How To Save More For Retirement If You Don’t Make Much Money
$180,000 by age 30, $500,000 by age 40, $1 million by age 50, and $2 million by age 60. These are the rough estimates for what I think everybody needs to have in their 401Ks to have a reasonable attempt at a comfortable retirement. If you read the comments from my “401K amount by age” article, you will notice that those in their mid-30s and below tend to disagree with these amounts, while those older generally agree, verify, and accept.
I don’t know why younger folks aren’t willing to follow along. It’s often times just rebel and justify why they aren’t saving. ”Live life!“, they say. True, but who says you can’t live life while saving? The easiest way to learn, is to listen to an older person who has gone through what you will go through. Perhaps it’s immaturity, or the way things are where every generation needs to question the next generation and the status quo.
There’s really no mystery to money. The more you have, the more you can make. It’s all about building the NUT large enough so that when you make a fortuitous 10% return, you’re pulling in an extra $50,000-$100,000 on your $500,000-$1 million portfolio. Saying you doubled your returns from $10,000 to $20,000 due to contributions is fine, but it’s really chump change and misleading. Build the nut, so that you can have real returns.
If you aren’t on retirement track based on my 401k age chart and disagree with my figures, just do the math YOURSELF and see whether you’ve saved enough to retire on. I don’t think you’re going to like the results.
There’s one question that kept coming up over and over again, and that’s, “How can I save so much, if I don’t make so much?” It’s a fair question that needs addressing. One commenter mentioned my table must be of “California Currency”, which made me chuckle. The problem of not making enough and therefore not being able to save enough is an honest problem which I’d like to address via a change in mindset and a chart.
HOW TO SAVE FOR RETIREMENT IF YOU DON’T MAKE MUCH
* If you don’t find it painful saving money, you’re not saving enough. If you’re not sweating at the gym and your muscles don’t feel sore the next day, you might as well go eat a double cheeseburger with a milkshake and fries because you’re just wasting your time. The same goes with saving. Since you’re in the lower income bracket, savings is not supposed to be easy. If you’re not feeling the disposable income pinch of putting away, 20%, 25%, 35%, 50% of your income into your 401K, IRA, or savings account, you simply are not saving enough. You need to feel the pain, so you are forced to change your spending habits.
* Recognize that you are not rich. For whatever reason, you do not make a lot of money. It could be by choice (messed up in school, less lucrative field) or misfortune (laid off, accident, starting over). Once you recognize you are of lower income, you’ve got to come to grips with the fact that retirement is not going to be filled with milk and cookies. Think tasty water and crackers instead. You’re going to be working longer and harder than others. You’ve got to save more than your wealthier friends simply because you have less. If you only make $50,000 a year, what on earth are you doing driving a $25,000 car? That’s 50% of your gross income, and around 65% of your net income! If you guys only earn a combined $70,000 a year and have a child, what are you doing living in a 3 bedroom apartment that costs $2,500+ a month? Downsize to a two bedroom apartment and save the difference. A family of four in Tokyo live in 600 square foot, 2 bedroom apartments! Don’t act rich, because you are not.
* Do the math. One commenter asked how he can put away $17,000 a year in his 401K and then another $5,000 in his traditional IRA if he “only” makes $70,000 a year. I told him to do the math. He did the math, and he did it all wrong! This is what he calculated:
70k – 17k (401K) = 53k —> Fine.
53k * 0.4 (taxes)= 31.8k —> 40% tax rate on a $53,000 income?
31.8k * 0.2 (after tax) =25.4k —> What’s this extra 20% tax?
25.4k-5k (Roth) = 20.4k —> Why contribute to a Roth after tax, when you can contribute to a traditional IRA pre-tax?
20.4k/12 = 1.7k per month. —-> Wrong. Should be around $35,500 net = $2,960/month, 74% more than what is stated.
The effective tax rate on a $53,000 income is around 17%. Add on 9% state tax, and at most he’s around 26%. His Roth deduction is fine, if he doesn’t want to contribute $5,000 in a traditional pre-tax. However, I always recommend paying less taxes than more. I am shocked how little people understand what their effective tax rates are, and the difference between pre-tax and post-tax contribution. Do the math people. You have more than you think!
* The new normal is a lower rate of return. Anybody telling you to input more than a 5% constant rate of return on your investments is being too aggressive. The days of 8%+ portfolio returns are gone in an environment of 2% long-term treasury yields. There is an inextricable link to fixed income and equities, and baking in more than a 2.5X return over the risk-free rate is a stretch. We can increase our assumptions once we see an uptick in inflation, corporate earnings, and risk appetite, but not now.
* Realize that making more money is a choice, especially if you live in a developed country. According to one researcher, it only takes around $34,000 to be in the top 1% of world income earners. Meanwhile, $33,000 so happens to be the middle line between the top 50% and bottom 50% of US income earners. You have a choice to work more than 40 hours a week to get ahead. You have a choice to have as many or as little kids as you wish. You have a choice to start a business and make extra income on the side. You have a choice to get in before everyone and leave last, while proposing new profitable ideas for your company. You don’t have to be a top income earner, you just have to make enough to be happy and save. We live in a free country, not North Korea.
* Vote for Obama. With a ~$2 trillion dollar deficit generated under the Obama administration, the incumbent is your best bet for ensuring that social welfare programs, unemployment insurance, affordable healthcare, and low taxes continue for the middle class. By raising taxes on “the rich”, the Obama administration is effectively redistributing wealth to lower income individuals through government programs. Republicans are more focused on cutting spending to balance the budget, and not raising taxes given our system already has a progressive structure already. Both systems have its merits and flaws, but if you are making under $200,000 and your retirement accounts are light, from a financial point of view, you’re better off voting Democrat at the margin.
A SYSTEM TO GRADUALLY INCREASE YOUR SAVINGS
Now that you’ve changed your mental outlook, here’s a proposed savings chart I developed to slowly turn the screws so that you get to your retirement goals. Here are some following assumptions:
FINANCIAL SAMURAI RECOMMENDED SAVINGS RATE CHART
| Income Level | Savings % | Pre-Tax Savings | Post-Tax Savings | Fed Tax Rate |
| <$25,000 | 5% | <$1,250 | $0 | 10%-15% |
| $25,000-$35,000 | 10% | $2,500-$3,500 | $0 | 15% |
| $35,00-$45,000 | 15% | $5,250-$6,750 | $0 | 25% |
| $45,000-$65,000 | 20% | $9,000-$13,000 | $0 | 25% |
| $65,000-$85,000 | 25% | $16,250-$17,000 | $750-$5,000 | 25% |
| $85,000-$100,000 | 30% | $17,000 | $8,500-$13,000 | 28% |
| $100,000-$150,000 | 35% | $17,000 | $18,000-$35,500 | 28% |
| $150,000-$200,000 | 35% | $17,000 | $35,500-$53,000 | 28% |
Assumptions for the chart:
* No matter what your income level, you are saving some money. Develop the savings habit early and always.
