Savings rate per month???

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Bhairston2018
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Savings rate per month???

Post by Bhairston2018 » Thu Aug 16, 2018 12:35 pm

26
51,500
15% retirement with 5.5% match
25-30% take home depending on the month

Just interested in hearing some others savings rates?

magicrat
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Re: Savings rate per month???

Post by magicrat » Thu Aug 16, 2018 12:39 pm

Our 2017 savings rate was 37% of gross employment income (includes employer 401k contributions)

KT785
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Re: Savings rate per month???

Post by KT785 » Thu Aug 16, 2018 12:45 pm

Married, both 30, no kids (yet).

I calculate our savings rate on a gross household (pre-tax), annual basis: 25-27% split between our 401ks and Roth IRAs. We both get a small ($1,200 per person) employer contribution to our 401ks--factored into the savings rate--since our employer also provides a well funded pension plan (completely paid for by them). I should also note, the pension is not factored into the savings rate . . . . though I'm vested and it's well funded, you never know what the future holds.

Re: the retirement accounts, we max both Roth IRAs but are not yet maxing the 401ks; am contemplating investing in taxable before fully maxing the 401ks for tax planning in early retirement, especially given the pension.
Last edited by KT785 on Thu Aug 16, 2018 1:51 pm, edited 1 time in total.

open_circuit
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Re: Savings rate per month???

Post by open_circuit » Thu Aug 16, 2018 12:57 pm

Over 50% of gross, if I count employer matches into 401ks.

azanon
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Re: Savings rate per month???

Post by azanon » Thu Aug 16, 2018 1:04 pm

I've averaged over the years about 14% of gross strictly to retirement funds with 5% match on 2/3rds of that over the years. About 1/3rd of that went into a Roth.

I admit that's lower than I would target for otherwise, because I anticipate a pension someday as a government employee. Without a pension, I'd probably tell someone to shoot more for 20% of gross with a match, 25% without.

To some extent, I do believe in consumption smoothing. Excessive saving takes away some of the wonder of compound growth, and potentially squanders all of that hard work you may have done in school to earn that degree that allows you to have a high salary.

lostdog
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Re: Savings rate per month???

Post by lostdog » Thu Aug 16, 2018 1:39 pm

Roughly between 50% to 55%.

kaeltor
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Re: Savings rate per month???

Post by kaeltor » Thu Aug 16, 2018 1:41 pm

Currently averaging in the high 60's post tax... I am young at 27. If I sacrifice now perhaps it'll open oportunities for me in my thirties...

PVW
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Re: Savings rate per month???

Post by PVW » Thu Aug 16, 2018 1:49 pm

Pretax = about 10% of gross pay. After tax = about 15% of gross pay.

lazydavid
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Re: Savings rate per month???

Post by lazydavid » Thu Aug 16, 2018 1:50 pm

2017 was about 33% of gross in pure dollars, about 43% if taxable contributions were grossed up (meaning counting taxes withheld to equalize the "value" of tax-advantage vs. not).

2018 target:

16% 401k withholding
5% 401k match
20% of take-home to taxable (missed this for part of the year due to cashflowing some home improvements and unexpected expenses)
100% of RSU vestment to taxable

Not sure what the blended rate would be if we had hit our target, probably right around 50%, or 65% if grossing up taxable contributions. Will most likely wind up at around 40%/50%

LiterallyIronic
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Re: Savings rate per month???

Post by LiterallyIronic » Thu Aug 16, 2018 2:21 pm

I thought I was doing decent at 25% of gross ($63,500 income with stay-at-home wife and a one-year-old), not including employer match or extra mortgage principal payments.

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queso
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Re: Savings rate per month???

Post by queso » Thu Aug 16, 2018 2:34 pm

31% of gross. 35% if you count the extra mortgage payments as savings.

H-Town
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Re: Savings rate per month???

Post by H-Town » Thu Aug 16, 2018 2:41 pm

Bhairston2018 wrote:
Thu Aug 16, 2018 12:35 pm
26
51,500
15% retirement with 5.5% match
25-30% take home depending on the month

Just interested in hearing some others savings rates?
See: viewtopic.php?t=223970

BradJ
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Re: Savings rate per month???

Post by BradJ » Thu Aug 16, 2018 3:45 pm

KT785 wrote:
Thu Aug 16, 2018 12:45 pm
Married, both 30, no kids (yet).

