What percentage of your income are you saving?

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brian2013
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What percentage of your income are you saving?

Post by brian2013 »

My wife and I recently transferred our retirement accounts to VG and finally feel like we have a handle on investing for retirement. We are in our late 30's. As we have turned our focus away from paying down debt and getting established in our careers, and more toward saving more for retirement, we of course are thinking more about that old question, "how much do we need to save." So I was just curious how much other Bogleheads are saving each year? In particular what percentage of your total before-tax household income are you saving for retirement?

It would be helpful to me to hear from folks all across the spectrum, from those who are in retirement and have successfully built a comfortable nest-egg, to those just starting out.

I'll start. Roughly it looks like we have saved about 20% of our total household, before-tax income this year. Our target for 2014 will be 30%.
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Bogle101
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Re: What percentage of your income are you saving?

Post by Bogle101 »

I am 29 and save 30% of my pre tax income.
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Johm221122
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Re: What percentage of your income are you saving?

Post by Johm221122 »

43 and I save 25%to 30% depending on year
John
Edit : past post(one of many)
http://www.bogleheads.org/forum/viewtop ... =2&t=85612
Last edited by Johm221122 on Thu Dec 12, 2013 11:23 am, edited 1 time in total.
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Clark & Addison
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Re: What percentage of your income are you saving?

Post by Clark & Addison »

We are 29 and 30 and this year we will be saving right around 16% of our gross income towards retirement. We are also saving an additional 23% towards a combination of our kids college, our next vehicle, and our next home.
nimo956
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Re: What percentage of your income are you saving?

Post by nimo956 »

I am 27, and I save 46% of my gross salary.
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The Wizard
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Re: What percentage of your income are you saving?

Post by The Wizard »

Newly retired at 63, so not presently saving any of my retirement income.
However, in a few years, I do expect to have excess income from my annuities, and eventually SS and RMDs, being that you can't leave funds in tax sheltered accounts forever.
So I expect to be saving/reinvesting 10% to 20% of my retirement income in my taxable account at that point.
I'll check back in five years with an update...
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enc0re
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Re: What percentage of your income are you saving?

Post by enc0re »

Age 32. Saving about 44.5% of my gross plus another 11.5% from my employer (no pension). That's not counting home equity.

However, I've only been doing so for about a year. I'm really trying to adopt the Boglehead lifestyle here.
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mhc
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Re: What percentage of your income are you saving?

Post by mhc »

Mid-40's and saving about 37%.

Save: 37%
Spend: 37%
Taxes: 26%
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SHL
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Re: What percentage of your income are you saving?

Post by SHL »

I save 20% of my salary in my employer's 403(b), and have also contributed the maximum amount to my IRA each year for the past 25 years or so. Together, it's about 27% of my current annual income. I'm 58 and planning to retire at 62.
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Re: What percentage of your income are you saving?

Post by Randomize »

The wife and I are both back in school, me working full-time and her part-time, so probably only 7% until we get the student debt paid down, then more like 15-20%. I have a pension and she'll have one too in her prospective line of work so that should be plenty.
moto112233
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Re: What percentage of your income are you saving?

Post by moto112233 »

As a corollary to this question, I'm curious -- do you (or did you) include paying down certain debt (mortgage, student loans) in your savings rates?

I am 29 and will "save" ~32% of gross this year, including payments on student loans. I am at ~18% if solely contributing purely to savings & retirement accounts.

I wonder if this gives me a false sense of saving more than I am as my loan payments really couldn't be used in retirement the way mortgage payments (and the related equity) could be drawn on retirement (e.g., downsizing).
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Re: What percentage of your income are you saving?

Post by KyleAAA »

It's looking like I'll come in at about 38% this year. 50% is my goal, but I like going on vacation.
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xyz12
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Re: What percentage of your income are you saving?

Post by xyz12 »

Early thirties, save about 60% - 62% of gross income.
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serbeer
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Re: What percentage of your income are you saving?

