The average saving rate by income increases the more you make. That’s logical since living expenses like housing and food tend to more relatively more fixed.
However, the average saving rate doesn’t always increase with more income due to a lack of discipline. We all know people who spend way too much and live paycheck-to-paycheck despite huge salaries.
Before the global pandemic began, Americans as a whole didn’t save a lot of money. Up until May 2020, the average saving rate was only around 7%. At least 7% was better than the average saving rate of only 2.4% in 2006.
In other words, it takes the average American 13 – 45 years to save just one year’s worth of living expenses. That is a disaster if you want to achieve financial independence sooner, rather than later.
When you’re 60-something years old and only have several years worth of living expenses to buttress your declining Social Security checks, life isn’t going to be very leisurely. You’ll probably be mad at the government for lying to you and mad at yourself for not saving more when you still had a chance.