I calculate our savings rate on a gross household (pre-tax), annual basis: 25-27% split between our 401ks and Roth IRAs. We both get a small ($1,200 per person) employer contribution to our 401ks--factored into the savings rate--since our employer also provides a well funded pension plan (completely paid for by them). I should also note, the pension is not factored into the savings rate . . . . though I'm vested and it's well funded, you never know what the future holds.

Re: the retirement accounts, we max both Roth IRAs but are not yet maxing the 401ks; am contemplating investing in taxable before fully maxing the 401ks for tax planning in early retirement, especially given the pension.
Does your pension play any role in your decision for future employment opportunities? I left a company with a great pension (vested), to another company with a good pension (vested in 3 years). I am considering applying for a company without a pension, but a higher 401k match (it doesn't make up for the pension if I worked 25 more years). Every older person I meet says I am borderline nuts to leave any job with a pension.

AerialWombat
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Re: Savings rate per month???

Post by AerialWombat » Thu Aug 16, 2018 3:52 pm

It varies heavily by month, since I have seasonal swings in business revenue, but I currently (as in, just starting this year) am saving 50% to 70% of my gross receipts per month. As a small biz owner, I have started implementing Profit First as of this year.

Solo 401k: max
Traditional IRA: max
Real estate investing: two buy and hold rental houses this year
Taxable: high four to very low five figures per month into muni bond funds at Vanguard

Traveler
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Re: Savings rate per month???

Post by Traveler » Thu Aug 16, 2018 8:57 pm

55-60% of gross annually including what my employer contributes to retirement accounts

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Tyrobi
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Re: Savings rate per month???

Post by Tyrobi » Thu Aug 16, 2018 9:00 pm

Saving rate is at 55%.
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raisinsaregrapes
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Re: Savings rate per month???

Post by raisinsaregrapes » Thu Aug 16, 2018 9:24 pm

55% is the standard. It fluctuates with life (eg. lowers during months with vacations).

Green Street
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Re: Savings rate per month???

Post by Green Street » Thu Aug 16, 2018 9:55 pm

55%, also will receive a pension.
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KT785
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Re: Savings rate per month???

Post by KT785 » Thu Aug 16, 2018 9:58 pm

BradJ wrote:
Thu Aug 16, 2018 3:45 pm
KT785 wrote:
Thu Aug 16, 2018 12:45 pm
Married, both 30, no kids (yet).

I calculate our savings rate on a gross household (pre-tax), annual basis: 25-27% split between our 401ks and Roth IRAs. We both get a small ($1,200 per person) employer contribution to our 401ks--factored into the savings rate--since our employer also provides a well funded pension plan (completely paid for by them). I should also note, the pension is not factored into the savings rate . . . . though I'm vested and it's well funded, you never know what the future holds.

Re: the retirement accounts, we max both Roth IRAs but are not yet maxing the 401ks; am contemplating investing in taxable before fully maxing the 401ks for tax planning in early retirement, especially given the pension.
Does your pension play any role in your decision for future employment opportunities? I left a company with a great pension (vested), to another company with a good pension (vested in 3 years). I am considering applying for a company without a pension, but a higher 401k match (it doesn't make up for the pension if I worked 25 more years). Every older person I meet says I am borderline nuts to leave any job with a pension.
It definitely plays a major factor. It's compounded by the fact that my wife also works at the same company (I've been there 5 years, she's coming up on 2); I just vested, she has about 3 years to go. There's certainly something to be said for the security of a pension, though there's also the perpetual fear that it could be frozen. Nevertheless, based on conversations with colleagues, I save considerably more than most (even compared to those much older) in part because of the uncertainty of the pension and because we plan to retire at 55 at the latest. Many at the company save minimally, if at all, in the 401k and plan solely on the pension.

I work in an industry (financial services) where pensions are quite a bit more common; admittedly, most other companies in the industry have a better 401k match, but a less generous pension. One of the challenges in leaving is that you may have forgone years of a lucrative 401k match in exchange for the pension, however the real benefit of the pension necessitates many years of service. If you give up the pension, even being vested but with minimum years of service, I'd worry about making up the difference . . . perhaps this is a bit of a fallacy though. Moreover, it's harder to quantify and compare our total compensation to other job offers because the pension isn't readily assigned a value.

Nevertheless, to reiterate my answer to your question: yes, it definitely plays a major role in any outside career choices. I think many in my age cohort at my company are of the position that we'll stick around unless and until the pension is frozen/modified . . . unless the new job was offered with a significant increase in pay.

JGoneRiding
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Re: Savings rate per month???

