
User avatar
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: What percentage of income do you save/invest?

Post by AnnetteLouisan »

Nicolas wrote: Sun Sep 19, 2021 9:47 am
AnnetteLouisan wrote: Sun Sep 19, 2021 4:30 am “He wasn’t a rich man. He was a poor man who had money. And that’s not the same thing.”

— Ernest Hemingway, The Great Gatsby
Wasn’t that F. Scott Fitzgerald?
ugh yes sorry. Ill fix it now.
Jags4186
Posts: 8198
Joined: Wed Jun 18, 2014 7:12 pm

Re: What percentage of income do you save/invest?

Post by Jags4186 »

spdoublebass wrote: Sun Sep 19, 2021 8:28 am I probably shouldn't have used the word impressed.
My only point was that I would prefer a metric that would be valuable both ways. If you make less than someone does it benefit you to know that they save 50% for retirement? Also if you make a lot more money than someone, does it benefit you to know they save 20%?

All I was trying to say is that if you made $50K a year (or $30K whatever), you might not be able to save 50% and live, especially if you have kids. If you make $500K a year you can find a way to save 50%, if you choose not to, that's a choice that the person making $50K doesn't get to make. Which is what Klangfool was pointing out above, people who make more money have other pressures.
Impressed is a good word. A person/family with a $500k income can pretty easily save 25% and spend lavishly. A person with a $50k income needs to think carefully about every penny spent in order to maintain that 25% savings rate. And since Social Security will replace a far higher percentage of your income for the $50k worker than the $500k worker, the $50k worker will be in a better position to maintain lifestyle when retirement happens. Of course, that lifestyle will be far more marginal than the $500k person.
helloeveryone
Posts: 1285
Joined: Sun Sep 04, 2016 5:16 pm

Re: What percentage of income do you save/invest?

Post by helloeveryone »

RXfiles wrote: Fri Sep 17, 2021 10:54 am 320k gross

62k pre tax my 403b 457b her 401k. Her HSA
12k roth ira
52k taxable 2k every 2 weeks auto invest in VT.
20k I bonds.
10k in 529

So around 50% of gross is automatically invested.

Then when we build up excess cash we invest that too. Some years pushing 75%.

Our hard expenses are around 1500 a month. We live in super low cost of living area. 3bed 2.5 bath in a good neighborhood was only 150k a couple years ago.
Curious do you have early retirement goal you’re working towards? Or just trying to maximize savings to give you options? We save less aggressively but still way more than others in our work environment with a goal towards FIRE
Post Reply