## How much do you save?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
rdwarejr
Posts: 15
Joined: Tue Sep 28, 2010 11:49 am

### How much do you save?

I am considering reevaluating my savings/investment percentages and was wondering what bogleheads do?

Age: 25

Annual Income: \$65K

Investment contribution per month: \$742.23 (Roughly 14%)

General Savings per month: \$400 (Roughly 7.5%)

Christmas Fund per month: \$200 (Roughly 4%)

So far, I've accumulated roughly \$20K in savings and another \$20K in investments.

Nummerkins
Posts: 294
Joined: Tue Jun 01, 2010 4:41 pm

### Re: How much do you save?

Do you have any debt?

Topic Author
rdwarejr
Posts: 15
Joined: Tue Sep 28, 2010 11:49 am

### Re: How much do you save?

No, I don't.

mac808
Posts: 479
Joined: Mon Sep 19, 2011 8:45 pm

### Re: How much do you save?

Are you single? If so, one challenge may be to maintain that savings rate while in a relationship. When I was single, I lived like a monk (and enjoyed it), but once I got into a relationship, I had to loosen up a bit.

mhc
Posts: 3853
Joined: Mon Apr 04, 2011 10:18 pm
Location: NoCo

### Re: How much do you save?

Without doing a Monte Carlo sim, you should save about 11% of your income based on the following:

Assume your current income is 1.
Assume you need 80% of your income in retirement.
Assume SS will replace 25% of your income in retirement.
You retirement income in terms of current income is: 0.6 = 1 * 0.80 * (1-0.25)

With a 4% SWR, you need 15x your current income

Assume 5% real return
Retire in 40 years at age 65
Currently have 30% of one years income.

using Excel
=FV(0.05,40,-0.11,-0.3,0) = 15.4

You need to save about 11% of your income. That does not take into taxes and the uncertainty of the future. To be conservative, I would save 15% and maybe 20% if it doesn't cramp your style too much.

You can also play with firecalc.com to get an idea of what you need to save.

kenyan
Posts: 2949
Joined: Thu Jan 13, 2011 12:16 am

### Re: How much do you save?

Be careful what you ask for...many Bogleheads save 40%, 50%, or even more. There are periodic polls around here that illustrate that.

For your situation, unless you're shooting for early retirement, you don't really NEED to save 20+%, but it will help for when life's little surprises crop up. You're doing well with your savings rate and early start, though; very few begin seriously saving in their early or mid twenties.

BTW, I wouldn't consider your Christmas Fund to be savings if it gets spent every year.
Retirement investing is a marathon.

Grt2bOutdoors
Posts: 19841
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

### Re: How much do you save?

kenyan wrote:Be careful what you ask for...many Bogleheads save 40%, 50%, or even more. There are periodic polls around here that illustrate that.

For your situation, unless you're shooting for early retirement, you don't really NEED to save 20+%, but it will help for when life's little surprises crop up. You're doing well with your savings rate and early start, though; very few begin seriously saving in their early or mid twenties.
Careful, many on here started saving the minute someone gave them a coin or had a newspaper route.
My siblings say "I still have the first nickel ever given to me". Today, I can vouch that nickel has compounded several times over.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

scone
Posts: 1455
Joined: Wed Jul 11, 2012 4:46 pm

### Re: How much do you save?

My husband and I are living on about the same amount of money we had when we first got married, 21 years ago. We have banked almost all of the salary increases and any windfalls. We did not engage in "lifestyle inflation" or use debt to buy consumption items, except for homes. So now we are debt free and living on about 25% of our net income. It can be done, but it takes time. Was it worth it for us? Yes! Yes! Yes!
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore

bigred77
Posts: 2012
Joined: Sat Jun 11, 2011 4:53 pm

### Re: How much do you save?

Sounds to me like your doing awsome. The amount of savings going into your "Christmas fund" sounds a bit high unless you have to travel a ways to see family every year or something.

I would make the follwoing suggestion though. If your "investment" money is all in your 401k, open a Roth IRA and throw all your "general savings" in there even if it just sits in a money market account. You can use it as an E-fund and take out contributions at any time, but if you find you can save more later you've utilized that tax advantaged space you'll never get back.