Post by serbeer »

Also in 'late 30s'
35% of gross income being saved, 34% are mandatory expenses (including local taxes), 5% discretionary expenses (eg vacations/gifts/gym, etc), 26% taxes federal/state/payroll taxes.
Were saving more before 2 young kids came along, the daycare is #1 expense right now, more than a mortgage and real estate taxes combined.
travellight
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Re: What percentage of your income are you saving?

Post by travellight »

I don't consider basic mortgage and loan pay down as part of the savings rate. Others have to pay rent so that should equal your mandatory mortgage payment. If you take your savings and use it to pay down your mortgage voluntarily though, I would count that in your savings.

I spent 26% of (ergo 74% savings) my net income before income taxes.

Shouldn't this be after tax though? We really can't save from what we don't get to keep (taxes). I saved 66% of my net income (after taxes).
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LFKB
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Re: What percentage of your income are you saving?

Post by LFKB »

We are 27.

Taxes: 40%
Spend: 18%
Save: 42%

If you looked at it based on what we save on after tax income (which is a more relevant figure IMO), it works out to about 70%.
MathWizard
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Re: What percentage of your income are you saving?

Post by MathWizard »

travellight wrote:I don't consider basic mortgage and loan pay down as part of the savings rate. Others have to pay rent so that should equal your mandatory mortgage payment. If you take your savings and use it to pay down your mortgage voluntarily though, I would count that in your savings.
I disagree, you should count the amount of principal paid on the mortgage over the year in your savings rate.
Especially so if you intend to save that amount after the mortgage is paid off. I would do the same for student loans.

The argument would be that the home was a real estate investment, in the sense that you could always sell it
if you needed to, and while you own it, it throws off the "dividend" which would be the difference between rent and
the sum of the insurance prop. taxes and maintenance on a house you own.
How is that so much different from a highly illiquid stock investment?

Student loans are even easier, since that was investment for future income, which is probably the best investemnt
you can make, assuming it does increase income and you don't go too far into debt. E.g. $20K of debt for an Eng. degree
would be an investment, since it likely will return in a positive return.
Last edited by MathWizard on Thu Dec 12, 2013 4:25 pm, edited 1 time in total.
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kenyan
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Re: What percentage of your income are you saving?

Post by kenyan »

We were saving around 40% of gross. Then we had a second child and bought a house. Now we're at around 28% of gross, 35% of net. Basically, everything we're saving is in tax-advantaged accounts now; we a large taxable account before that was used for the down payment, and it's no longer growing due to the increased expenses. Of course, if our incomes increase and/or our costs decrease (see day care), we'll direct those funds toward maximizing our tax-advantaged accounts prior to any taxable savings.
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overst33r
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Re: What percentage of your income are you saving?

Post by overst33r »

What's the fastest and most accurate way to calculate savings rate? I'm using Mint at the moment, but I'm not confident in the accuracy.
armeliusc
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Re: What percentage of your income are you saving?

Post by armeliusc »

We are 33, and we save about 45% of our gross to retirement accounts (401k, 457 + 2 IRAs) in the last two years. My employer contribute about 10% of salary at this point, which I can convert to pension after 5 yrs of employment. We rent, so no mortgate at this point. I was fortunate enough to get a more permanent academic position that boost the income from being grad student then postdoc before, but we still live pretty much like when I was postdoc.

We have other saving such as I-bonds for EF and things for vacation / car fund but we anticipate that it will get spent so that is not included.
newbeee
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Re: What percentage of your income are you saving?

Post by newbeee »

29 years old, this past year saved about 37% of gross + 4% emp match + 3.3% emp pension
kbrinaldi
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Re: What percentage of your income are you saving?

Post by kbrinaldi »

Currently 28
Based off Pre-tax Gross Income
Effective Total Tax rate - Savings Rate
2010 - 31% - 41%
2011 - 34% - 31%
2012 - 36% - 44%

Taxes...
feh
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Re: What percentage of your income are you saving?