* As your income level increases, so does your savings percentage rate. Challenge yourself to save more as you make more.
* It’s important to keep your rate of spending slower than your income and savings growth. Don’t let lifestyle inflation derail your plans.
* After you have maxed out your 401K at $17,000, the after-tax savings is simply the difference in your income X savings rate – $17,000. The after-tax savings amount is higher than reality, because you have to pay taxes on the gross income. Hence, multiply your after-tax savings by your Federal + State marginal income tax rate to get your true after-tax savings amount.
* At around $65,000-$85,000, I am assuming you should be able to maximize your 401K contribution, and save more money. In other words, try and target $65,000-$85,000 in annual income as soon as possible.
* I stop at a 35% savings rate to allow one to enjoy their income. Furthermore, at a 35% savings rate at $100,000-$200,000, you will have more than $5,000,000 in retirement savings if you consistently save for 43 years assuming a 5% constant rate of return.
* If you can save more than 35% of your gross income, go for it! After you earn $200,000, you should gradually aim to save 40-50% of your after tax income. We stop at $200,000, because this is the level President Obama deems rich, although plenty of people who make more have difficulty saving a well.
FINANCIAL SAMURAI 401K RETIREMENT SAVINGS GUIDELINE RECAP
| Age | Years Worked | Low End | High End |
| 22 | 0 | $0 | $0 |
| 23 | 1 | $8,000 | $17,000 |
| 24 | 2 | $25,000 | $45,000 |
| 25 | 3 | $42,000 | $70,000 |
| 30 | 8 | $127,000 | $182,000 |
| 35 | 13 | $215,000 | $331,000 |
| 40 | 18 | $300,000 | $521,000 |
| 45 | 23 | $383,000 | $764,000 |
| 50 | 28 | $468,000 | $1,075,000 |
| 55 | 33 | $553,000 | $1,470,000 |
| 60 | 38 | $638,000 | $1,974,000 |
| 65 | 43 | $723,000 | $2,618,000 |
CONCLUSION
The good thing about not making much money, is that you are used to living on not much money, and therefore you don’t need much money to retire on! With the above assumptions and chart, I hope I’ve provided a guide for those who have wondered how they can save so much if they don’t earn much at all. Savings should be an automatic way of life. Always save money before you pay yourself. That way, you will always operate in the confines of your disposable income.
Another good thing about retirement is that when you are retired, you do not have to save for retirement. That 5-35% savings rate I discuss in my charts disappears, making you suddenly that much richer. Meanwhile, you’ve hopefully paid off all your debts, and can live in your home mortgage-free for the rest of your life. But, even if you still have a mortgage, or are renter, with the above system, you should still have enough money to support you until the end.
Please try not to make excuses for why you cannot save even just 5-10% of your pre-tax income in your 401K. I lived in super expensive Manhattan on $40,000 a year and managed to put away $15,000 into my 401K. $40,000 in Manhattan is like $35,000 in San Francisco, and only $25,000 in the MidWest. You just have to make a choice whether you want to build a safety net for your retirement or not. Hopefully you will continue to make more money the longer you work, making saving more money easier and easier. You’ll wake up 10 years from now and amaze at how much money you’ve managed to accumulate.
It’s really up to you. See you at the beach!
Readers, do you think my savings chart is reasonable? What percentage of your income are you saving?
Photo: Oahu Sunset, 2010. Sam.
Regards,
Sam
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“If you don’t find it painful, you aren’t saving enough” Love it! How true is that for everything? We all make excuses and justify the things we want rather than being realistic about the things we need. I know I can save more myself, I’m working at it, but it can be a slow process to undo the damage you have already done by committing to lifestyle expenses.
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Financial Samurai Reply:
January 29th, 2012 at 1:43 pm
So long as your direction is correct, sooner or later you will get there!
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This is my favorite post of the year so far!
Based on your chart and where I stand, I’d say it definitely makes sense. In terms of what I’m able to save, I’m on the high end of your chart.
Recognizing you’re not rich is a very important step. Even after getting my new job last year (which is the highest-paying one I’ve ever had), I had to take a step back and realize that I’m not bringing in that much money.
I planned to vote for Obama in 2012 anyway, so this benefit is a bonus for me!
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Financial Samurai Reply:
January 29th, 2012 at 1:44 pm
Hi Jeff, sounds good. Yes, it’s important to get realistic with our finances and spend accordingly. We make $80,000 and see some commercial of a millionaire spending money on fancy things and tell ourselves me too! Nope! Not us too!
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I am enjoying your series on 401ks. I always thought I was doing very good with mine but only shows that I am not judging myself against the right standard and validates that a lot of others will be in real trouble.
As for the vote Obama thing that may be the answer for the poor but if those programs mentioned and tax rates continue or expand worse things may happen vs. assuming it will be good for the poor. It could mean more layoffs, new businesses not forming and an overhaul poor economy where the stock market and 401k balances continue to flounder.
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Financial Samurai Reply:
January 14th, 2012 at 7:27 am
It’s definitely a possibility if Obama spends too much and squeezes the rich too hard, the middle class and poor will ultimately suffer since those being squeezed will just say “Screw You”. However, I don’t think Obama will be able to raise taxes given the Senate and House will be Republican majorities.
Better to have the devil we know and stability in the White House for 4 more years.
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Glad my “California Currency,” comment for your previous post made you chuckle! I’m also glad you followed up that post with this one, based on some of the arguments you got from the previous post.
I like your take that you don’t need much money to retire on if you’re used to living off of not very much. Factor in too that many retirees no longer have a mortgage, kids living at home or even kids college expenses to worry about. As long as inflation for greens fees at the local golf course don’t get out of hand like inflation for college, we’ll be golden!
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Financial Samurai Reply:
January 14th, 2012 at 7:28 am
Matt, lower your 8-10% assumptions for your portfolio. I really think it’s giving you a false sense of security and progress. Make it a little more painful!
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Those are lofty goals and I admit I’m nowhere close. Still, I know that I actually have more in retirement savings than 80-90% of other people my age even being quite a bit below the thresholds there. It is a scary proposition.
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Financial Samurai Reply:
January 23rd, 2012 at 9:14 pm
That is scary, but how would you know you have more?
I’m always of the belief that people have more than they let on.
