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Started By
Message
What % of gross income to save/invest?
Posted on 11/30/15 at 7:30 am
Posted on 11/30/15 at 7:30 am
Obviously the more the better but what is a realistic savings rate, in your opinion, to balance financial future and life/experiences today?
I've heard 15% but 25% wouldn't be too difficult
I've heard 15% but 25% wouldn't be too difficult
12
Posted on 11/30/15 at 8:06 am to SomeGuyFromLA
I've been thinking about it too. When you say 25% wouldn't be too difficult, do you mean 25% BTAX or ATAX?
Posted on 11/30/15 at 8:45 am to SomeGuyFromLA
Depends on goals....for me its FIRE...financial independence retire early so the answer is as much as you can and still enjoy your life. Maybe the best thing about savings is it holds back lifestyle creep. Keeping expenses low is just as important.
Need more info to answer the question.
Need more info to answer the question.
This post was edited on 11/30/15 at 8:48 am
Posted on 11/30/15 at 11:08 am to stonerolledaway
25% before tax wouldn't be difficult.
It was an objective question, really. Just feeling out what others are doing out of curiosity more than anything
It was an objective question, really. Just feeling out what others are doing out of curiosity more than anything
Posted on 11/30/15 at 11:18 am to SomeGuyFromLA
My suggestion is to have a target number that you always want to meet (say 15%), all the while aim to do better than that while you can. If you can invest 20% of income or greater and not be living off of ramen noodles, by all means go for it.
Retirement investing needs to be planned, just as the rest of your budget. You do not have to have everything planned to a T in regards to your annual forecast. The fact of the matter is having goals in mind will put you in a much better place. Investing 25% might seem plausible, but it could negatively impact you in meeting a goal for buying a house tomorrow, or surviving an emergency.
Retirement investing needs to be planned, just as the rest of your budget. You do not have to have everything planned to a T in regards to your annual forecast. The fact of the matter is having goals in mind will put you in a much better place. Investing 25% might seem plausible, but it could negatively impact you in meeting a goal for buying a house tomorrow, or surviving an emergency.
Posted on 11/30/15 at 11:33 am to SomeGuyFromLA
quote:
I've heard 15% but 25% wouldn't be too difficult
If it isn't difficult, do it. The more the merrier.
Posted on 11/30/15 at 11:47 am to bwallcubfan
quote:
If it isn't difficult, do it. The more the merrier.
This. Save as much as you can while still spending enough to enjoy life, even if that means having cable, smart phones, etc. I say this because there are those that believe you should only spend on necessities.
Posted on 11/30/15 at 12:30 pm to SomeGuyFromLA
I am single so can save about 50% of my take home. Work 457 IRA is maxed out. Personal roth IRA is maxed out. Work takes out 7.5% for retirement. I put aside $150 per check for future car purchases, also put $250 a check in regular after tax investments (low cost index total market). The 457 came first, then the roth, after that the car etc...
Posted on 11/30/15 at 6:34 pm to SomeGuyFromLA
Save as much as you comfortably can. However, all of this is highly dependent on income and your financial goals later in life. Saving 15% of a 100k salary is saving 50% of a 30k salary so there is a huge difference in "realistic or difficult". 
Posted on 11/30/15 at 7:19 pm to SomeGuyFromLA
I save about 25% before tax but I'll dip into that for vacations or unexpected expenses so some of it isn't long term savings
Posted on 11/30/15 at 7:42 pm to yellowfin
I think I am currently around 15%+ of before tax household income going straight to some account before we even see it. Then we are continously rolling over additional money saved we don't spend and applying elsewhere afterwards. The biggest thing I feel is not having continuous credit card debt. We have a couple of car loans just because it is such low interest. We have a house note that is somewhere 15%-20% monthly takehome.
I think I could apply a better strategy personally; however, I am clueless what is really reccomended though.
I think I could apply a better strategy personally; however, I am clueless what is really reccomended though.
This post was edited on 11/30/15 at 8:10 pm
Posted on 11/30/15 at 8:49 pm to SomeGuyFromLA
Save as much as you can. This seems like a no-brainer.
Posted on 11/30/15 at 10:15 pm to SomeGuyFromLA
The correct way to do this is to run a DCF model on your expected retirement spending in today's dollars, then do a PMT calculation using a real rate of return (inflation adjusted).
The calculation is combative in nature, as your earning power will likely increase throughout your career, but I just consider that a margin of safety.
The calculation is combative in nature, as your earning power will likely increase throughout your career, but I just consider that a margin of safety.
Posted on 11/30/15 at 10:18 pm to TheHiddenFlask
Using what discount rate?
Posted on 11/30/15 at 11:54 pm to SomeGuyFromLA
quote:
Just feeling out what others are doing out of curiosity more than anything
I was going to post my %, but got confused.... do I count my bonus? Do I count my company's 401k match?
If I include my bonus as part of my gross, and include my employer's contributions to my 401k, then we are at 25% of gross dedicated to retirement accounts (IRA, 401k). However, we put a bit more throughout the year in different savings accounts (Vanguard brokerage, funds/equities with a financial advisor). We try to keep 4-6 months gross pay in savings or money markets for emergencies.
I don't know any rules of thumb or recommendations, though... so don't know what we "should" be doing. I guess we will find out in 25-30 years when we want to retire.
Posted on 12/1/15 at 1:20 am to SomeGuyFromLA
My rule of thumb has always been at least 20% of my gross income. I've been doing this since day 1. If my 401k gets a 5% match I count that toward the 20%.
Today I'm saving around 30% gross. I worked hard and saved aggressively in my 20s and early 30s. Now that I'm late 30s, the compounding interest has really added up over the years.
I'm to the point now where my portfolio gains or losses can be multiples of my yearly contributions.
I could save another 10-20% if I really wanted to, but this is where the balance comes in for me. I'm comfortable where I am on the path to retirement. So, I'd rather go ahead and enjoy things now while I'm still healthy, etc.
Today I'm saving around 30% gross. I worked hard and saved aggressively in my 20s and early 30s. Now that I'm late 30s, the compounding interest has really added up over the years.
I'm to the point now where my portfolio gains or losses can be multiples of my yearly contributions.
I could save another 10-20% if I really wanted to, but this is where the balance comes in for me. I'm comfortable where I am on the path to retirement. So, I'd rather go ahead and enjoy things now while I'm still healthy, etc.
Posted on 12/1/15 at 7:42 am to SomeGuyFromLA
it all depends on your income and what you consider a minimum comfortable lifestyle. If you can be happy on a minimalist lifestyle and make great money, you can easily put back well over 50% and do everything you enjoy.
If you like toys, clothes, cars, etc. and don't make much, just putting back 3% can be a real chore.
If you like toys, clothes, cars, etc. and don't make much, just putting back 3% can be a real chore.
Posted on 12/1/15 at 9:44 am to SomeGuyFromLA
quote:
I've heard 15%
Should be the floor - the minimum.
quote:
25% wouldn't be too difficult
If you can do it, do it. It will amplify your quality of life in retirement.
Posted on 12/1/15 at 10:29 am to Ace Midnight
Save about in 50% from gross.
Max 401k
Max ROTH IRA
Rest goes into my house fund lol.
Max 401k
Max ROTH IRA
Rest goes into my house fund lol.
Posted on 12/1/15 at 10:37 am to I Love Bama
Long term expected inflation is 3%.
If you use that in all of your calculations, there will be a lot of self hedging.
If you use that in all of your calculations, there will be a lot of self hedging.
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