Post by feh »

Late 40s, saved 45% of gross this year.

Planning on retiring in 3 years. The primary reason I can retire early is that we've saved at least 20% every year.
MichDad
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Re: What percentage of your income are you saving?

Post by MichDad »

We're saving about 33% of our gross income for retirement. This does not include matching retirement funds contributed by our employers.
Agwapijaw
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Re: What percentage of your income are you saving?

Post by Agwapijaw »

I'm 30, wife is 28. We save ~40% of gross for retirement.

I save 49% and my wife saves 27%.

If we add on car savings and college savings we are upto 52%.
bhsince87
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Re: What percentage of your income are you saving?

Post by bhsince87 »

I’m late 40’s, and my wife and I (no kids) usually shoot for around 50%. That’s up from 15-20% in our 20’s and 30% in our 30’s.

But depending how I add it up, I could conclude that we saved 87% this year!

I usually earn about 50% salary/50% bonus in a good year, so I just save all of my bonus. Makes budgeting a lot easier. But this year was very good, and my bonus was about 2X my salary. So this is a high percentage year for us. I’ll probably splurge and spend maybe 5% of my bonus this year. But I don’t even have anything on my “shopping list” that I can think of spending it on right now. I’ll probably trickle it out over the next few months on some nice meals and weekend getaways.

But where it gets fuzzy in my mind is, should I consider interest and dividends as income too? What about capital gains? Realized and unrealized, or just realized? In theory, I could cash it out now and spend it. I know some people who do take profits and spend it in good years. And what about in 401k or IRA versus in taxable accounts? And should we count investment losses against our income too? And then there are the very valid mortgage/debt questions too, as others have mentioned.

It all seems arbitrary to me. So I don’t even bother thinking in percentages. We work out a budget for our expenses (with a little buffer and some “splurge” money built in), and stick to it. Any income above that gets invested.
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Topic Author
brian2013
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Re: What percentage of your income are you saving?

Post by brian2013 »

moto112233 wrote:As a corollary to this question, I'm curious -- do you (or did you) include paying down certain debt (mortgage, student loans) in your savings rates?

I am 29 and will "save" ~32% of gross this year, including payments on student loans. I am at ~18% if solely contributing purely to savings & retirement accounts.

I wonder if this gives me a false sense of saving more than I am as my loan payments really couldn't be used in retirement the way mortgage payments (and the related equity) could be drawn on retirement (e.g., downsizing).
Personally I did not include paying down student loan and mortgage date in my retirement savings estimate of about 20%. However, we paid down student loans and mortgage agressively over the past 10 years and i am very happy we did. Only debt we have now is a 15 year mortgage. So it will contribute greatly to our ability to retire when desired. we tried hard to balance saving some and paying down debt early as well. sounds like you are balancing it well.
Savvy
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Re: What percentage of your income are you saving?

Post by Savvy »

24 yrs old & married. Save around 50% gross income, but that includes our savings for a house down payment.
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bottomfisher
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Re: What percentage of your income are you saving?

Post by bottomfisher »

Turned 40 yesterday - saving a lowly about 8%'ish. Personal goal is 10%. But in high tax bracket, just moved to new old house (req'd additional monies down payment), many student loans, twins on way and 2 other major expenses in recent years. No intention to retire early; so current balance and savings rate should meet retirement needs. But hope to increase savings rate in future to cover margin of error in estimation
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Tortoise
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Re: What percentage of your income are you saving?

Post by Tortoise »

57 years old saving 40% toward retirement. we were saving 50% for past 25 years, but encountered reduction in pay which tapered savings a bit. We also have $200k saved for son's college and have paid off mortgage.
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Re: What percentage of your income are you saving?