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$25,000 in the Midwest? I think you’re selling yourself short! $40,000 in Manhattan likely translates to high-teens in most Midwestern locales.
Also, I agree with the whole ‘Max your 401(k) and always save something’ concept. The younger crowd should be happy to get this splash of cold reality in their face now instead of later. It’s much easier to make up for a savings gap if you’re 28 than if you’re 48 (not saying it’s over 48 year-olds, just harder!).
Preach it!
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Financial Samurai Reply:
January 12th, 2012 at 1:08 pm
You’re probably right. I wanted to give the Mid Westerners the benefit of the doubt. The differences are less pronounced percentage wise at lower income levels due to fixed basic costs.
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I wish I had read this post when I first started working many years ago! I was so dumb to think that I had to wait until I was older to start contributing to a 401k because I “didn’t make enough.”. You say it perfectly that saving isn’t supposed to be easy at a low income. I was spending money on new clothes and other junk when I should have been saving that money in my early 20s. Luckily I didn’t bury myself in debt but I would have been a lot closer to the ideal 401k contribution range now if I had taken the pain and saved more earlier on.
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Financial Samurai Reply:
January 14th, 2012 at 7:29 am
Sydney, knowing you, I know you’re being modest! I’m glad you are maxing everything out now. The only person you can depend on is yourself!
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From your neat little chart, we’re suppossed to be saving 20%, but we aren’t. :-( We’re currently doing 6% into the 401k and I’m planning to up that this year. We’re also saving about $100-$300 each month but not all of that is going to retirement.
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Financial Samurai Reply:
January 14th, 2012 at 7:29 am
Turn the screws Jen a little tighter! If you went to 10%, would you still survive and lead a happy life? Let’s do it!
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Jen @ Master the Art of Saving Reply:
January 17th, 2012 at 4:34 pm
I still would survive and lead a happy life if it the 401k contributions were at 10%. How about we meet in the middle at 8% and after I’ve been able to adjust the budget to that, shoot for the additional 2% (making it 10%).
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Financial Samurai Reply:
January 17th, 2012 at 5:08 pm
Ok, deal!
It it really true that people need to learn how to save more. IT is sad that people think that putting away 5% a year is any near sufficient. Talking with students now a days it is common to find people who put away almost nothing for the future. It is really sad how people who live in the midst of such opportunity in the western world consistently sell themselves short by not saving enough and planning for their future.
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Financial Samurai Reply:
January 17th, 2012 at 5:08 pm
Hopefully by folks searching for such articles, they are learning and improving!
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” I’m planning to up that this year.” Why this year, why not today? So many good intentions never happen as people put them off.
For example, how many times have you heard someone mention they were going to make that 13th mortgage payment this year? What percentage of the people made the payment, if I had to guess I would say less than 10%. That’s why instead of making on big extra payment to my mortgage, I add a few hundred dollars to each monthly payment.
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Financial Samurai Reply:
January 14th, 2012 at 7:30 am
Good point David. Pay that 13th mortgage payment today. Just try and save more for one month, it won’t kill anybody.
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Your saving chart is reasonable for savers. My first job paid about 50k/year and I maxed out the 401k back then at around 9k and send some extra to the Roth IRA.
For 2012, I’m maxing out 401k and saving the rest of the after tax money in preparation for the big day. :)
I checked your 401k guideline again and I’m actually around the middle and not the low end like I thought previously. I’m actually between 35 and 40 so by extrapolating, I’m doing OK.
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Financial Samurai Reply:
January 14th, 2012 at 7:31 am
I can’t wait for your big day Joe!
The only thing I struggle with retiring so early (40s) is that we can’t take out our 401K penalty free until 59.5.
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I am no where near where your charts say I should be. I currently save 5%, and have maxed out my company matching at 2%. In April, my contributions will kick up to 6%, right at the time that I also get a raise. (I have the retirement savings increase automated.)
Since I’m toward the high end of the 65-85k category, I should be saving just under 21% of my income to max out (does that mean 19% from me + the 2% from my employer? that’s what I’m going with for my numbers), so another $435/paycheck. Could we do that? Yes.
Could we do that without taking on debt? No. If we were willing to take out more money in student loan debt for C to be back in school, we could max out my 403(b), but instead we’re choosing to pay for it out of pocket.
Could I do this if we had no debt? Oh goodness, yes. If we didn’t have my student loan payments (~$710/month), I would easily figure out how to max the retirement. And that doesn’t even touch the mortgage.
Right now, we’re on a balancing act. C has been out of work for 2.5 years. We expect him to be a drain on finances (school costs) for at least another 1.5. After that, we don’t expect him to earn any money for another 2 years. So 3.5 years before we get any income from him. But the truth is, once he does start making money, we can throw all of it at retirement because we will have spend 6 years living on just my income and doing fine.
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Financial Samurai Reply:
January 12th, 2012 at 10:55 am
Is C gettig his PhD? How come you are assuming no income after he graduates for two years?
Balancing act is right. Once he starts working, you guys are going to crush your savings goals! Just keep the temptation of more money in check.
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shanendoah@the dog ate my wallet Reply:
January 13th, 2012 at 9:31 am
He’s getting a combo BA/BS now, and then wants to go on for an MS in math. The program he is looking at entering says that the majority of their students pay for the MS program via fellowships and TAing. He knows we can’t afford to pay for graduate level courses out of pocket, so the deal is, whether its through fellowships or elsewhere, the two years he’s in the MS program, he has to find the way to pay for it. (We could keep paying what we’re paying for the undergrad program, but I’d like to have that money back, too.)
So yeah, two years of the MS program with no income from him, but no additional outlay.
HOnestly, our allowances will creep up (but they’ll do that as I get raises anyway), and there are a ton of renovations we’d like to make to the house, but we’ve gotten really good at balancing savings for retirment and savings for specific goals, so I think we’ll make it through ok.
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Financial Samurai Reply:
January 14th, 2012 at 7:32 am
Ah, gotcha. Good for him for wanting to get his Masters. Yes, there is a lot of grants and TAing, which should essentially cover all his costs.
I hope it pays off in the end. Sounds like you guys have all your ducks in order and have a plan, which is more than half the battle!
Repeat after me: I am not rich. I am going to save until it’s painful. It’s painful now! Obviously, not painful enough. New goal for 2012: increase savings every week.
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Financial Samurai Reply:
January 14th, 2012 at 7:33 am
More pain baby! Say no to the Strawberry Milkshake!
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Very well done! I believe that once we throw all the rules out the window and redefine retirement, we gain control. Rather than save and save and watch the world change and grow, constantly requiring me to save more and more, I’m going to use the money to purchase things that will make my retirement as self-sufficient as possible.