Post by JGoneRiding » Thu Aug 16, 2018 10:43 pm

LiterallyIronic wrote:
Thu Aug 16, 2018 2:21 pm
I thought I was doing decent at 25% of gross ($63,500 income with stay-at-home wife and a one-year-old), not including employer match or extra mortgage principal payments.
You are! That is a very above average savings rate in that situation and you should be very proud. We have the 1 yr old and a little bit higher salary and are struggling to hit 25% realistically if you consistently hit 12 to 15 % you should be good. Some of these people have insane salaries and nothing better to do with it. Others stretch the definition of "savings"

orhkaf
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Re: Savings rate per month???

Post by orhkaf » Thu Aug 16, 2018 11:08 pm

Just finished paying off my student loan and moved back in with my parents.

Saving around ~65% of gross pay (including 401K match).

CarpeDiem22
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Re: Savings rate per month???

Post by CarpeDiem22 » Fri Aug 17, 2018 4:33 am

Around 52% of net pay (gross - tax) for last 12 months. 31, married, no kids, renting. If I include wife's income and her personal expenses also, the household rate is around 62%.

SelfEmployed123
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Re: Savings rate per month???

Post by SelfEmployed123 » Fri Aug 17, 2018 5:43 am

Family of three here. Spouse and I are in our mid-30s. We are saving approximately 70% of our gross pay this year. We are blessed in that both my spouse and I can walk to work. We also have free childcare. However, we are trying to catch up in our retirement accounts and save up a house downpayment after years of barely saving anything. We will be moving out of the city and signing up for commutes once our 1 y.o. hits school age.
"Get what you can, and what you get hold, 'Tis the stone that will turn all your lead into gold." | -Benjamin Franklin

The Wizard
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Re: Savings rate per month???

Post by The Wizard » Fri Aug 17, 2018 6:10 am

Back when I was working full-time, savings rate was around 35% of gross, including employer contribution to my 403(b).

Now that I'm retired, savings rate from excess retirement income is around 10% over the year, varying month to month due to travel expenses.
That 10% excludes Roth conversions...
Attempted new signature...

BanquetBeer
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Re: Savings rate per month???

Post by BanquetBeer » Fri Aug 17, 2018 6:34 am

Early 30’s, 2 kids, both work, separate finances.

I save 40-50% gross (inc bonus/401k in numerator and denominator). Pay taxes and spending out of 50-60%

That has been going down slowly (from 50%) as kids grow and we feel more comfortable with our finances. When kid #2 can start kindergarten will have to re-evaluate where we live (public school) or what we save (private school).

At some point (5-10yrs) plan to match spending with SWR until spending gets where I want for retirement. Also estimating $12k/pp/yr for healthcare if no longer working.

Edit: Our relationship is equatable.

runner540
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Re: Savings rate per month???

Post by runner540 » Fri Aug 17, 2018 6:50 am

azanon wrote:
Thu Aug 16, 2018 1:04 pm
To some extent, I do believe in consumption smoothing. Excessive saving takes away some of the wonder of compound growth, and potentially squanders all of that hard work you may have done in school to earn that degree that allows you to have a high salary.
azanon, Can you please explain what you mean by this? I'm familiar with compound growth, but I don't understand your comments about squandering hard work...

azanon
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Re: Savings rate per month???

Post by azanon » Fri Aug 17, 2018 7:10 am

runner540 wrote:
Fri Aug 17, 2018 6:50 am
azanon wrote:
Thu Aug 16, 2018 1:04 pm
To some extent, I do believe in consumption smoothing. Excessive saving takes away some of the wonder of compound growth, and potentially squanders all of that hard work you may have done in school to earn that degree that allows you to have a high salary.
azanon, Can you please explain what you mean by this? I'm familiar with compound growth, but I don't understand your comments about squandering hard work...
I was reflecting on my own personal experience through the entirety of my schooling (MA in Biology), that allowed for me to eventually get a relatively high paying job. I was 24 or 25 or so by the time I finished my degree. To me, it doesn't make a lot of sense to do so much work over many years to get a high end education, only to get a job for just 15 or so years by being a hyper-saver that lives on next to nothing for the purpose of extreme early retirement.

Also, when it comes to compounding of your growing investments, time is far more powerful than amount saved, so it's exponentially harder to get a very large retirement amount by saving more instead of just adding more time. Case-and-point, do you know how many times you would need to fold a piece of paper .1mm thick to reach the moon? Just 42 times.