Post by IlliniDave »

I'm 49. What I do know pretty accurately is that 76% of what I get after all payroll deductions (max 401k contribution, insurance, federal, state, and payroll tax) goes to Vanguard. Probably a little over 50% of my gross is saved. Altogether maybe 80%-ish or a little more of after tax depending on how you weigh the pre-tax 401k contributions. I'm too lazy to figure that out. My target is to save as much as I can without living in abject misery. The percentages just fall out from there.
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daave
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Re: What percentage of your income are you saving?

Post by daave »

I'm 25, saving 40% of gross income.
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Re: What percentage of your income are you saving?

Post by leonard »

Analyze each dollar you are thinking of spending and "ask do I really need this". The answer should be no more often than not - then save it. Save as much as possible. The resulting percentage is just that - a result - not a target.

even if you say it's 40% - if you could be saving 45% - then it's really not telling you much about how well you are managing the dollars.
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mlipps
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Re: What percentage of your income are you saving?

Post by mlipps »

24 years old. Our breakdown for 2013 is about:

30% in retirement savings (Max out 401k & Roth)
5% towards educational expenses (Husband working towards MBA), this took most of our cash savings for the year
Expecting about 20-25% in taxes total (federal, FICA, state)
35% spending, including our wedding
6% towards paying off some student loans earlier in the year
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Re: What percentage of your income are you saving?

Post by nash031 »

brian2013 wrote:My wife and I recently transferred our retirement accounts to VG and finally feel like we have a handle on investing for retirement. We are in our late 30's. As we have turned our focus away from paying down debt and getting established in our careers, and more toward saving more for retirement, we of course are thinking more about that old question, "how much do we need to save." So I was just curious how much other Bogleheads are saving each year? In particular what percentage of your total before-tax household income are you saving for retirement?

It would be helpful to me to hear from folks all across the spectrum, from those who are in retirement and have successfully built a comfortable nest-egg, to those just starting out.

I'll start. Roughly it looks like we have saved about 20% of our total household, before-tax income this year. Our target for 2014 will be 30%.
36/33, no kids (yet), saving ~40% of our gross, all toward retirement. In my late 20s, single, I was at about 20%. Married, wife and I started at ~30% and have been able to increase it over the last two years as we settled in our lifestyle together.

Caution, however, through LBYM it's arguably easier to save a larger percentage of income when your income is higher, so these numbers are going to vary based on income level for most bogleheads I would think.
DVMResident
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Re: What percentage of your income are you saving?

Post by DVMResident »

Pre-tax basis:

2009 - 66.8% (graduated school, single)
2010 - 81.5% (single)
2011 - 85.9% (single)
2012 - 20.1% (for retirement, combined households) - (minus)60% (house down payment, ouch) + 7.6% student loans, if you count that as savings)
2013 - 17.2% (combined households and incomes, other half went on medical leave and changed jobs to less pay, losing ~4.5 months of income) + 7.6% (paying off student loans) + 10.1% (home equity if you count that)
2014 (income bump)- Goal is 20% (retirement) + 5% (student loans) + 7.5% (home equity)...but with a baby on the way, who knows...
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yatesd
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Re: What percentage of your income are you saving?

Post by yatesd »

Almost nuts...does anyone spend the money they earn today? What is the average percentage that supersavers give to charity each year?

Personally, I am married, single income, and save 15% into 401K. Simultaneously, I am working on reducing debt, buying Christmas presents, saving for college, and going on vacations. I probably average another 12% for charity.

BTW, I am 43.

Full disclosure: I have a history of overspending, but trying to behave. Hanging out here is my therapy. :)
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Re: What percentage of your income are you saving?

Post by Grt2bOutdoors »

Deleted - see bobby's post down below.
Last edited by Grt2bOutdoors on Thu Dec 12, 2013 4:24 pm, edited 1 time in total.
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Grt2bOutdoors
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Re: What percentage of your income are you saving?

Post by Grt2bOutdoors »

yatesd wrote:Almost nuts...does anyone spend the money they earn today? What is the average percentage that supersavers give to charity each year?
Don't know, but I spend quite a bit of time on the forum assisting out others who could use the help. :wink: What does that count for?
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nordlead
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Re: What percentage of your income are you saving?