I’m talking some land out west, solar panels, a large garden, livestock, etc. I once read a quote from someone else doing this, and it basically was: “even if the whole world financial system collapsed tomorrow, I’d wake up not even noticing. It really wouldn’t affect me at all.”
I think people are becoming more afraid of staking their future on recalcitrant politicians across the globe. I know I am.
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Financial Samurai Reply:
January 14th, 2012 at 7:35 am
I do sometimes think of the “worst cast” scenario, and living in America, it’s like a cake walk compared to so many other countries.
Ironically, in the worst case scenario, I do think Obama will bail us out better than any Republican for a year. Then it’s on our own.
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Thanks Sam for putting this post together. This post really helps. Need to get my savings together and bump my 401k contributions back up. Think I might need to be more aggressive with the savings than my plan was initially. I’m behind the 8 ball here. The reminder about mindset is really important. Pretty sure I lost my ever-loving mind when I got my first job. I thought I was rich, but again I’m not rich. Remembering that is so important when you don’t make very much. This post is encouraging. Thanks again.
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Financial Samurai Reply:
January 14th, 2012 at 7:36 am
No problem Rachel. Glad you find this post useful. I lost some marbles my first couple years of work too and bought a car and a motorbike! What a waste of money.
Bump up the jam. Good luck!
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Like you have shown, saving is possible for everyone. I too liked the line that if it isn’t painful you aren’t saving enough. It’s true. We should max out our saving ability in all aspects. It will only help us down the road.
I also think you need a good plan in place. Without it, you don’t know where you are going or what you should be saving with or for.
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When I started saving for my first house I was earning $7,500 a year (my wife earned $7,500 too). It was a long time ago and my wife and I just graduated from college. I put down (approx. $10K) 1/3 to assume their mortgage. I saved that in 6 years and part of the time I was in the Army (21 mos.). As my earnings increased I saved more and four years later bought my first rental property (9 unit). Anything is possible and it does not matter how much you make.
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If you can’t save a lot you could try moving to a country where your purchasing power is much greater. I”ll probably do that.
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Financial Samurai Reply:
January 14th, 2012 at 7:37 am
I agree with this outlet if one doesn’t make it on the retirement savings front. A lot of lifestyle bloggers who couldn’t make it during 2008-2009 due to the economy moved overseas and are loving it on $1,000-$1,500 a month which is awesome.
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I agree with your points and a dose of reality. I don’t know who votes Republican and thinks they will benefit from a financial standpoint if they are making under $200,000. The reason is unlikely financial, but religious or on anti-abortion issues and so forth.
Since the people making $25-$200,000 dominate the people making more, Obama is going to work for the majority.
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Sam,
This is a good post, but I will just nit pick a bit on one of the points mentioned…
You mentioned 50% of working Americans make $33k or more a year, but this is in the top 1% of the world. I would challenge that statement… America is 5% of the world population, so 50% of working Americans would equate to 2.5% of the world work force, right… so no way this is in the top 1% for the world.
I’d suspect the top 1% worldwide annual income is about $100K USD. Reasonable to think that 40 million people make at least that salary across the world based on 4 billion people working out of a population of 7 billion.
-Mike
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Financial Samurai Reply:
January 12th, 2012 at 6:16 pm
Here you go Mike. Got it from this recent article, which I’ll like in the article.
http://money.cnn.com/2012/01/04/news/economy/world_richest/index.htm
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Mike Hunt Reply:
January 13th, 2012 at 3:37 am
Sam,
Nice link- but note this passage from the article:
It only takes $34,000 a year, after taxes, to be among the richest 1% in the world. That’s for each person living under the same roof, including children. (So a family of four, for example, needs to make $136,000.)
—
So this is household income divided by the number of people per household. Given the average household is just about 3 my $100K per household number holds up!
Just another example on how reporting a headline number can be misleading without context.
-Mike
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Financial Samurai Reply:
January 13th, 2012 at 7:07 am
Do individuals of one and families of two not exist? What about families of 5 or 6? How would you calculate them?
After tax is a good point. How do we know what the taxes rates are and if they pay taxes since half the people in America don’t?
I think you are missing the gist of the article, and my passage. Which is that it doesn’t take much to be a top income earner in the world, especially if you live in America.
Mike Hunt Reply:
January 15th, 2012 at 6:19 pm
Hi Sam,
Actually it was a minor nit pick. I don’t disagree with the main gist of the article, which is to save more.
Good stuff.
Financial Samurai Reply:
January 15th, 2012 at 7:23 pm
No worries Mike. I welcome any and all criticisms so I can think about things more and be as accurate as possible.
As you progress in your career it does get easier. If you maintain your lifestyle and not increase it there will be lots of money leftover. Also, FS doesn’t talk about this, but the “company” money that is put away on your behalf can be substantial. For example, my company contributes 6% to a CBA plus a 6% match on a 401K.
So here’s what my plan looks like:
15% 401K
6% match <-company
6% CBA <-company
15% after tax
2% <- obama payroll tax cut (extra savings).
This total comes out to 44% of income, and that's not even trying very hard. The after tax number will be higher for sure.
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Financial Samurai Reply:
January 14th, 2012 at 7:38 am
I purposely removed the company matches from the chart (one of the assumptions in the previous post), to try and counteract the years where we lose money in the chart. But yes, company matches REALLY start adding up over the years as well.
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My partner and I made around $140K last year total and put ~$33.5K into Roth IRA, 401K, and SEP IRA, including employer match. We also put money into shorter-term saving accounts like travel and school. We try to target saving 1/3 of our gross income, but I think we have been slacking lately. That’s why this line “If you don’t find it painful saving money, you’re not saving enough” really spoke to me. I am trying to figure what matters, what doesn’t, try to spend wisely on the former and cut as much as I can from the latter.
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Financial Samurai Reply:
January 14th, 2012 at 7:39 am
33% sounds good to me! Nice job. Good luck w/ the MBA decision. I look forward to reading your update post on where you decided to go.
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Right now my math tells me I don’t need such a big calculator. In fact I could use my fingers. I will start saving this year though. I promise. Not you me. :)
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Financial Samurai Reply:
January 14th, 2012 at 8:27 am
How’s it surviving and thriving in Manhattan? The place where you have your studio must have expensive rent no? I love the Union Square area!
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Jai Catalano Reply:
January 14th, 2012 at 8:42 am
I shoot out of my 2 bedroom apartment. It doubles as a studio during the week when the family is out. So far I am able to make it work but I have a feeling I am going to need something bigger soon. If I book something on the weekend I go to their place or location.