But i digress; consumption smoothing is about having an optimized standard of living throughout one's life. I think if I can live on 85% of what I take home, 15% is plenty enough to compound and grow into a sizeable sum with my pension. As I said before, add another 5-10% with no pension.

runner540
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Re: Savings rate per month???

Post by runner540 » Fri Aug 17, 2018 7:39 am

azanon wrote:
Fri Aug 17, 2018 7:10 am
runner540 wrote:
Fri Aug 17, 2018 6:50 am
azanon wrote:
Thu Aug 16, 2018 1:04 pm
To some extent, I do believe in consumption smoothing. Excessive saving takes away some of the wonder of compound growth, and potentially squanders all of that hard work you may have done in school to earn that degree that allows you to have a high salary.
azanon, Can you please explain what you mean by this? I'm familiar with compound growth, but I don't understand your comments about squandering hard work...
I was reflecting on my own personal experience through the entirety of my schooling (MA in Biology), that allowed for me to eventually get a relatively high paying job. I was 24 or 25 or so by the time I finished my degree. To me, it doesn't make a lot of sense to do so much work over many years to get a high end education, only to get a job for just 15 or so years by being a hyper-saver that lives on next to nothing for the purpose of extreme early retirement.

Also, when it comes to compounding of your growing investments, time is far more powerful than amount saved, so it's exponentially harder to get a very large retirement amount by saving more instead of just adding more time. Case-and-point, do you know how many times you would need to fold a piece of paper .1mm thick to reach the moon? Just 42 times.

But i digress; consumption smoothing is about having an optimized standard of living throughout one's life. I think if I can live on 85% of what I take home, 15% is plenty enough to compound and grow into a sizeable sum with my pension. As I said before, add another 5-10% with no pension.
Thanks for that. I agree with you, IF you are confident you can work, earn and save at the same rate for decades. I am younger and in a volatile career, so saving a lot because I don't know if I can keep up this level of earning and saving for the next 3 decades.

stoptothink
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Re: Savings rate per month???

Post by stoptothink » Fri Aug 17, 2018 8:34 am

JGoneRiding wrote:
Thu Aug 16, 2018 10:43 pm
LiterallyIronic wrote:
Thu Aug 16, 2018 2:21 pm
I thought I was doing decent at 25% of gross ($63,500 income with stay-at-home wife and a one-year-old), not including employer match or extra mortgage principal payments.
You are! That is a very above average savings rate in that situation and you should be very proud. We have the 1 yr old and a little bit higher salary and are struggling to hit 25% realistically if you consistently hit 12 to 15 % you should be good. Some of these people have insane salaries and nothing better to do with it. Others stretch the definition of "savings"
+2. When my wife and I were just married (coming up on 5yrs), with a combined income of ~$90k/yr, it was pretty difficult to do much better than LiterallyIronic is currently doing (and our necessity spending should be similar as we live in the same area) and I am easily one of the most frugal individuals on this board. Now that our income has more than doubled, even with 2 kids in full-time daycare, cash-flowing my wife's full-time education, and paying a 15yr mortgage down at an accelerated rate, our savings rate has easily doubled and my wife spends a lot more on wants than she felt comfortable doing before. More income makes it all a whole lot easier.

getthatmarshmallow
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Re: Savings rate per month???

Post by getthatmarshmallow » Fri Aug 17, 2018 9:13 am

Tbh, I don't find savings rate to be a useful comparison between wildly different income ranges. On the assumption that one minimally avoids lifstyle inflation, which Bogleheads do, it becomes very easy to save a high percentage just by having a high income and not buying a big house (and if you count mortgage principal as saving numbers are easy to inflate.) I'm far more impressed by someone putting away 15% on 60K per year than someone saving 50% on 300K, most likely.

azanon
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Re: Savings rate per month???

Post by azanon » Fri Aug 17, 2018 10:22 am

getthatmarshmallow wrote:
Fri Aug 17, 2018 9:13 am
Tbh, I don't find savings rate to be a useful comparison between wildly different income ranges. On the assumption that one minimally avoids lifstyle inflation, which Bogleheads do, it becomes very easy to save a high percentage just by having a high income and not buying a big house (and if you count mortgage principal as saving numbers are easy to inflate.) I'm far more impressed by someone putting away 15% on 60K per year than someone saving 50% on 300K, most likely.
To be frank, I don't necessarily envy extreme high savers in any event, depending on the specific situation. I'm very close to one person like this who puts up with all sorts of life inconveniences, but it darn near a decamillionairre, and well on his way to being one of the wealthiest people in the local graveyard. What's the point of making so much money if you don't ever use it, or at least have some sort of noble goal in mind for it, such as a charity.

