Percentage of Gross Pay to Savings ?

[edro]

Have you ever figured out what percentage of your Gross Pay goes to savings (Retirement or long term goal >5years)?

For this poll, include:

• Personal Retirement Contributions
• Long Term Savings Account Contributions
• Long term HSAs
• 529 Plans / College Savings
• Any other long term investment made by you

Not included:

• Employer Paid Retirement Contributions (401k match, etc)
• Tax payments or social security payments, etc
• Mortgage Payments

Include your spouse into the mix.
Ex. Husband and wife make $100k gross.
They contribute 10% each to 401k ($10k) and save $1000/mo into savings account ($12k).
They save $22k/$100k = 22%.

Some websites I see say the national average in the US is 4%.
The top 10% save ~20% and the top 1% save around ~40%.

This can get messy, for instance, if you get a large pension or had a large inheritance you might not save as much.

 

[cbrunny]

Rough math puts this just over 30% of gross.

Edit: wait, what do you mean by savings? Do you mean savings that is specifically and exclusively for retirement purposes? Or savings for any long-term goals? Or some other thing?

And not including principle amount of a mortgage payment, right?

 

[x26]

I usually save at Least 0% but If I really save a lot I will double that and save:

0% x 0% for a Whopping 0% Rate!!

 

[edro]

Rough math puts this just over 30% of gross.

Edit: wait, what do you mean by savings? Do you mean savings that is specifically and exclusively for retirement purposes? Or savings for any long-term goals? Or some other thing?

And not including principle amount of a mortgage payment, right?

No mortgage payments or principal reductions, and yes, any long term savings goal.
Long term meaning >5 years.

 

[purbeast0]

about 18 - 19 percent into retirement plans.

i don't have a specific savings plan for my savings account, although whatever i make from my random mobile app sales go directly to it, but any "left over" money after bills are paid the month is over i usually toss into savings or put away towards our next vacation.

 

[IronWing]

I figure if I save up enough, someday I can pay off the CCs.

 

[child of wonder]

13% or so? I max out my 401k, my wife contributes to a pension, and we put our own post tax money into targeted mutual funds. Would like to get that number up to 18%.

 

[Spungo]

It was 20% a few months ago, but it's about 10% right now. I'm always nuts about saving money because I enjoy having money. If I need something, I can buy it any time I want. I love that feeling.

IMO, people should shoot for a 10% savings rate, and that includes pension contributions. You make 50k, your pension is 2.5k, so try to save at least 2.5k in addition to the pension. Saving more is better, but at least try to get that 10%, and you'll probably never need to worry about retirement. Over 40 years, that 10% adds up.

 

[core2slow]

7% to the 401k. Only because my company does horrible matching so I might as well take some out and put it in my own money market account.

 

[JTsyo]

I put away 10% and my wife 8% into our 401K. We don't have a set amount for retirement savings on top of that. Whatever is left over at the end of the month is put into savings but is not earmarked for anything.

 

[edro]

~10% 401ks
~4% Roth IRAs
~2% HSAs (don't plan on using until retirement)
~3% Savings account
~0.5% 529 Plan

19.5% Total

 

[ViviTheMage]

I have student loans, so only 6% goes to my 401k, and 2% to HSA.

 

[CraKaJaX]

6% into 401k right now. Paying off the student loans is more important at the moment.

 

[dave_the_nerd]

16% into a 401k. 5% of that is matching though.

Plus social security. ::ducks and runs away::

 

[JimmiG]

I put away about 10% every month. Just a plain savings account. Don't have any of those fancy HSA's, PSA's, FSA's, AGFSJNO's etc. here in Sweden since we have universal health care and universal pensions.

 

[gorcorps]

save? hah!

I contribute the amount I need for all company matches (because you don't give up free money) but other than that, hah!

Spoiler

hah!

 

[Imp]

Remember, a lot of these "financial experts" who write these guidelines helped crash the world economy in 2008 and didn't see it coming. The genuinely smart ones were ignored and just shorted the market. Hell, they're doing it again right now in Canada.

Also, average is "normal." If "normal" people only save 4%, you probably don't want to be like them because "normal" people have financial issues.

For me, it's as much as possible until I hit $500k so I can make a passive livable income investing in relatively safe things. Having worked shit jobs my entire life, I value the freedom of never having to get on my knees for a paycheck and a two week vacation every 50 weeks of subservience.