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Financial Samurai Reply:
January 14th, 2012 at 8:48 am
Ahh, gotcha. Sounds like a plan, and a write-off for the business!!
Good article – one thing I always suggest is to start from the end and “reverse engineer” your budget. Make 50,000k/year pre-tax and deductions? Using Sam’s chart you’d be putting away 7500, leaving you with 30,000 post taxes. Take out your fixed monthly expenses (rent, car, cell phones, gas, etc.) and THEN decide how you’re going to spend your remaining income. Its amazing how much easier it is to stick to a simple budget and eliminate materialistic bullshit when you’re forced to compare whether that morning coffee is more important than buying a new pair of shoes.
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I love this article- one of my favs. I am attempting to max out my savings percentage every year. Its become second nature now, but it was a bit painful in the beginning.
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Most people find it tough to fall into a certain income echelon and not spend like their peers, but spend like they make half that (bc that’s what it would take to move from the savings rate of typical Americans to what you propose). That doesn’t mean it can’t be done; just explains why so few do.
I am behind everything in the article except “* Vote for Obama. With a ~$2 trillion dollar deficit generated under the Obama administration, the incumbent is your best bet for ensuring that social welfare programs, unemployment insurance, affordable healthcare, and low taxes continue for the middle class.”
By voting for Obama, or just going with your “social welfare, print dollars” theme in the future, all that does is further imperil Social Security, Medicaid and the various government programs that young people have to pay into all their lives only to realize it’s gone by retirement. This is not a 4 year issue with is at near-term risk. It’s 20-30 years down the road that it’s going to collapse. Some very small painless changes now could change the trajectory into solvency but Dems come up with all kinds of populist ridiculous excuses why we can’t raise the retirement age by 2 years 20 YEARS FROM NOW to fix the system. It’s all for a good soundbite but the bottom line is the systems are currently insolvent and bankrupting the entire country. So, by voting for more of the same, it’s not really helping anyone. It will be gone.
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Financial Samurai Reply:
January 14th, 2012 at 3:54 pm
You make some good points, however don’t you think the poor and middle income earners who could not, or decided not to save are more concerned about the near-term, rather than the long-term? If one has no job and can’t afford to provide for their family for 1 more month, does the long-term really matter?
It’s the whole reason why supporters of the Democratic party are OK with raising taxes on others, even though they pay the most. What’s more important is taking care of people’s short-term needs, and dealing with the long-term repercussions for our children.
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I think the chart is a great chart, Sam! If I may suggest an improvement, I think it’s possible and perhaps even imperative to raise the savings rate at lower levels of income. That gives you more of a buffer and also reduces lifestyle inflation and retirement requirements.
According to your chart I am below the min, but I am taxed closer to 50% overall and I started working at 25, not 22. Oh well, I’m still young.
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I automatically put 3% into 401k and 3.6% into Roth IRA. Then, when I get my tax return, I dump it all into the Roth. (I make sure to get a decent amount back each year as a savings mechanism…and I understand the arguments against that.) That puts me right around 11% savings per year. However, I am nowhere near your numbers. 33, 8 years working, 35k saved.
I guess the old “save 10% of your income” advice is a little outdated. And I thought I was doing well.
Time to up the 401k contributions. Thanks for the dose of reality.
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Financial Samurai Reply:
January 15th, 2012 at 3:09 pm
Hi Mike, yes, 35K is kind of tough if you do the math. That might get you through one year of retirement if you retired today.
I don’t mind folks getting a tax refund b/c it’s a relatively easier way to save money if you do indeed save it. I think you know in your heart that you can bump that savings up 10% and still feel OK.
Turn the screws and feel a little more pain!
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I do think your recommended savings rate chart is reasonable (and doable), but I think that’s a different question that what some people might be asking themselves: “How can I possibly have 180,000 by age 30 if I only make $35,000 a year?”. I suspect they’d be better off by just focusing on saving at least 10% of whatever they do make.
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Financial Samurai Reply:
January 15th, 2012 at 7:25 pm
It’ll definitely be tough saving $180,000 by 30 and $35,000 a year, hence, it probably won’t happen if one doesn’t raise their income. However, the good thing is, you don’t need to be at my retirement level pace if you are only making $35K since you are used to making this amount.
I do believe folks should strive for saving these levels.
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Didn’t read the other comments, very much agree to it, although I am mid 30′s. The tax rate is calculated as ‘single’ or ‘married joint’. Seems not to match with fed rate chart.
Also, I can raise healthy question on stopping at 35% saving. understand it’s personal opinion.
I specially liked the similarly you drew between saving and exercising. No pain, no gain.
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Financial Samurai Reply:
January 15th, 2012 at 7:23 pm
Tax rate is focused on a single individual’s income.
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Incredible post! Your arguments are all very motivating, and I fully agree that our culture does not do enough to save. Glad to see I’m almost at par with your recommended savings.
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Financial Samurai Reply:
January 23rd, 2012 at 9:14 pm
Good to hear and no problem!
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Great article Sam! The key for me as you pointed out is to not increase your expenses as you increase your income. The has helped me save a lot of money. I plan on continuing to increase my income and keep my expenses the same. :)
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Glad I am seeing these series now (while I am still young). Now I just have to put to practice what the Financial Samurai himself preaches!
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“If you don’t find it painful, you aren’t saving enough”
My generation must be getting the screws with this economy because I don’t know anyone from college or in my life (save one friend that became a chemical engineer) that makes over $25k.
Take into account the higher and higher costs of living and I’ve got a life savings of 5k at 28 at the moment.
My job isn’t stable enough to do any 401K etc. BS and I don’t really see myself living past 40 with the trends in war and plagues.
Don’t you find it ironic that you’ll go your whole life working and earning money just to hoard it away to someday die with a bunch of money you won’t use (assuming you’ve got kids they’ll get it?) and then you did all of that for what? I suppose I’d rather live now and do it comfortably and have a super miserable old person life, which won’t matter since I’d be dying soon anyway, than to squeeze every dime from myself just to be saving?
I find it odd how society has become so enamored with money and buying and saving and worshiping everything money and financial gain. I remember how in school they teach you about the times when knowledge was important and most people lead comfy lives practicing a trade and then just died and that was that. Now we’ve become nothing but money mongers because that’s what has become the most important thing with the development of the planet.
Maybe I missed something in life when I decided that I don’t care about money, living poorly my whole life, never owning a house, and never caring about retirement because I’m part of a class that would only rise to those levels if I tried harder than anything and cared about such petty things first and foremost…maybe that’s why we have lower classes than the elite super wealthy…hell anyone with 100k in the bank is super wealthy to me. If I had that kind of money I would be able to make a ton more…but who knows.