I chuckle at the shallow quip sometimes made, but I'm inclined to subscribe at least a little truth to it; "If I can't see it, you don't have it".

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Majormajor78
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Re: Savings rate per month???

Post by Majormajor78 » Fri Aug 17, 2018 10:33 am

40 years old

Household income about 120K

savings rate for retirement at about %22 when including employer match.

We have an additional 4% going towards the kids college and a little extra trickling towards the mortgage every month.
"Oh, M. le Comte, it is only a loss of money which I have sustained... nothing worth mentioning, I assure you."

Crisium
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Re: Savings rate per month???

Post by Crisium » Fri Aug 17, 2018 10:42 am

1/3 for now. But I am single and have a housemate. It will be drastically lower if those things change. My income is lower than the national average so full housing and family costs would mean little savings.

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willthrill81
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Re: Savings rate per month???

Post by willthrill81 » Fri Aug 17, 2018 11:08 am

We have a 51% pre-tax savings rate right now.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

crazcarl
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Re: Savings rate per month???

Post by crazcarl » Fri Aug 17, 2018 11:22 am

around 80-85% I believe,

11,000 total household income per month

max my 401k, wife's 403b and 457, tIRA for both, pay extra towards very small mortgage, and throw another $2500+ into taxable accounts each month.

Of course we are 33 and 34 and planning on retiring in 2 years, so we are pushing hard at this currently and live in a LCOL area.

JHU ALmuni
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Re: Savings rate per month???

Post by JHU ALmuni » Fri Aug 17, 2018 11:30 am

crazcarl wrote:
Fri Aug 17, 2018 11:22 am
around 80-85% I believe,

11,000 total household income per month

max my 401k, wife's 403b and 457, tIRA for both, pay extra towards very small mortgage, and throw another $2500+ into taxable accounts each month.

Of course we are 33 and 34 and planning on retiring in 2 years, so we are pushing hard at this currently and live in a LCOL area.
That's very impressive. Making 11k a months and living on 2k! How do you do it?

H-Town
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Re: Savings rate per month???

Post by H-Town » Fri Aug 17, 2018 11:37 am

crazcarl wrote:
Fri Aug 17, 2018 11:22 am
around 80-85% I believe,

11,000 total household income per month

max my 401k, wife's 403b and 457, tIRA for both, pay extra towards very small mortgage, and throw another $2500+ into taxable accounts each month.

Of course we are 33 and 34 and planning on retiring in 2 years, so we are pushing hard at this currently and live in a LCOL area.
That's just impressive.

132,000 household gross
18,500 - your 401k
18,500 - wife 403b
18,500 - wife 457
11,000 - both tIRA
15,000 - fed income tax, FICA, etc.
30,000 - brokerage account
--------------------------
20,500 =
18,000 - mortgage, insurance, property tax
--------------------------
2,500 = left to spend on food, transportation, household consumption for the entire year?

InvisibleAerobar
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Re: Savings rate per month???

Post by InvisibleAerobar » Fri Aug 17, 2018 11:39 am

getthatmarshmallow wrote:
Fri Aug 17, 2018 9:13 am
Tbh, I don't find savings rate to be a useful comparison between wildly different income ranges. On the assumption that one minimally avoids lifstyle inflation, which Bogleheads do, it becomes very easy to save a high percentage just by having a high income and not buying a big house (and if you count mortgage principal as saving numbers are easy to inflate.) I'm far more impressed by someone putting away 15% on 60K per year than someone saving 50% on 300K, most likely.
this

there's a baseline to certain fixed costs, and these costs aren't zero when a person has no income, nor do these costs scale in a 1:1 relationship with increase in salary, especially when one lives beneath one's means.

i went from saving 16% from take home pay of 51k and contributing 11% of gross pay of 85k to 401k (without contributing anything to Roth IRA) to saving 30% from take home pay of 66k (maxing out Roth and putting the rest in savings account) and contributing 16% of gross pay of 115k to 401k. My lifestyle hasn't changed much, and one could say that I may even have been living above my means when I was making 85k, but the fact remains that the excess in savings is attributed almost entirely to an 30k increase in salary. A 33% increase in income led to an almost doubling in my after-taxes savings and a 45% increase in pre-tax contributions. It was actually a bit jarring when my annual after-tax savings was more than my annual 401k contributions.

