There are plenty of positives that have come out of the coronavirus pandemic: better health, less pollution, more time with family, an acceleration in the work from home trend, and the chance to buy stocks at large discounts, to name a few. The U.S. personal saving rate could be the most positive of them all.
Thanks to the lockdowns, the U.S. personal saving rate surged to an incredible 33% in April 2020! Although it has gradually faded throughout the year as confidence resumes, a 33% saving rate is still very impressive. It means that when Americans need to save, we will.
What Is A Personal Saving Rate?
The personal saving rate is defined as savings as a share of personal disposable income. Personal disposable income is defined as income less taxes.
If your income stays the same, the higher your personal saving rate, the stronger your household balance sheet. The stronger your household balance sheet, the more financially secure you will feel. The more you save, the quicker you will achieve financial independence. Love it!
Our household plan has been to cut our spending by 32%. The cut is to match the 32% decline in the stock market from peak to trough. If the stock market and our income rebounds, we will have increased our cash flow and our wealth. If the stock market and our income stay depressed, then we will have continued to protect our financial freedom.
As evidenced by the latest personal saving rate data, I'm pleased to see tens of millions of Americans do the same.
U.S. Personal Saving Rate At Record High
Below is the historical personal saving rate chart by the Bureau of Economic Analysis. As you can see from the chart, today's personal saving rate of 33% has far surpassed the historical high of ~17% in 1975 and more recently, ~12% in 2013.
U.S. Historical Personal Saving Rates
1960 – 10%
1965 – 12%
1970 – 11%
1975 – 17%
1980 – 10%
1985 – 7%
1990 – 7%
1995 – 6%
2000 – 4.5%
2005 – 2%
2010 – 5.5%
2015 – 7%
2020 – 33%
2021 – 15%
2022 – 4.5%.
What's interesting about the 33% personal saving rate in is that it comes at a time when the average money market interest rate is close to an all-time low. Americans have been so freaked out by the coronavirus, the forced lockdowns, the mass unemployment, and the sell-off in the stock market that they'd happily earn close to nothing rather than lose money.
From 1970 to 1975, it was understandable to save between 10% – 17% of personal income. The inflation rate back then was around 8% – 9%. OPEC placed an embargo on oil exports to the U.S. and inflation shot higher. In comparison, the average inflate rate per year between 1975 and 2020 has been closer to 3.5%. Today, the inflation rate is under 2%.
In other words, saving money back in the 70s yielded a much higher savings interest rate than it does today because the Fed Funds rate, inflation, and the 10-year bond rate were also much higher.
In 1974, the Fed Funds rate was between 9% – 13% and the 10-year Treasury interest rate was between 7% – 8%.
Today, with the Fed Funds rate at between 0% – 0.25% and the 10-year bond yield around 1%, an online savings rate is relatively low as well.
As a result, investors are taking more risk and investing in stocks and real estate due to such a lower opportunity cost.
Further, homeowners are refinancing their mortgages like crazy. I personally got a 2.125% 7/1 ARM jumbo with minimal fees. If you haven't refinanced already, I encourage you to do so with Credible. It has a great network of qualified lenders competing for you business to give you the best rate. There is no-obligation either.
Save More Aggressively Than The Average Rate
Everything is relatively in finance. In order to achieve financial independence sooner, you must do at least one of the following:
- Make more money than the average person
- Save more money than the average person
- Return more money than the average person
- Work harder than the average person
In other words, with the average U.S. saving rate at 33%, I challenge you to double your savings rate to 66%!
Since the beginning of Financial Samurai in 2009, I've encouraged readers to aim to save 50% of your after-tax income. With a 50% saving rate, every year you work will be one year of living expenses saved. After 20 years of saving and investing 50%, you will likely have way more than 20 years of living expenses covered due to market returns.
