What percentage of income do you save/invest?

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FrugalInvestor
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Joined: Thu Nov 06, 2008 11:20 pm

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

Post by FrugalInvestor »

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
Exactly. During my working years I saved anywhere from 0% to 80%. The wide range was due primarily to income.
Have a plan, stay the course and simplify. Then ignore the noise!
KlangFool
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Joined: Sat Oct 11, 2008 12:35 pm

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

Post by KlangFool »

hg064754 wrote: Sun Oct 24, 2021 9:31 pm
KlangFool wrote: Sun Oct 24, 2021 9:24 pm
hg064754 wrote: Sun Oct 24, 2021 9:08 pm
KlangFool wrote: Sat Sep 18, 2021 11:26 am
pizzy wrote: Sat Sep 18, 2021 11:17 am

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
This is interesting. What is the maximum amount I can withdraw from a pre-tax account in retirement and still be at zero tax rate (using today's tax bracket.) Assume no other source of income.
hg064754,

1) Why do you need to withdraw from your pre-tax account? You could Roth convert every year.

2) Why should your annual expense needs has anything to do with your Roth Conversion/taxable income?

3) Keep 2 to 3 years of expense in CASH before you retire. Then, your annual Roth conversion and/or withdrawal does not have to be the same as your annual expense.

4) Do you file your own taxes? If yes, what was deducted from your gross income before you get your taxable income? Standard deduction and what else?

KlangFool
I am not retired yet. Still working. My comment was a reaction to your statement that FI/retired people don't pay that much taxes and I was simply trying to determine the upper limit of how much one can takeout/convert pre-tax money at zero tax rate. My understanding is that the upper limit is $12.5k/person this year.
You should check out this thread.

viewtopic.php?t=87471
"How to pay ZERO taxes in retirement with 6-figure expenses"

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

Post by Drxgs »

Single, no debts, LCOL, inexpensive hobbies

139k net - 34k yearly expenses = 75% savings rate, straight to index funds.
mdavis
Posts: 41
Joined: Sun Mar 18, 2007 3:10 am

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

Post by mdavis »

>90%.

- max deferred comp
- max HSA
- max 401k
- max 2-step Roth
- max Mega
- max SPP
- max match

-mark
59Gibson
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Re: What percentage of income do you save/invest?

Post by 59Gibson »

Our household income fluctuated, sales and self employed. We always maxed out the great yrs, we hit around 70% of net take home a couple of them.
jsapiandante
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Re: What percentage of income do you save/invest?

Post by jsapiandante »

Before we switched to part time, we were able to save 1.5 years (50% of gross income) of expenses every year by maxing out 401k, simple ira, trad ira for one spouse, Roth IRA for the other spouse, and the rest going to taxable. Now that we are part time, we are still able to max out all tax deferred and Roth but have contributed much less if at all to taxable (around 25-30% of gross). Life is still good.
Shorty
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Re: What percentage of income do you save/invest?

Post by Shorty »

I love your response. Especially given your username. :beer
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.
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Lee_WSP
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Location: Arizona

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

Post by Lee_WSP »

It may be more useful to think of he savings rate as a multiple of your marginal tax bracket including FICA taxes.

Maybe shoot for 100%.
Harri88
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Location: Midwest

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

Post by Harri88 »

There are some phenomenal savers on this board. We are on track to save 41.5% this year. I'm proud of that. This will be the most we've saved in a year! Past couple months we've spent less so I moved that $$ in to long term savings. For the past 5 years we've been in the Super to Advanced super savers. I dont see us trying for Extreme but who knows ;) Right now its icing on the cake.
fyre4ce
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Re: What percentage of income do you save/invest?

Post by fyre4ce »

Retirement contributions: ~20%
Employer match: ~3%
Other saving (taxable, principal portion of mortgage payment, 529, HSA): ~20%
Total: ~43%
vaguely
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Joined: Mon May 17, 2021 2:22 pm

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

Post by vaguely »

Usually around 60% of gross for the last 4 years. It was around 25% of gross for the 3 years before that (before I found out about FI). Trying to cram in as much as possible before our first kid arrives soon.
Last edited by vaguely on Tue Oct 26, 2021 7:11 am, edited 1 time in total.
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sf_tech_saver
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Re: What percentage of income do you save/invest?

Post by sf_tech_saver »

AK59 wrote: Sun Oct 24, 2021 12:50 pm
sf_tech_saver wrote: Sun Sep 19, 2021 3:28 pm I try to save around ~$400k a year, or about ~50% of my net. As my portfolio passed $5M I've been tempted to splurge on vacations and travel to stay motivated to keep working and investing in my own human capital.

I could do better ... maybe writing it down will help :)

401k: 19k
401/after-tax roth: $30k
Defered Comp: $100k
Bonus: ~$100k
Equity Comp: $200-300k

I've been debating cranking my deferred comp all the way up to 50-75% to just sock away more pre-tax automatically. It's nice as you can only adjust it every Jan so once you set it you are locked in. But the higher I set the deferred (currently 25% of base) the more I sometimes need to spend my equity grant income.

*

I explained financial/investment management to a friend just starting yesterday as 4 steps:

#1: Save greater than 25% of income ideally 50%
#2: Pay off any debt until you reach your mortgage
#3: Buy as much VTI as you can
#4: If you must take a loan for a car etc you can now loan against your assets for far less

I repeated that there is no reason to think about 2-4 until you master #1.
Why are you so bug on VTI versus other options?
VTI vs. VOO vs. some VT as well isn't really where the math gets interesting. #1 is where the action really is!
VTI is a modern marvel
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