Now extrapolate that further to 300k. Of course, the tax hits on the ~200k from ~100k to 300k will be greater, but one could still pocket ~60% of that after tax. As the taxes on the last 200k should be ~80k, then the person pockets 120k, and that alone would represent at least 55% of take home pay (assuming the first 100k is sufficient for all other expenses). This says nothing about how frugally someone is living and more that the person is sufficiently well-off that s/he doesn't need to worry about the small details and can still manage to save a lot.

crazcarl
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Re: Savings rate per month???

Post by crazcarl » Fri Aug 17, 2018 11:44 am

JHU ALmuni wrote:
Fri Aug 17, 2018 11:30 am
crazcarl wrote:
Fri Aug 17, 2018 11:22 am
around 80-85% I believe,

11,000 total household income per month

max my 401k, wife's 403b and 457, tIRA for both, pay extra towards very small mortgage, and throw another $2500+ into taxable accounts each month.

Of course we are 33 and 34 and planning on retiring in 2 years, so we are pushing hard at this currently and live in a LCOL area.
That's very impressive. Making 11k a months and living on 2k! How do you do it?
Thank you! It used to be more of a struggle when we first started, but much easier as you learn.
My PITI is $750/month + we pay an extra $400
no cable TV, internet is $65
food is roughly $300
Gas and electrical is $125 combined (we live in a 1,000 sq ft 3 bed 1 bath home. (Wife and two kids, 2 and 4)
Wife teaches about a mile from where we live
Most of our time is spent outside at parks and walking and riding bikes
We will still go out here and there, but usually only if invited with friends and/or family. We buy quality only when we need them and something broke. (replaced my iphone 5 with the iphone 8 after 5+ years with the same one)
We like to live simply right now, as we will be selling everything and buying a sailboat in 2 years.

crazcarl
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Re: Savings rate per month???

Post by crazcarl » Fri Aug 17, 2018 11:49 am

thangngo wrote:
Fri Aug 17, 2018 11:37 am
crazcarl wrote:
Fri Aug 17, 2018 11:22 am
around 80-85% I believe,

11,000 total household income per month

max my 401k, wife's 403b and 457, tIRA for both, pay extra towards very small mortgage, and throw another $2500+ into taxable accounts each month.

Of course we are 33 and 34 and planning on retiring in 2 years, so we are pushing hard at this currently and live in a LCOL area.
That's just impressive.

132,000 household gross
18,500 - your 401k
18,500 - wife 403b
18,500 - wife 457
11,000 - both tIRA
15,000 - fed income tax, FICA, etc.
30,000 - brokerage account
--------------------------
20,500 =
18,000 - mortgage, insurance, property tax
--------------------------
2,500 = left to spend on food, transportation, household consumption for the entire year?
Sorry our income is a bit closer to 136000
401k, 403b and 457 are all taken out before taxes, so my taxes paid are much lower, and my PITI is only 750/month, not sure where you got 18,000

MathWizard
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Re: Savings rate per month???

Post by MathWizard » Fri Aug 17, 2018 11:51 am

43% of gross for retirement, counts employer match in numerator and denominator

does not include pension payment for my spouse or short term savings

getthatmarshmallow
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Re: Savings rate per month???

Post by getthatmarshmallow » Fri Aug 17, 2018 11:59 am

InvisibleAerobar wrote:
Fri Aug 17, 2018 11:39 am
getthatmarshmallow wrote:
Fri Aug 17, 2018 9:13 am
Tbh, I don't find savings rate to be a useful comparison between wildly different income ranges. On the assumption that one minimally avoids lifstyle inflation, which Bogleheads do, it becomes very easy to save a high percentage just by having a high income and not buying a big house (and if you count mortgage principal as saving numbers are easy to inflate.) I'm far more impressed by someone putting away 15% on 60K per year than someone saving 50% on 300K, most likely.
this

there's a baseline to certain fixed costs, and these costs aren't zero when a person has no income, nor do these costs scale in a 1:1 relationship with increase in salary, especially when one lives beneath one's means.

i went from saving 16% from take home pay of 51k and contributing 11% of gross pay of 85k to 401k (without contributing anything to Roth IRA) to saving 30% from take home pay of 66k (maxing out Roth and putting the rest in savings account) and contributing 16% of gross pay of 115k to 401k. My lifestyle hasn't changed much, and one could say that I may even have been living above my means when I was making 85k, but the fact remains that the excess in savings is attributed almost entirely to an 30k increase in salary. A 33% increase in income led to an almost doubling in my after-taxes savings and a 45% increase in pre-tax contributions. It was actually a bit jarring when my annual after-tax savings was more than my annual 401k contributions.