For example, let's say you make $100,000 after-tax a year and save $50,000 a year for 20 years. If you earn a feasible 6.3% compound annual return over the 20-year period, you will end up with $2,019,000. Now let's assume your average living expenses rise from $50,000 to $65,000 in 20 years due to inflation.
After 20 years of saving 50% of your income and earning a 6.3% compound annual return, your $2,019,000 portfolio will provide for 31 years of living expenses. You are practically set for life given your portfolio should continue to return something and you will be eligible for Social Security.
If you were to somehow keep your living expenses flat at $50,000 a year because you paid off your mortgage or something similar, then you would now have 40 years of living expenses.
Savings Chart For Financial Freedom
Below is an easy savings guideline that shows how many years you'll need to work before you can retire based on your personal saving rate. The minimum recommended saving rate is 20%.
I've tested the chart against my own experience. I saved roughly 60% of my after-tax income on average every year from 1999 – 2012 and was able to leave work for good after 13 years. I'm absolutely sure that even if my savings rate was lowered to 50%, I would have still left after 18 years. This reason is because I was saving a higher absolute dollar amount during the last five years of my career.
It was still scary to leave a well-paying job, especially after so long you get used to saving aggressively. However, if everybody can also negotiate a severance package before they leave, the extra income will provide a lot more courage to say goodbye to work.
Savings Or Net Worth Target Multiple By Age
Another easy personal saving objective is to accumulate a certain multiple of your average income or current income by age. As you get older, your savings or net worth should equate to a higher and higher multiple of your current earnings.
For example, by 30, you should have at least 2X your income saved. By 40, you should have 10X your income saved, and so forth. Your ultimate goal should be to try and save at least 20X your current or average income before considering calling it quits.
If you can save at least 20X of your current income at age 40, then it's probably safe to take things down a notch. You may not want to fully retire, but at least you can take a nice long sabbatical and not have to worry about the financial repercussions.
Many people will argue that it's better to have a saving goal based on a multiple of your annual expenses. This is absolutely a fine way to go. However, I like basing a savings target on 20X income because it is more challenging, especially the more you make.
By basing your saving multiple on your annual expenses, you can easily “cheat” your way into reaching your 20X savings goal by cutting down expenses to the max. It is human nature to take shortcuts, especially with difficult goals.
However, “cheating” your way to financial independence may rob you of a more fulfilling journey. For example, to try and achieve financial independence sooner, you might:
- Lower your expenses to near poverty levels. Do you really want to live on near poverty-level wages just so you can retire early and continue to live on near poverty level income?
- Delay or never have a family. Not having a family is totally fine if you don't want kids. But if you do want kids, not having kids for the sake of financial freedom is a difficult trade-off.
- Stop traveling. Traveling to new countries is one of the most exciting leisure activities you can do. There's nothing better than learning about a new culture, exploring a new environment, and getting to know people from different backgrounds. The most closed-minded of people are often those who have never seen the world.
- Limit your wealth potential. Focusing on expenses is an inferior way to achieve financial independence compared to growing your income and your equity. There's no reason why you can't do both. However, it's better to adopt an abundance mindset instead of a scarcity mindset.
Challenge yourself to save 20X your income instead of 25X or more of your annual expenses based on the 4% rule. You'll end up more motivated, more excited, and wealthier.
Unsustainable Personal Saving Rate
Let's be frank. We all knew a 30%+ U.S. personal saving rate was unsustainable. The personal saving rate already dipped to 23.2% in May and is now down to only about 3.1% as of September 2022.
Americans have an insatiable appetite to consume almost all of their income each month. As investors, we need Americans to consume like there's no tomorrow again to get corporate earnings back up.
Based on the historical trend, the average U.S. personal savings rate will likely come back down below 10% by 2021. I anticipate the average U.S. personal savings rate will range between 5% – 10% for the next 20 years. I also believe more Americans will be using their savings to buy homes in 2021+.
