How much do you save?

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What percentage of your disposable income do you save?

1-10%
7
7%
10-20%
15
14%
20-30%
21
20%
20-30%
21
20%
40-50%
17
16%
50-60%
7
7%
60-70%
9
9%
70-80%
4
4%
80+%
4
4%
 
Total votes: 105

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Topic Author
Teetlebaum
Posts: 457
Joined: Tue Apr 10, 2007 4:27 pm

How much do you save?

Post by Teetlebaum »

See the US Personal Saving Rate.

For clarification, I'm adding this definition of disposable income:
Disposable personal income is total personal income minus personal current taxes.

Personal current taxes is tax payments (net of refunds) that are made by persons and that are not chargeable to business expense and certain other payments by persons to government agencies (except government enterprises) that are treated like taxes.

Personal current taxes includes taxes on income, including realized net capital gains, and on personal property. Also included in personal taxes are personal licenses. Contributions for government social insurance are not included.

Q. Are sales taxes included in the calculation of disposable personal income?
A. No. Disposable personal income is personal income less personal current taxes. Personal current taxes consists of income taxes, motor vehicle licenses, and personal property taxes.

Q. Do you have disposable personal income by county?
A. No. It is not available from any Federal statistical agency.

All state and local area dollar estimates are in current dollars (not adjusted for inflation).

[edited remark about OT by Mel when moved]
Last edited by Teetlebaum on Thu Apr 12, 2007 2:19 pm, edited 1 time in total.
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XtremeSki2001
Posts: 1666
Joined: Fri Mar 09, 2007 2:28 pm
Location: Philadelphia, PA

Post by XtremeSki2001 »

~6%, but striving to save more.
A box of rain will ease the pain and love will see you through
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cgold
Posts: 53
Joined: Tue Feb 20, 2007 1:08 am
Location: Denver, CO

Post by cgold »

What is the definition of personal disposable income? Is that simply gross income - taxes? How do pre-tax contributions to retirement plans, flexible spending plans, and so, factor in?
Nitsuj
Posts: 1347
Joined: Tue Feb 20, 2007 2:56 pm
Location: Indiana
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Post by Nitsuj »

I have heard reports that that personal savings rate ignores retirement saving via 401(k) and the like.
BrianTH
Posts: 1340
Joined: Tue Feb 20, 2007 6:10 pm

Post by BrianTH »

Nitsuj wrote:I have heard reports that that personal savings rate ignores retirement saving via 401(k) and the like.
I believe this is a myth, perhaps started by a misunderstanding of the fact that the BEA calculates the personal savings rate on a post-tax basis. But as I understand it, the BEA does include 401K contributions, both employee and employer, when calculating income, so it is included as savings (since for them, savings is basically income minus taxes and spending).

What is not included, however, is things like unrealized capital gains. So, if your 401K increases in value, that does not count as income and therefore does not count as part of your savings rate. Also not included, as I understand it, are mortgage payments (principal or interest), or unrealized increases in home equity.

Incidentally, all this raises the issue of how the personal savings rate could be negative if they are counting 401Ks. Basically, it means people must be borrowing from somewhere, enough to more than offset 401Ks. And from what I understand, a lot of that borrowing was coming from home equity--and again any offsetting increases in home equity would not be included.

Anyway, doing it the BEA way to the best of my ability, I get us with a savings rate of around 35%.
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frose2
Posts: 628
Joined: Thu Mar 01, 2007 2:10 am

Weird definition

Post by frose2 »

"Personal current taxes includes taxes on income, including realized net capital gains, and on personal property. Also included in personal taxes are personal licenses. Contributions for government social insurance are not included."

This means that your disposable income, being defined as gross income minus "personal current taxes," includes what you pay in Social Security and Medicare tax (and presumably self-employment tax if you're self-employed). This is pretty crazy.

That said, in 2006 I believe I saved in excess of 50% of "disposable" income so defined. No wonder I feel strange and out of place in a land where the average is minus one %. Maybe I should move to Japan.
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fishnskiguy
Posts: 2605
Joined: Tue Feb 27, 2007 1:27 pm
Location: Sedona, AZ

Post by fishnskiguy »

Being retired and building a house mortgage free, we have to work really hard NOT to save money.

All my life I have been a saver. Now that we have reached "critical mass",
whatever that is, learning how not to save has been a real challenge. We have no children and only one nephew. He's gonna be in clover when they plant the clover over us.

This not saving is real work :lol:

Chris
Trident D-5 SLBM- "When you care enough to send the very best."
mptfan
Posts: 6260
Joined: Mon Mar 05, 2007 9:58 am

Post by mptfan »

We save about 27% of our gross, and about 33% of our disposable income (as defined above).
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Richard Berg
Posts: 63
Joined: Tue Feb 27, 2007 3:07 pm

Post by Richard Berg »

I'm still not sure how to count tax-deferred contributions. Here's my intuition: the traditional 401k & IRA contributions need to be discounted by your marginal tax rate, and Roth 401k / Roth IRA contributions should not. Additionally, your disposal income will be slightly lower in the Roth case.

So if made $70k (25% bracket), saved $10k in a 401k / trad IRA, paid $15k in income taxes, then your savings rate would be ($10k * 0.75) / ($70k - $15k) = 13.6%. Whereas if you saved the $10k into Roth accounts, you wouldn't discount the contributions, and your income taxes would increase by $10k * 0.25, making the savings rate ($10k) / ($70k - $17.5k) = 19%.

This is a slightly confusing conclusion, because the traditional person's savings rate was 28% lower than the Roth person. (naively, you'd expect 25%) I'm pretty sure my numbers are correct, though, and the difference is just an artifact of the "disposable income" definition.

----

My savings are all Roth-style or taxable, so the calculation is easy. About 38%.
gkaplan
Posts: 7034
Joined: Sat Mar 03, 2007 8:34 pm
Location: Portland, Oregon

Rough Estimate

Post by gkaplan »

70 percent
Gordon
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