Post by nordlead »

Married 3 kids, 29, average cost of living area, single income family.

It depends on how you define saving.

(all % of gross)
15% - Retirement (403b)
4.3% - EF/Roth (basically, I dump my EF into the Roth and then refill the EF)
3.2% - extra mortgage payments (I count this towards my savings rate as it is pure equity above/beyond my regular mortgage payment and I could easily divert it to my retirement accounts if I wanted. I don't count my normal principal payment because it can't be diverted, feel free to count this however makes you happy)
Total Retirement = 22.5%

Other savings
3.2% - saving for a car
1.6% - Home improvements (I do almost all of my own work, which is how I keep this so low)
1.6% - Vacation Fund
Total = 28.9%

Add in anything Anything else that doesn't get spent and in 2013 I will hit ~34%. Next year I should hit ~37%. There are a few more places I can trim the budget and maybe I can bump it over 40% in 2 years with raises. Since I've saved 15% of my earnings in a 403(b) for the last 7 years I'm confident if I continue down this path (and don't lose my job too early or have a major medical emergency) that I'll retire with a better standard of living than I have now.
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Re: What percentage of your income are you saving?

Post by Grt2bOutdoors »

nordlead wrote:Married 3 kids, 29, average cost of living area, single income family.

It depends on how you define saving.

(all % of gross)
15% - Retirement (403b)
4.3% - EF/Roth (basically, I dump my EF into the Roth and then refill the EF)
3.2% - extra mortgage payments (I count this towards my savings rate as it is pure equity above/beyond my regular mortgage payment and I could easily divert it to my retirement accounts if I wanted. I don't count my normal principal payment because it can't be diverted, feel free to count this however makes you happy)
Total Retirement = 22.5%

Other savings
3.2% - saving for a car
1.6% - Home improvements (I do almost all of my own work, which is how I keep this so low)
1.6% - Vacation Fund
Total = 28.9%

Add in anything Anything else that doesn't get spent and in 2013 I will hit ~34%. Next year I should hit ~37%. There are a few more places I can trim the budget and maybe I can bump it over 40% in 2 years with raises. Since I've saved 15% of my earnings in a 403(b) for the last 7 years I'm confident if I continue down this path (and don't lose my job too early or have a major medical emergency) that I'll retire with a better standard of living than I have now.
And there in lies the crux - don't forget to smell the roses while the family is still young.
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icefr
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Re: What percentage of your income are you saving?

Post by icefr »

I'm 25 and I save about 75-80% of my net income, including bonuses. I max out my 401(k), Backdoor Roth IRA, and HSA. I also include regular mortgage principal payments, as well as taxable investments, cash savings, and extra mortgage principal payments in this number.
ThatGuy
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Re: What percentage of your income are you saving?

Post by ThatGuy »

100% of gross.

What? I'm using the fuzzy math that some of these other posts are.
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bhsince87
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Re: What percentage of your income are you saving?

Post by bhsince87 »

ThatGuy wrote:100% of gross.

What? I'm using the fuzzy math that some of these other posts are.
Now that you mention it, I actually started out that way.


Back when I lived with my parents and made $5 a week mowing the lawn! :D
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fposte
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Re: What percentage of your income are you saving?

Post by fposte »

nash031 wrote: Caution, however, through LBYM it's arguably easier to save a larger percentage of income when your income is higher, so these numbers are going to vary based on income level for most bogleheads I would think.
Yup. I'm lower-income than many around here, and while I'm putting the equivalent of 60% of gross pay into retirement every year, I couldn't actually live on the remainder if I wasn't supplementing from my CD ladder and IRA RMDs. My true savings rate into retirement looks to be more like 25%, and even that's a fairly tight existence that I will probably ease up on a little in a couple of years.
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Re: What percentage of your income are you saving?