Don't let the inevitable decline in the U.S. personal saving rate distract you from trying to consistently save 50% of your after-tax income. The alternative is to save 20X your annual gross income. The longer you can hold strong as the rest of America fades, the relatively wealthier you will become.
I promise you that if you save at least 50% of your after-tax income a year for 10 years, you will surprise yourself and start feeling a new sense of freedom. You will love this feeling of freedom so much so that you will want to force yourself to save even more!
Get your personal saving rate up. You won't regret it.
In 2023, the U.S. personal saving rate has dipped down to below 6% again as Americans feel more confident about an economic recovery. I highly encourage you to have a personal saving rate of at least 20% or more.
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Allocating a portion to cash in ones asset allocation could really make a difference moving forward. After 30 years of falling rates it stocks and bonds have been strong. Cash can do well under both inflation and deflation. I am not advocating market timing, but a constant allocation to cash could really help a portfolio in the future, even though it was a drag on it for 30 years. I know some people are scarred to make investments, but even an online savings account right now is paying over 1% and is risk free fDIC vs 0% on treasuries.
Thank you for this insightful post. A 33% savings rate is quite crazy for the US. I wonder if this is going to cause significant revenue decreases for many companies (brick and mortar retail, food & restaurants etc.).
OK, so we had our family’s saving rate to 48%, and I can see a few more ways to get us up to 53%. I’ll have to look at some new ways to get up to 66% however! How long do you think this average 33% savings rate can last? (Hopefully for a while, but for good reasons and not a negative one).
I think a 33% savings rate lasts for at most 3 months until we’re back to spending lots more of our money.
I know these numbers are just for our own comparative measures, but I wanted to pose this to the accountant people in the crowd. I am in law-school part time while working full time with a generous scholarship of 75% tuition. In my personal accounts, I have been recognizing scholarship as income which adds significantly to the denominator in this formula. Would the accountants out there instead recognize scholarship income as a contra expense item since it is directly offsetting tuition? In other words, should I be thinking about this like sales less discounts as reported on a corporate income statement with discounts being contra revenue?
I know, I know, but thinking about personal finance this way keeps my first year accounting classes relevant.
Do you count mortgage payment toward principal as an expense when calculating savings rate? Do you include employer 401k match?
I would include the principal portion of the mortgage payment as part of your savings ratio. Might as well through in the employer 401k match as well.
But ideally, the savings comes from all your disposable income. Everything else is a bonus.
I thought that a lower inflation rate, means people will be less likely to buy things and save, because the money they have today will be worth a similar amount tomorrow. A higher inflation rate means that your money is worth less tomorrow since the price of goods will increase more and more and thus people are more likely to spend their money today.
I really like this post. Setting stretch goals (goals that may be a little too far out there) motivates me. After reading, my new Net Worth goal is 5 million by retirement.
Way out there, but even if I fall short, I’m going to be fine.
Sam, you mentioned that you must do atleast one of the following four points to achieve financial independence. Make more money, save more money, return more money and work harder than the average person. I would add that working harder may be substituted with working smarter than the average person. I’ll give an example of my own personal situation.
13 years ago, I was a relatively new (and young) insurance agent. Another younger agent and I decided to combine our offices. We established an LLC to purchase our small office building, shared all expenses related (mortgage, utilities, etc) and our staffing. This small change to my business structure afforded me an embarrassingly amount of freedom. We could now trade off days to be in the office. My staffing expenses were cut by 50% immediately. Over thirteen years, this one small employee change has probably saved me well over $500,000 so far and I was staffed to scale with the appearance and ability to show a much larger operation. The change to buying a building instead continuing to rent by myself, probably netted me another $500,000 so far. This has freed me up to enjoy life, make a great living and spend more time with my daughters than I will ever admit.
Many of my peers that work “harder”but they spend more (time and money) and probably have much higher expenses. Churning and burning if you will. Anyways, great thought provoking article. Thank you for the motivation for a new goal!