Maybe someday I’ll make a ton of money without ever really trying, and maybe all those with money will somehow manage to skirt death and make their financial gain actually worth their time.
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Financial Samurai Reply:
January 23rd, 2012 at 9:17 pm
My belief is that only the poor or the super wealthy say money can’t buy happiness and that one shouldn’t care. When you’re poor, you shun the idea of accumulating money since it’s so difficult.
I am shocked you only know ONE person with a college degree that makes over $25,000. Is this a 4 year college degree? At 28 years old, I’d think you’d know a MAJORITY of people who make over that!
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I think 8% average market returns will hold up. My personal returns (individual stocks rather than using index funds) is running at 20% return since 2007, so that’s including the market crash.
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Financial Samurai Reply:
January 23rd, 2012 at 9:18 pm
Sounds good George. What is it since 2000? Or, is that when you started?
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I think Sam’s guidelines are spot on, it will sound like tough love for those who haven’t managed to save enough. Realistically, many older people will be unable to catch up because they will not be able to increase their income/savings in the limited amount of time they have left.
Given that retirement accounts have the advantage of growing tax free and Roth accounts benefit from tax-free distributions even those who haven’t saved much up to now should give this some thought, I think everyone can experience some level of financial independence if you want to truly make it a priority.
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Financial Samurai Reply:
January 23rd, 2012 at 9:18 pm
I hope that enough people under 40 can read this article and get cracking. I don’t think the article is tough love. It’s just the truth, and the assumptions are all quite reasonable.
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Well written and spot on. It’s important we do the math ourselves to face reality. I like what you suggest of continuing to turn the screws and save more!
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Sam,
Good article, but please follow up on one thing- Contributions to traditional IRA’s when one has an employer sponsored plan are phased out according to AGI. So you usually cannot get the tax benefit on both contributions to a 401k and a traditional IRA. See IRS publication 590.
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Financial Samurai Reply:
January 23rd, 2012 at 9:19 pm
Yep, they are totally phased out, and at extremely low income levels. Pathetic policy by the government.
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I loved the post but I am WAY under in my retirement savings. Like embarrassingly low compared to the chart.
I have been entirely too focused on other goals which may or may not b helping future Evan.
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Financial Samurai Reply:
January 17th, 2012 at 8:37 pm
I thought you ramped up your net worth by like 70% in 2011 and killing it? I think my NW gain was only about 10%!
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Sam or any other knowledgeable poster,
I could use some advice. I am 25. My wife is 23. We currently make ~85k combined. We live in DC so the cost of living is high. (atleast for me. I am from Fl) Our rent is $1400 a month for a 2BR. We have 1 child. My wife is working and pursuing her MBA which we are cash flowing. She graduates in 2 years.
We are only saving $~400 a month in our 401k.
The only debt we have is SL debt (~90k OUCH…STUPID TAX)
Our income will go up 20k in 2 years just from the career path of my job. Then whatever she earns when she gets her MBA.
We don’t have much if any left over each month. After she finishes school should we bump the 401k contributions or knock off the debt?
What would be your suggested plan for us?
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Financial Samurai Reply:
January 19th, 2012 at 7:39 am
What is your student loan rate? Your situation is only temporary if she gets a job, so I wouldn’t fret too much. If she is getting her MBA part-time, look to write off that entire tuition expense to her income if she’s working in a related field (check w/ an accountant).
If your SL interest rate is over 3%, I would do a 70 pay down / 30 save ratio.
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cord62185 Reply:
January 19th, 2012 at 10:02 am
Thanks for the reply. I currently make 50k and she is making ~35K. The interest rates vary but it is ~6%. Yes she is getting the MBA part time.
I am in a career ladder type program so my income will be ~70k in 2 years.
God willing her income will definitely go up but just pretend it doesn’t and we have ~$1200 per month left over with us contributing ~6-7% to our 401Ks.
What would be your course of action?
Emergency Fund (3-6 Months), Retirement, or debt repayment. I am guessing your answer would be a combination of them and if so at what rate?
Another question I have is about purchasing a home. I would love to save for a down payment and possibly have a mortgage that is cheaper than my current renting price on top of being in our home instead of an apartment. I do understand being an homeowner adds more risk but I wanted to know your thought process.
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Financial Samurai Reply:
January 23rd, 2012 at 9:21 pm
Don’t purchase a home until you have 30% of the value of the home in cash imo.
You can deduct the interest on your student loans btw. I’d crank out the 401K contribution based on my guideline above. I can’t imagine your SL rate is that high in this environment.
I am wondering what you take is on my situation given these charts that you made. My husband and I are 26 and currently make about $52,000/year, which is the median income in our city (so not high, not low cost-of-living). We are in graduate school on stipends, which is why our income is at that level, and are prevented by our contracts from having secondary jobs. After we finish our degrees we do expect quite a jump in income and will likely be high earners later in life, which means our standard of living at retirement will require a high account balance. So my question is, what would you recommend for a savings rate for now, when we are low-earners? Should we save 10% or so as recommended in this chart (we don’t have 401ks so we use Roth IRAs), or $34,000/year (not possible on our incomes)? We currently save 17.7% of our income but that doesn’t even max out our IRAs. My answer so far is to save as much as we can while still living comfortably.
A related question is how to practically use the “If you don’t find it painful saving money, you’re not saving enough” guideline. Initial cuts are painful but we all become accustomed over time. It’s the same with your workout analogy – if you keep doing the same routine, eventually your muscles won’t become sore any longer as your body learns to use those muscles more efficiently. For example, when we first cut our cable it hurt but now we don’t miss it. Yet I don’t think it’s reasonable to cut and cut one’s standard of living to the bone. How would you recommend finding a balance when feeling pain is relative?
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Financial Samurai Reply:
January 23rd, 2012 at 9:23 pm
Hi Emily,
Sounds like you guys are in for a very big jump in income as $52,000 combined a year between you two is low, but for a reason.
I’d make sure your debt levels remain low, and you inch up your savings percentage rate by a percent a month until you feel the pain, then keep it there for 6 months, and increase again.
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Last year we managed to save 38% of our net pay. Hurrah! This was to our IRAs, 401(K)/pension, investments, and our general savings. Our goal was 50%, but we had to fix our foundation and paid for an Alaskan cruise a few months earlier than planned to save $600 off the ticket price (I use the word “save” here because we were planning on spending a certain amount of money anyway).
This year we have another goal of 50%…I hope we get even closer.