Post by letsgobobby »

I'm going to stop responding to these threads (we've had many, many over the years). One thing that has come up in the past is how intimidating it is to new forum members, lower income earners, and just your average person trying to save a few bucks when they read that everyone here is saving 20%, 40%, 60% of their gross household income. It might send the wrong message that you can't be a successful investor if you aren't an ubersaver.

I'm not opposed to these threads, I can see why people find it interesting to ask. I'm just not going to participate any more.
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Meg77
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Re: What percentage of your income are you saving?

Post by Meg77 »

The OP asked a specific question about RETIREMENT savings rates based on a percentage of gross PRETAX income. Those of you including mortgages and student loan payments as "savings" are off base and skewing the responses. Repaying a debt - particularly an unsecured debt like a student loan - is not "savings." It's "debt repayment." Sure, it's boosting your net worth, but that doesn't make it "savings" in any traditional sense.

I'm saving $23000 a year toward retirement - maxing out 401k and backdoor Roth IRA. That's 20.4% of my pretax salary. I'm 30.
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ZedThou
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Re: What percentage of your income are you saving?

Post by ZedThou »

letsgobobby wrote:It might send the wrong message that you can't be a successful investor if you aren't an ubersaver.
I pretty much agree. My own metric for how successfully I'm preparing for the future is this: What percentage of my anticipated post-retirement annual expenses, did I save this year?
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Re: What percentage of your income are you saving?

Post by nordlead »

Grt2bOutdoors wrote:
nordlead wrote:I'll retire with a better standard of living than I have now.
And there in lies the crux - don't forget to smell the roses while the family is still young.
Yep, hence the vacation fund and not worrying about maxing the 403(b) (I actually only contribute what I'm mandated by my company to contribute, the rest is company match, and yes I count that because it is my money). Sure, I could stop funding the Roth or the extra mortgage payments, and probably be fine, but those are my safety net. I'd rather have a paid off house and a Roth IRA I can tap if I need to.
Meg77 wrote:The OP asked a specific question about RETIREMENT savings rates based on a percentage of gross PRETAX income. Those of you including mortgages and student loan payments as "savings" are off base and skewing the responses. Repaying a debt - particularly an unsecured debt like a student loan - is not "savings." It's "debt repayment." Sure, it's boosting your net worth, but that doesn't make it "savings" in any traditional sense.

I'm saving $23000 a year toward retirement - maxing out 401k and backdoor Roth IRA. That's 20.4% of my pretax salary. I'm 30.
Eh, hence why I gave a breakdown. Just because I put money in a savings account for home improvement doesn't mean it is going to be spent. Tomorrow I can reallocate it as a retirement savings when I find I have too much for home improvement. Same with the car. I have enough to buy at least a 10-year old minivan. I don't know if I'm going to buy anything newer. I could buy the 10-year old minivan and put the rest into retirement.

It works the other way too. I can reallocate what I saved for retirement for a vacation just by drawing out of my Roth IRA.

I agree with not including student loan payments, as you can't sell anything when you are done paying off the loan. I have no problem with principal on a mortgage though. Buying a house is no different than buying any other investment. It can go up or down in value. I don't treat my house as a retirement, but paying extra on the principal (of my mortgage) is better than paying into TIAA Traditional which only guarantees me 3%.
stoptothink
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Re: What percentage of your income are you saving?

Post by stoptothink »

letsgobobby wrote:One thing that has come up in the past is how intimidating it is to new forum members, lower income earners, and just your average person trying to save a few bucks when they read that everyone here is saving 20%, 40%, 60% of their gross household income. It might send the wrong message that you can't be a successful investor if you aren't an ubersaver.
Post of the day. I've heard this exact statement from numerous people I've referred to this board. I make a comfortable income and my net worth is above the 90th percentile for my age group, yet these threads always end up making me feel like a total slacker. Getting creative with the accounting ruins any purpose these threads may possibly have.
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