Now extrapolate that further to 300k. Of course, the tax hits on the ~200k from ~100k to 300k will be greater, but one could still pocket ~60% of that after tax. As the taxes on the last 200k should be ~80k, then the person pockets 120k, and that alone would represent at least 55% of take home pay (assuming the first 100k is sufficient for all other expenses). This says nothing about how frugally someone is living and more that the person is sufficiently well-off that s/he doesn't need to worry about the small details and can still manage to save a lot.
Our trajectory has been similar. To continue the somewhat philosophical discussion, if one has relatively modest tastes, the high savings rate also doesn't represent significant personal sacrifice. It reflects a prudent sense of planning ahead, of course, but at a certain income level (which is COL-dependent) it's not meaning extreme coupon clipping or deprivation to save a lot. And... there's no particular reason that it should. I could probably save 70% of our income if I ran this household like a martinet and eliminated all extracurriculars and unnecessary spending. (Or maybe with creative budgeting where I call mortgage principle payments 'savings.') But to what end? Is there a gold star somewhere for savings rates?

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dccboone
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Re: Savings rate per month???

Post by dccboone » Fri Aug 17, 2018 12:06 pm

I'm 61, my wife is 58. We try to increase our retirement savings rate by 1 percentage point each year. In 2017 we saved 41% of net income and as of August 1st, we're on track to save 42% of net take-home this year. That's possible because we have no debt, live below our means, follow a monthly budget and we're empty nesters.

fiskalisch gesinnt
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Re: Savings rate per month???

Post by fiskalisch gesinnt » Fri Aug 17, 2018 12:21 pm

Question: For those including the employer match, are you including it in both the numerator and denominator?

IRT
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Re: Savings rate per month???

Post by IRT » Fri Aug 17, 2018 2:08 pm

fiskalisch gesinnt wrote:
Fri Aug 17, 2018 12:21 pm
Question: For those including the employer match, are you including it in both the numerator and denominator?
48% of gross last year. Includes employer match (in the num and denom).

InvisibleAerobar
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Re: Savings rate per month???

Post by InvisibleAerobar » Fri Aug 17, 2018 2:32 pm

getthatmarshmallow wrote:
Fri Aug 17, 2018 11:59 am

Our trajectory has been similar. To continue the somewhat philosophical discussion, if one has relatively modest tastes, the high savings rate also doesn't represent significant personal sacrifice. It reflects a prudent sense of planning ahead, of course, but at a certain income level (which is COL-dependent) it's not meaning extreme coupon clipping or deprivation to save a lot. And... there's no particular reason that it should. I could probably save 70% of our income if I ran this household like a martinet and eliminated all extracurriculars and unnecessary spending. (Or maybe with creative budgeting where I call mortgage principle payments 'savings.') But to what end? Is there a gold star somewhere for savings rates?
i think philosophically, it's important to impart the message of having the goal of saving 10% of one's take home pay for the vast majority of people when they start out. Main reason is that the overwhelming majority of society aren't doing this. It's also the issue that when one doesn't make much, the effort just appears to be so futile and Sisyphean. Thinking back to my grad school days, I get a take-home pay of $25k. Both rent and food were expensive, along with other living costs; so I could have saved $350/month if I acted responsibly, to the tune of ~$4k/year. That would have been 17% of take home pay, but the number just seemed so inconsequential that by the time I left grad school (4 years), I had almost nothing saved. Saving that 10%+ (preferably by payroll deduction) deters one from dreading the low value in the account or the low amount added/month.

Once someone is at least taking full advantage of employer's 401k match (and preferably saving at least 10% pre-tax) and also manage to save 15% after-tax, anything else is just gravy. For the vast majority of young people starting out, this would preclude them from indulging in too many money-draining hobbies/vices. Add to that one should increase the proportion saved every time one obtains a significant raise, this would lead to a healthy personal finance situation. The amount may not guarantee a nest egg that would allow one an upper-middle class retirement filled with vacations, but the person would also not be forced into working into his/her 70s or forced to depend primarily on social security. Would be great if one could save more, but numbers themselves carry less meaning once the threshold has been cleared. What I don't agree with (and i'm not saying that anyone here is doing it), is the fetishizing of savings rate for its own sake. Same goes with someone who drives a 20-year old car solely for the appearance of being frugal. To me, that's just trading conspicuous consumption for conspicuous "virtue signaling" (the virtue here being frugality). Preferable to showing off of consumption, of course, but the mentality behind it is no different.