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Financial Samurai Reply:
January 23rd, 2012 at 12:30 pm
Well done Amanda! Hope you achieve your goal of 50%. Just save every other paycheck!
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Amanda L Grossman Reply:
January 26th, 2012 at 2:12 pm
Thanks Sam!
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Wow, I am nowhere close and I am in my late twenties. My husband and I have a little over $21K and we thought we were doing okay in the retirement department. I usually do the 4% assumption when calculating for retirement needs.
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Financial Samurai Reply:
January 24th, 2012 at 9:08 pm
Renee, just do the math at your rate of savings. Will you have enough by the time you want to retire?
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generally agree w/your concepts, but like another poster, you lost credibility with me by injecting a vote for govt dependency – many financial calculators have the option to include or exclude Social Security from retirement calculations – since you posit that voting for the Democrat platform of entitlement (and yes, i know SS is *my* money) is best if you don’t make a lot of money, i’m going to assume that you recommend including Social Security in retirement calculations? (you don’t mention it specifically)
as for me, i do not include Social Security in our retirement calculations – except as an adverse tax burden – i would think that counting on govt entitlement is NOT a good facet of financial planning
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Financial Samurai Reply:
January 28th, 2012 at 8:12 am
You don’t think the Democratic party is more focused on redistributing wealth from the wealthy to the rest and creating a bigger social safety net than the Republican party?
Who’s for raising taxes on the wealthy? Extending unemployment to 99 weeks? Enlarging welfare programs?
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I’ll be turning 28 this year, and I’m waaaaay below corresponding point on your chart. Kicked over into a positive net worth when I paid off my undergraduate loans at the end of 2010, and now I’m aiming to get through grad school with no debt (working full-time and saving to pay back subsidized student loans before they start to add interest 6 months after graduation).
Currently I’m saving 5% into a 401(k) — no company match — and plan to max out my Roth IRA this year. My goal in 2012 is to save or donate a combined 50% of my take-home income, but most of my savings are going into the grad school fund and my emergency fund. I’m also getting married in the fall, but I’ve been saving up for a small wedding, and won’t take on any debt. I’m thinking that once grad school loans are paid off, I’ll have lots more to put toward retirement (definitely 20% is possible); I just don’t think I’ll catch up to the recommended levels…. um, ever.
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Financial Samurai Reply:
February 13th, 2012 at 10:57 am
Remy, try increasing that 5% to 20% savings rate. I don’t think it will kill you. Make it hurt a litte, so it hurts so good.
Then, do the math. You’ve got to do the math to see if you can make it. Then, you’ll get even more motivated.
Good luck!
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Remy @MLISunderstanding Reply:
February 13th, 2012 at 11:44 am
Moving 20% to my 401(k) from other savings would mean that I couldn’t pay for grad school. Currently about 18% of my gross salary pays for school; that’s a larger percentage after factoring out taxes and insurance from my paycheck. I’m supporting myself and my fiancee on less than half of what I make, but we can manage that because we’ve reduced a lot of costs in this high-COL area (roommates, no car, minimal cell service, no land line, no TV, only used clothes, no vacations). Trust me, it already hurts.
For reference, here’s the previous month’s breakdown:
Save or donate 50 percent of my take-home income.
In January, I saved 57.2% and donated 10.8% of my net income. (I’m counting the cash I applied to the accounts, not any interest earned.) Here’s how it broke down:
Emergency Savings: 15.1%
Xmas 2012: 1.8%
Wedding: 5.7%
House Fund: 7.1%
Grad School: 23.4%
Roth IRA: 3.5% (**this will be more in future months to max out contributions)
401(k): taken from paycheck; 4% of gross income (**now 5%); not counted in this total
HSA and medical FSA: taken from paycheck; not counted in this total
Investments: taken from bonus; not counted in this total
Church Pledge: 7.3%
Other Donations: 3.5%
So in one manner or another, I’m saving 60%+. It just has to go to other things than retirement right now.
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I am very excited to have come across this article today. Very interesting and informative.
I am 26 years old and would really like to focus on my savings. My employer does not offer a 401(k) contribution; however, I have a money market account and have maxed out my Roth IRA for 2011 and 2012.
What next?
I have slightly less than my total annual income in a money market account earning 0.65%. Should I be placing these extra funds elsewhere?
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We put in 50% of our gross pay into Roth 401Ks and Roth IRAs (maxing both out). After taxes of 30%, we are left with 25% to live off of. Company matches 5% to make wages 105% a year. It has taken a number of years to get to this point, but as the saving habit gets ingrained, it becomes easy. We have been doing this for enough years to have gone from retirement planning to working a couple of years for endowment for future generations. It can be done.
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Financial Samurai Reply:
March 8th, 2012 at 7:09 am
Sounds great D Evans! I’m glad you are doing it and showing others it can be done! Keep it up!
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I am curious if the savings of Americans (on a per capita basis) has increased over the past couple years. My suspicion is that it has decreased due to the economic situation. It will be interesting to see what the long term ramifications of inadequate retirement savings will be.
The US got very close to having a revolution during the Great Depression — why do do think we got the New Deal? It was not because FDR liked poor people ;-)
Extrapolate your graphs….
No matter how much I save, it won’t matter if dollars are worthless. We have to fix some fundamental problems in this country or the future will not be pretty.
But Moore’s Law might yet be our salvation… All hail the Singularity!
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Financial Samurai Reply:
April 4th, 2012 at 5:07 am
I think savings has improved drastically as people “know better now”.
Also, depreciation of the USD hurts, but if just stay in the US all your life, then it cancels itself out and doesn’t matter too much.
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One thing to note. I very well might hit the AMT, if I were to put aside the 30%-35% pre-tax away as you suggest. I do need to run some numbers, although it would be quite hard to hit that level just yet. We’re approaching the 20% level this year I believe and that’s on a single income.
Just wanted to remind you that AMT may NOT be your friend. :-)
Thanks for all the food for thought though!!!!
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Very interesting.Enjoyable reading. I know at my age I need to put away $5000 per year(allowed) in the 401 k – making up for years w/out real income. Good goals.
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Very good post! Even when I was a “poor” teenager working at Wal-Mart, I still managed to save 15-20% of my income. Now that I make much more, I’m able to save 50%. And it’s not even painful, which probably means I’m not saving as much as I could, right? :)
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Nice blog, I agree with these views. I am a poor college student and I am 7k of debt, I am planning on selling my car to recoup some of that debt and I will start working eventually when somebody will give me a job that doesn’t require physical labor.