***edited to add: I wouldn't worry too much about monte carlo simulations or saving too much at your age. Just save as much as possible and keep indulgences to a reasonable level. Your saving a good chunk, just maintain at least at your current level moving forward as long as you can.

zaboomafoozarg
Posts: 1988
Joined: Sun Jun 12, 2011 12:34 pm

### Re: How much do you save?

About 50-60% of income, but only so I don't have to work as long (hopefully), and to make up for what will likely be a lower saving rate later in my career.

The Wizard
Posts: 12874
Joined: Tue Mar 23, 2010 1:45 pm

### Re: How much do you save?

Savings rate depends HUGELY on one's age and assets already accumulated or paid for!
WIthout indexing to those things, it's not too meaningful...
Attempted new signature...

hicabob
Posts: 2761
Joined: Fri May 27, 2011 5:35 pm
Location: cruz

### Re: How much do you save?

As much as I can which is about 80% after considerable taxes on a silly-nice income - but then, I'm 56 and plan to be semi-retired in a year or so.

mw1739
Posts: 548
Joined: Mon Mar 21, 2011 5:44 pm

### Re: How much do you save?

As a reference point, I'm same age/salary and have accumulated roughly \$80k in investments since college.

Save, save, save. You never know what the future holds. I view it as front-loading my retirement. If I have to cut back when life's events happen, I will be ok.

thebogledude
Posts: 419
Joined: Thu Jun 09, 2011 12:40 am

### Re: How much do you save?

I think as long as you are able to live below your means then you're doing OK.

Anon1234
Posts: 779
Joined: Sat Feb 26, 2011 10:32 pm

### Re: How much do you save?

Sounds like you are doing great. Comparing to Bogleheads may make you feel average; I save 33-50% (depending on what denominator you like). But, you are saving more than 5X the percentage of the average american. http://research.stlouisfed.org/fred2/series/PSAVERT/

Posts: 1171
Joined: Sun Jul 15, 2012 12:24 am
Location: Southern California

### Re: How much do you save?

Ah, this is how I know I'm going to love this board (especially mw1739's comment about front loading the retirement). It's not just the great help - although that's very awesome too. It's also seeing the responses on this thread, and being able to add my own: approximately two-thirds of what I'm not paying in taxes is going into savings ( 2/3 * (take home + 401(k) contributions )) ... and that's assuming I don't get any bonuses, but I'm certain I will. As per my first post on this forum, I don't even know what I'd spend that on if I weren't saving it.

This doesn't count saving for a car, which I categorize as a want. I have enough in savings for a decent used car, but since I own a young, reliable, paid-for car, I can just keep saving. I estimate at least another five years in my current one. I suppose I should re-categorize the amount I'm saving towards a house from savings and just count portfolio type savings.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.

gofigure
Posts: 240
Joined: Sun Dec 05, 2010 6:42 am
Location: In a van down by the river

### Re: How much do you save?

We're maxing the tax advantaged accounts that are available, two roths and two 401ks. That includes the catch-ups and both 401k's have employer matching benefits. Having saved enough already by most estimates to be on track for a reasonably secure retirement and with 7-10 years more of work ie. saving...., I'm spending some money now on what I hope will be our retirement destination. I might go back to putting some more away at some point...but for now I'm enjoying this project....we're not getting any younger.

22twain
Posts: 1690
Joined: Thu May 10, 2012 5:42 pm

### Re: How much do you save?

mac808 wrote:When I was single, I lived like a monk (and enjoyed it), but once I got into a relationship, I had to loosen up a bit.
That depends on who you get into a relationship with. My wife is more frugal than I am. Her favorite shopping places are Aldi, Big Lots, Family Dollar, and the local thrift store. She aims to never pay more than \$10 for an item of clothing.
My investing princiPLEs do not include absolutely preserving princiPAL.

FinanceFun
Posts: 722
Joined: Mon Nov 28, 2011 9:29 am

### Re: How much do you save?

I was around 56% last year (of gross. Taxes take a big chunk). This year is looking similar 50%-60% range.