That said, I always found certain charm in driving a 20-yr old Volvo station wagon; but that's just me

Grogs
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Re: Savings rate per month???

Post by Grogs » Fri Aug 17, 2018 7:04 pm

KT785 wrote:
Thu Aug 16, 2018 9:58 pm
BradJ wrote:
Thu Aug 16, 2018 3:45 pm
KT785 wrote:
Thu Aug 16, 2018 12:45 pm
Married, both 30, no kids (yet).

I calculate our savings rate on a gross household (pre-tax), annual basis: 25-27% split between our 401ks and Roth IRAs. We both get a small ($1,200 per person) employer contribution to our 401ks--factored into the savings rate--since our employer also provides a well funded pension plan (completely paid for by them). I should also note, the pension is not factored into the savings rate . . . . though I'm vested and it's well funded, you never know what the future holds.

Re: the retirement accounts, we max both Roth IRAs but are not yet maxing the 401ks; am contemplating investing in taxable before fully maxing the 401ks for tax planning in early retirement, especially given the pension.
Does your pension play any role in your decision for future employment opportunities? I left a company with a great pension (vested), to another company with a good pension (vested in 3 years). I am considering applying for a company without a pension, but a higher 401k match (it doesn't make up for the pension if I worked 25 more years). Every older person I meet says I am borderline nuts to leave any job with a pension.
It definitely plays a major factor. It's compounded by the fact that my wife also works at the same company (I've been there 5 years, she's coming up on 2); I just vested, she has about 3 years to go. There's certainly something to be said for the security of a pension, though there's also the perpetual fear that it could be frozen. Nevertheless, based on conversations with colleagues, I save considerably more than most (even compared to those much older) in part because of the uncertainty of the pension and because we plan to retire at 55 at the latest. Many at the company save minimally, if at all, in the 401k and plan solely on the pension.

I work in an industry (financial services) where pensions are quite a bit more common; admittedly, most other companies in the industry have a better 401k match, but a less generous pension. One of the challenges in leaving is that you may have forgone years of a lucrative 401k match in exchange for the pension, however the real benefit of the pension necessitates many years of service. If you give up the pension, even being vested but with minimum years of service, I'd worry about making up the difference . . . perhaps this is a bit of a fallacy though. Moreover, it's harder to quantify and compare our total compensation to other job offers because the pension isn't readily assigned a value.

Nevertheless, to reiterate my answer to your question: yes, it definitely plays a major role in any outside career choices. I think many in my age cohort at my company are of the position that we'll stick around unless and until the pension is frozen/modified . . . unless the new job was offered with a significant increase in pay.
I consider my pension to be, maybe not golden handcuffs, but at least silver-plated ones. Like you, I vested in my pension at 5 years, but there are two more thresholds at 8 and 10 years. The first would reduce the full retirement age in the event of a severance, and the second would reduce it regardless of my reason for leaving. I'm coming up on seven years, so I'm looking forward to crossing those thresholds because they would mean 3-5 years (age 60-62 vs. 65) less inflation before I could claim the full pension, or a reduced pension as early as 50. The company reduced the pension benefits for new employees beginning in 2012 (the year after I was hired), so I'm hoping that will mean there are no plans for reducing the plan further for several years to come. If they do choose to freeze it at some point, I'll look at the positive aspect -- it would free me to look at other job opportunities if I found other places I would prefer to work.

ETA: It probably helps too that where I work is probably one of the best places in terms of pay and cost of living. I've seen similar jobs in HCOL locations that that pay maybe 20% more, but my best guess is that expenses would go up 50%+ so it would be a net loss.

Candor
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Re: Savings rate per month???

Post by Candor » Fri Aug 17, 2018 7:17 pm

On track for 55-60% of gross for this year. That will be pretty close to the max I can save until retirement hopefully in 4 years.

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Toons
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Re: Savings rate per month???

Post by Toons » Fri Aug 17, 2018 7:33 pm

When we were working we aimed for
30-35%,so that,
we would not have to save in retirement.
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Bogle_Bro
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Re: Savings rate per month???

Post by Bogle_Bro » Fri Aug 17, 2018 9:08 pm

33%

50/150, maxed tax advantaged (married, 1 kid)

Roughly

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