 

[Phynaz]

17% 401K
5% 401K catchup
2% IRA
===========
24%

5% Company 401k match
10% Company pension contribution
=============
39%

 

[dullard]

~10% 401ks
~4% Roth IRAs
~2% HSAs (don't plan on using until retirement)
~3% Savings account
~0.5% 529 Plan

19.5% Total

Not knowing the details, it looks on the surface that you should direct some of that 3% savings account contribution into taxable stocks. Having a few taxable stocks can be a godsend when you want to lower taxes. Plus, assuming you actually invest well, it'll do far better than your savings account. You can always take a loan with that as collateral if needed.

In other words, don't put $10000 into savings where after a few years you have ~$10000. Put $2000 into savings which is all you probably need in most emergencies and then $8000 into taxable stocks. In 2 to 3 years, that will become $2000 in savings and $10000 in stocks. Worst case scenario, you take a loan with those stocks as collateral and pay $100 or so in interest. You are still far ahead.

 

[cbrunny]

Remember, a lot of these "financial experts" who write these guidelines helped crash the world economy in 2008 and didn't see it coming. The genuinely smart ones were ignored and just shorted the market. Hell, they're doing it again right now in Canada.

Also, average is "normal." If "normal" people only save 4%, you probably don't want to be like them because "normal" people have financial issues.

For me, it's as much as possible until I hit $500k so I can make a passive livable income investing in relatively safe things. Having worked shit jobs my entire life, I value the freedom of never having to get on my knees for a paycheck and a two week vacation every 50 weeks of subservience.

Who is shorting what market in Canada right now?

 

[dullard]

Some websites I see say the national average in the US is 4%.
The top 10% save ~20% and the top 1% save around ~40%.

In general, to live in retirement with the same quality of life as you had before retirement, you need to have an average of 15% saved each year over your career. But that can be a mix of your savings, your employer match, and social security.

If you save 4%, your company matches 4%, and assume that social security comes in at 6%, you aren't that far off from what you truly need.


Calculations for proof:
I'll do everything inflation-adjusted to make it easier, but the same result is obtained with raw numbers.

Suppose you make $50k a year after tax. Suppose you save 15% of that ($7500), so you spend the rest ($42500). Inflation-adjusted stock gains should be around 5%/year. Suppose you work 40 years. After 40 years of putting away $7500/year with 5% gains, you have $905,998.

One rule-of-thumb is that you can usually retire safely if you use 5% of your savings each year in retirement. Thus, you could spend 5% of $905,998 each year = $45,299.92. Since the rest gains 5% a year, you will always have $905,998 and can always withdraw $45,299.92 each year.

That means after retirement you get to spend $45,299 when before retirement you get to spend only $42500. Your standard of living went up slightly after retirement by saving 15%. Of course, to be ultra-conservative, you may want to only use 4% of your investments each year in retirement. In that case, you get $36,239.93 which is a slight decrease in standard of living. Either way, saving about 15% is just about right.

 

[WilliamM2]

10% goes into 410K, and probably 50% of take home pay saved in one account or another, I don't really keep track anymore.

It gets easy to save as you get older, and everything is paid for.

 

[edro]

Not knowing the details, it looks on the surface that you should direct some of that 3% savings account contribution into taxable stocks. Having a few taxable stocks can be a godsend when you want to lower taxes. Plus, assuming you actually invest well, it'll do far better than your savings account. You can always take a loan with that as collateral if needed.

In other words, don't put $10000 into savings where after a few years you have ~$10000. Put $2000 into savings which is all you probably need in most emergencies and then $8000 into taxable stocks. In 2 to 3 years, that will become $2000 in savings and $10000 in stocks. Worst case scenario, you take a loan with those stocks as collateral and pay $100 or so in interest. You are still far ahead.

I've subscribed to your newsletter.
I do have a small stock account, but it's just for fun.
It's basically gambling on individual stocks.
I do like the idea of shifting some savings into safer stocks though...

Thanks for the input.

 

[soulcougher73]

Roughly 15% it appears between wife and I.

 

[edro]

Having a few taxable stocks can be a godsend when you want to lower taxes.

I see you can only deduct up to $3000 in losses, but can carry forward those losses.
So it's not a huge benefit, but a decent upside to having some stock losers.
And if you don't have stock losers, they are winners... which equals winning.