FinanceFun
Posts: 722
Joined: Mon Nov 28, 2011 9:29 am

### Re: How much do you save?

gofigure wrote:We're maxing the tax advantaged accounts that are available, two roths and two 401ks. That includes the catch-ups and both 401k's have employer matching benefits. Having saved enough already by most estimates to be on track for a reasonably secure retirement and with 7-10 years more of work ie. saving...., I'm spending some money now on what I hope will be our retirement destination. I might go back to putting some more away at some point...but for now I'm enjoying this project....we're not getting any younger.

Momus
Posts: 566
Joined: Tue Feb 21, 2012 9:23 pm

### Re: How much do you save?

22twain wrote:
mac808 wrote:That depends on who you get into a relationship with. My wife is more frugal than I am. Her favorite shopping places are Aldi, Big Lots, Family Dollar, and the local thrift store. She aims to never pay more than \$10 for an item of clothing.
How do you find a wife like that? One can be so lucky >_>;

FabLab
Posts: 1127
Joined: Mon Oct 18, 2010 12:15 pm

### Re: How much do you save?

GRT2BOUTDOORS wrote:
kenyan wrote:Be careful what you ask for...many Bogleheads save 40%, 50%, or even more. There are periodic polls around here that illustrate that.

For your situation, unless you're shooting for early retirement, you don't really NEED to save 20+%, but it will help for when life's little surprises crop up. You're doing well with your savings rate and early start, though; very few begin seriously saving in their early or mid twenties.
Careful, many on here started saving the minute someone gave them a coin or had a newspaper route.
My siblings say "I still have the first nickel ever given to me". Today, I can vouch that nickel has compounded several times over.
It was the Philadelphia Inquirer route for me
The fundamental things apply as time goes by -- Herman Hupfeld

mptfan
Posts: 4996
Joined: Mon Mar 05, 2007 9:58 am

### Re: How much do you save?

mac808 wrote:Are you single? If so, one challenge may be to maintain that savings rate while in a relationship. When I was single, I lived like a monk (and enjoyed it), but once I got into a relationship, I had to loosen up a bit.
Unless you find someone who also enjoys living like a monk.

FabLab
Posts: 1127
Joined: Mon Oct 18, 2010 12:15 pm

### Re: How much do you save?

RE: having debt:
rdwarejr wrote:No, I don't.
For age 25 it sounds like you've got a real nice start. As a lifelong saver, I'd have to say that it's the number one factor (saving, that is) in whether an individual, or couple (assuming you've eased up on the monk business ), can build sufficient wealth for one's retirement future. Not the specific funds one chooses and the like. But I can't say I/we ever hewed to a pre-set %, rather, we simply saved as the money became available, early and often.
Last edited by FabLab on Wed Aug 01, 2012 11:32 am, edited 1 time in total.
The fundamental things apply as time goes by -- Herman Hupfeld

SnapDuck
Posts: 5
Joined: Tue Jul 24, 2012 10:12 am
Contact:

### Re: How much do you save?

Just figured this out for a recent blog post and we come in at about 74%. Getting the most out of being DINKs while we can.

mholdi1540
Posts: 67
Joined: Tue Sep 06, 2011 10:21 am

### Re: How much do you save?

My Advice based upon experience - Don't get married; Don't have kids; Live in a cave !! You will get by just fine by that.

kermit
Posts: 207
Joined: Mon Feb 08, 2010 8:11 am

### Re: How much do you save?

I'm 27 and save approximately 28%. But I'm married and live in one of the most expensive cities in the country. If I were single and lived someplace cheaper I'd probably be saving in the 40% range but I wouldn't trade what I have now for that lifestyle.

FinanceFun
Posts: 722
Joined: Mon Nov 28, 2011 9:29 am

### Re: How much do you save?

SnapDuck wrote:Just figured this out for a recent blog post and we come in at about 74%. Getting the most out of being DINKs while we can.
Are you posting savings percentages of Gross. In other words, Total Savings / Gross Income?

Or are you trying to do some form of net calculation sans taxes? I dont see how 74% is possible. That assumes less then an aggregate 26% tax rate (fed and state), then expenses, and still 74% of gross? Sounds like a very irrational number to me. I may be wrong. If I am, I would love to understand HOW you manage to save 74% of gross...