Don’t look at me as if I am a loser I made in killing in the stock market from ages 13-16 but I spent all of that money in the first 2 years of college. I wasn’t able to keep up with both school and my classes and so it is all gone all I have left is my car.
-i have already face the fact that I will be poor forever its the plight of the proleteriat
-yes i was one of those kids who bought apple stock because my home room teacher told me to
-yes i live a ignorant middle class imaginary lifestyle but it has come crashing down over the past few months
-I am happy to say I was able to use some crude accounting tricks to dodge taxes and have only paid about $160 dollars.
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Financial Samurai Reply:
May 1st, 2012 at 10:21 pm
You’re a student. You have your WHOLE LIFE ahead of you! Don’t face that fact of being poor.
How did you find my site anyway?
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I feel stupid for not taking my 401K seriously until I was 39. Now just turned 41 I’m taking it very seriously and have a plan to be able to “max out” by age 43. Right now I have a little annoying debt to take care of. I’m just praying to get to the 1 million dollar mark at 65. Not gonna be loaded but can at least be respectable and self sufficient.
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Financial Samurai Reply:
May 6th, 2012 at 10:53 pm
Hopefully you at least had a good time spending the money though. That’s the positive way I look at things.
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I really like your advice. I was searching around about retirement, and I’m behind the curve. I’m active duty military enlisted and plan to stay to 20 years if possible given the environment. I’m also about 3 years from an electrical engineering degree. Saving is hard with a wife and 2 small kids, but I could probably put away at least 20% of my income right now. We live in the DC area right now and make probably 75k pre-tax. If I was working on the outside, it would be close to 90k including my allowances. People might say that’s huge, but rent and expenses in this are are outrageous. My goal though is finding not just saving but what to save in. I will probably put most into IRA and TSP (like a 401k) as that is what I know. Being as busy as we are, we need simplicity. My wife and I are both 31, hence being behind the curve. We currently have an investment property that should net about 100k once it is paid off in about 20 years, but have little else other than savings account and paying off our condo that we live in. I’m currently saving 10% and only have one car payment, but every year it gets harder.
Like a couple other though, I did recoil at your command to vote for Obama. A head race to Greece style financial collapse is not preferable to me just to reap in the short term. $1.5 trillion a year in deficit spending does not make me feel any more confident about retirement. As for your rich comment, you could take 100% of what those evil rich are making and it won’t matter because Obama and Congress will not cut any real spending… the programs in place and imposed will spend more than that additional tax and more. All of our politicians should take your advice concerning public spending.
I personally don’t count on Social Security as a form of future income in retirement. I believe it will be gone by then. For all those that gnash teeth about paying into it, they have to realize people now, especially in the middle class, take out of social security more than 3 times what they contributed over their lifetime. Couple that with all the IOU’s that have been replaced for the pot that was there, and there will not be anything left by the time us 30 somethings can draw from it.
Sorry for the rant, just hard to believe someone with such sensible saving advice is toeing the “give me a hand out and sock it to the ‘rich’ while you are at it” line. What do you see as a good fire-and-forget investment for someone in their 30′s? I understand to go less risky closer to retirement, but as I plan to work until at least my 70′s, what is a good mix to invest in prime earning years?
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Financial Samurai Reply:
May 12th, 2012 at 1:43 pm
Jeff,
On Obama, if you can’t beat him JOIN him and embrace the reality! Obama and Big Government will screw our future generations whether you like it or not. Hence, you might as well get on board and reap the rewards of big government. He’s not going to raise middle class taxes, and at the very least, you won’t be paying more.
Obama will get re-elected. Unless you are making $200,000+, and more like $500,000+, it doesn’t make sense to vote Republican.
You’ve got to read more posts on here to get my style of thinking and writing.
Here are some:
http://www.financialsamurai.com/2009/10/09/were-idiots-please-tell-us-a-flat-tax-is-not-fair/
http://www.financialsamurai.com/2011/08/01/socialism-as-a-means-to-a-brighter-future/
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typo… meant to say 20% not 10%…
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Great site.very informative.I am 32 with 5500.00
Sitting in cash in a Roth Ira.I need to cash out to pursue
Higher education and the tax implications are a little beyond me.
I have depleted all contributitions so what is left is earnings.I am
Not able to fund the Roth due to my income,but I do contribute 15%
To my 401k.I am in the 15% tax bracket,does it make sense to cash
Out Roth and pay penalty or stay in the Roth until I can afford to make
Monthly contributions.
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Hi Sam,
I’ve really been enjoying absorbing all of the information on your site so far. Thanks for putting all this great stuff out there so that people like me can benefit from it!
I was wondering what you thought was a good savings/investing strategy for someone in my position. I’m a 26 year old graduate student with at least another 5 years to complete my Ph.D. I have almost no debt (a few hundred in credit card, but will be paid off by the end of summer) and am on a stipend that covers most of my education costs. I also make around $1000/month in income from the stipend for living. However, I am able to save more than most in my shoes because I live in my parents’ house rent free. As far as I know, my university does not offer any kind of retirement accounts for graduate students.
So, if I am still trying to save 20-30% of my income each month, where is a good place to put it other than a savings account? An ETF maybe? A regular savings account? Money Market?
When I do eventually get a salaried position with a real income in 5-6 years, I will definitely be keeping your savings advice from this post in mind. Also, I really appreciate your optimistic attitude and outlook. You set a great example for those looking for guidance with finance/saving/spending behavior/shifting perspective/etc. I figure I will probably be behind your suggested savings guideline chart by about 8-10 years by the time I start saving anything significant (I will be 31 or 32 by the time I have a job and an income above poverty level), but I can still do my best to catch up!
Best of luck with everything!
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I just love urwebsite..and your information…thank you….I am self employed with dog business..80000 in stocks…that’s it..no debt..savings 10000…48 years old…I clear after taxes 1000 a week…I am not acting poor like I should….losing house..upside down on mortgage…my goal in 14 years have 3500 with retirement funds calculated at 6.5 return…just making the return to live on….should I just rent and save money? Or save to get a small…tiny house in a few years…..what Ira tool or savings tool could I contribute besides what I do now to save for retirement?…should I retrain for job?…even a job at 70000 doesn’t do better than what I get with the dog business now…unless their is more benefits to have with working at a company…ur advice would be quite helpful to me…..thanks….amy
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Also I will get arnd 1400 at 62..1400 a month…I’m a widow….67…1750…that’s calculated in addition to my 3500 I’d have from retirement savings..I’d have each month…what should my mortgage or rent be….??? 25 percent of my income?
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Financial Samurai Reply:
May 20th, 2012 at 9:21 am
Hopefully 25% of your after tax income to 0%!
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