Grt2bOutdoors
Posts: 19841
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

### Re: How much do you save?

FinanceFun wrote:
SnapDuck wrote:Just figured this out for a recent blog post and we come in at about 74%. Getting the most out of being DINKs while we can.
Are you posting savings percentages of Gross. In other words, Total Savings / Gross Income?

Or are you trying to do some form of net calculation sans taxes? I dont see how 74% is possible. That assumes less then an aggregate 26% tax rate (fed and state), then expenses, and still 74% of gross? Sounds like a very irrational number to me. I may be wrong. If I am, I would love to understand HOW you manage to save 74% of gross...
Sounds like net. You could save gross, but then that means you are not paying your fair share of taxes.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

market timer
Posts: 5989
Joined: Tue Aug 21, 2007 1:42 am

### Re: How much do you save?

My consumption bundle hasn't changed much in 10 years, but the costs vary dramatically by location. Currently, the bundle includes studio apartment in doorman building (\$2400/mo), food (\$30/day), travel (\$5K/year), random other stuff (\$5K/year). In other locations, this lifestyle would cost less than \$20K/year. Until I have kids, I expect this will be my consumption bundle, so my savings rate is determined by how much I earn. I save a little over \$100K/year, or five years of living expenses outside of NYC. I don't plan ever to upgrade my lifestyle, just to work less (or not at all) if my savings allow it.

Squints
Posts: 1
Joined: Thu Aug 02, 2012 11:19 am

### Re: How much do you save?

My wife and I save roughly 40% of our combined income into 401k's and Roth's. My company match is 2%, her's 7.5%. We are close to maxing out the 401ks but have decided we wanted to contribute a little to the 529s (2 kids) and like being about to put a little more in our cash reserve each month to account for big expenditures and vacations.

We are both in our late 30's with roughly \$575k in retirement funds saved. I've been reading the board for awhile and I always leave thinking I could be saving more.
I guess this board keeps me focused.

zaboomafoozarg
Posts: 1988
Joined: Sun Jun 12, 2011 12:34 pm

### Re: How much do you save?

market timer wrote:food (\$30/day)

That is nuts, I eat on like \$5 a day, if that. There is an Aldi in NYC.

market timer
Posts: 5989
Joined: Tue Aug 21, 2007 1:42 am

### Re: How much do you save?

zaboomafoozarg wrote:
market timer wrote:food (\$30/day)

That is nuts, I eat on like \$5 a day, if that. There is an Aldi in NYC.
I've never really cooked. Even as a college student, I'd eat out for lunch and dinner. Lately, I've started cooking ribeye/fillet in a frying pan at home. But that's still like \$15 for the meat, plus \$3 for salad, plus \$8 for wine/beer. \$5 would just cover half of a typical lunch (e.g., bento box, Chipotle burrito, or chips and sandwich).
Last edited by market timer on Thu Aug 02, 2012 5:35 pm, edited 1 time in total.

scrabbler1
Posts: 2294
Joined: Fri Nov 20, 2009 2:39 pm

### Re: How much do you save?

After I paid off my mortgage in 1998, my percent saved has been mostly in the 40%-60% range.

interplanetjanet
Posts: 2226
Joined: Mon Jan 24, 2011 4:52 pm
Location: the wilds of central California

### Re: How much do you save?

market timer wrote:
zaboomafoozarg wrote:
market timer wrote:food (\$30/day)

That is nuts, I eat on like \$5 a day, if that. There is an Aldi in NYC.
I've never really cooked. Even as a college student, I'd eat out for lunch and dinner. Lately, I've started cooking ribeye/fillet in a frying pan at home. But that's still like \$15 for the meat, plus \$3 for salad, plus \$8 for wine/beer. \$5 would just cover half of a typical lunch (e.g., bento box, Chipotle burrito, or chips and sandwich).
I feed a family of four on about \$1k/mo and consider it to be overspending (that includes a lot of \$20+/lb cheese, some prime beef, my weaknesses for truffle butter, salmon roe and payusnaya...). I do think that it's easier to stretch food dollars when cooking for several people, though. Consider a cooking class? There's a lot that you can do that's not nearly so meat-heavy that's still very satisfying.

Eating inexpensively usually requires you to not treat each day or meal in isolation - for example, stewing a bird and then using the meat and stock on later days. Since some things (like stock) freeze very well, this is less limiting than it seems.

Last night's dinner was roasted chicken thighs, saffron-strawberry orzo with duck broth and just a bit of black truffle, and some cantaloupe.

-janet

market timer
Posts: 5989
Joined: Tue Aug 21, 2007 1:42 am

### Re: How much do you save?

interplanetjanet wrote:Last night's dinner was roasted chicken thighs, saffron-strawberry orzo with duck broth and just a bit of black truffle, and some cantaloupe.
Sounds delicious. Yeah, I'd like to cook more once I have greater economies of scale (cooking for 3 or 4 instead of 1) and more free time. At this time, I'm not very concerned about food expenses.

Momus
Posts: 566
Joined: Tue Feb 21, 2012 9:23 pm

### Re: How much do you save?

market timer wrote:
interplanetjanet wrote:Last night's dinner was roasted chicken thighs, saffron-strawberry orzo with duck broth and just a bit of black truffle, and some cantaloupe.
At this time, I'm not very concerned about food expenses.
I don't eat out a lot because sodium and fat content are unacceptable/ridiculously high. Once in a while only...

LH
Posts: 5490
Joined: Wed Mar 14, 2007 2:54 am

### Re: How much do you save?

GRT2BOUTDOORS wrote:
kenyan wrote:Be careful what you ask for...many Bogleheads save 40%, 50%, or even more. There are periodic polls around here that illustrate that.

For your situation, unless you're shooting for early retirement, you don't really NEED to save 20+%, but it will help for when life's little surprises crop up. You're doing well with your savings rate and early start, though; very few begin seriously saving in their early or mid twenties.
Careful, many on here started saving the minute someone gave them a coin or had a newspaper route.
My siblings say "I still have the first nickel ever given to me". Today, I can vouch that nickel has compounded several times over.
Unless its numismatic, the first nickel saved has seriously degraded in worth if held tens of years : P

Posts: 204
Joined: Tue May 22, 2012 3:14 am

### Re: How much do you save?

After-tax income:
40% spending.
33% taxable savings.

Watty
Posts: 15205
Joined: Wed Oct 10, 2007 3:55 pm

### Re: How much do you save?

rdwarejr wrote:I am considering reevaluating my savings/investment percentages and was wondering what bogleheads do?

Age: 25

Annual Income: \$65K

Investment contribution per month: \$742.23 (Roughly 14%)

General Savings per month: \$400 (Roughly 7.5%)

Christmas Fund per month: \$200 (Roughly 4%)

So far, I've accumulated roughly \$20K in savings and another \$20K in investments.

You are doing great for your age.

What worked for me was to try to save half of any pay raises I got.

\$X a month to a fund to pay cash for your next car (new or used). If you have a paid off car now then it is likely losing at least \$100 a month or more in value and if you are not saving at least that much then your net worth goes down each month as the car loses value.

\$X dollars a month into a housing fund to save up a downpayment to buy a house some day or to generate income to pay for rent if you never buy. By the time you retire it would be good to either have a paid off house or have a large nestegg just to genereate enough income to pay the rent in retirment.

Toons
Posts: 13191
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

### Re: How much do you save?

A lot
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

FabLab
Posts: 1127
Joined: Mon Oct 18, 2010 12:15 pm

### Re: How much do you save?

Toons wrote:A lot
No disagreement here
The fundamental things apply as time goes by -- Herman Hupfeld

The Wizard
Posts: 12874
Joined: Tue Mar 23, 2010 1:45 pm

### Re: How much do you save?

The problem with some of these numbers is distinguishing between long-term and short-term savings.

\$500 a month into short-term savings to buy a new car in a while is very good, but is it conceptually that much different from someone paying \$500 a month on a low interest car loan? Not really; both cashflows are going to purchase a consumable asset.
Attempted new signature...

Toons
Posts: 13191
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

### Re: How much do you save?

FabLab wrote:
Toons wrote:A lot
No disagreement here

"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

ge1
Posts: 473
Joined: Sat Apr 28, 2012 8:15 pm

### Re: How much do you save?

On a very good combined income, we roughly save 1/3, pay taxes 1/3 and spend 1/3