Absolutely. Work smarter by all means possible. However, some folks, such as myself, haven’t quite figured out the smart part yet. Trying as I go. So between the two, I mostly focus on working harder. It’s something I can control.
Good job controlling your business costs!
Definitely smarter and harder must be used in combination. Especially initially. Kind of like the themes of many of your posts. Thanks again for the ideas and motivation, Sam
I would disagree with the better health statement. With my Fitness Studio closed, soccer games and practices cancelled, sand volleyball courts shutdown, and nowhere to go with nothing to do, my mental and physical health certainly declined. Now I have to lose about 20lbs so I can get back in shape for soccer, which will hopefully start again in Fall.
Let’s speed up the return to a good life!
Hello everyone
Thank you for all the information. Could someone recommend a substitute for Personal capital please. It has not been working for 10 months. Does not sync with one of the top 3 banks in the US.
Thank you .. I can’t find anything comparable
My suspicion is that in a month or two from now this is going to drop back down to normalized rates just as fast as it peaked. Likely in April is when most Americans received their stimulus payment in addition to deferred mortgage programs, no daycare expense, etc. Assuming this is one-time stimulus as people get back to their normal lives the mortgage and daycare bills will follow..
Another article that made me think! I knew from personal experience my savings has jumped in the last 3 months due to a cancelled vacation, no eating out, no entertainment, no dry cleaning, and almost zero car expense. I also did the calculation of my saving after taxes which makes more sense, and something I don’t usually do. I have always looked at savings income as a part of gross income, and factoring in the government is going to take a big part of my income makes perfect sense. I am around 30% savings, and with 4 kids chances are super low of getting to 50%, but goals are supposed to be hard!
Robert, saving 50% with 4 kids is very hard. It’s worth TRYING, but don’t beat yourself up if you don’t. A 30% savings rate is great with 4 kids. Super great in fact!
Related: How To Retire Early With Kids: A Nearly Impossible Task
If your financial goals are set and achievable with your current savings rates, is there really any reason to adjust lifestyle or increase output in order to marginally increase the savings rate? Isn’t there an equilibrium point that may well be before hitting the 66% mark?
From 2009 – 2018 we averaged a a 44.5% savings rate, and in 2019 our savings rate shot up to 59.7% (due to income increase, not spending decrease).
Is it worth it for us to make changes in our lifestyle to hit 66%? No way. We are (very fortunately) at the point where enough is enough. We have our goals, our current plan surpass those goals, so why limit ourselves any further now for an arbitrary future goal? (People already think I’m too cost-conscious.)
Many of the percentage goals or calculators seem so arbitrary and over-generalize, which always seems so weird when talking about personal finance. Applying general rules or percentages to your very specific set of circumstances rarely seems productive.
Just like the savings rate data set you are gathering on this post. It would be interesting to see incomes and locations tagged with the percentages and run various statistical tests on the data set. Based on the responses, I’d be curious if you have any previous data on average income of your readership? And even further curious if you have ever considered gathering even a larger chunk of financial data to perform your own analysis and statistics.
You’ve got to do what’s best for you.
A savings percentage goal is not arbitrary at all b/c it is directly correlated with time and when you can leave your day job based on your percentage saving.
Saving for savings sake, without any goals is arbitrary and pointless after certain basic needs are met.
Are you still working? If so, do you have a target date of exit based on a net worth or savings goal?
For income, see: Financial Samurai Reader Demographic Profile
The 66% figure is absolutely arbitrary–its based on doubling anomaly data from the government. A savings percentage only makes sense when it is tied to a very specific dollar value as percentages are a reflection of the specific dollar goal you are after, not the other way around.
Us saving 45% of our current income gets us where we want to be, but the percentage only works based on the specific income and retirement goal amounts. If my wife quit work tomorrow, the percentage would obviously need to adjust to meet our goal.
Yes, we are still working with specific age and dollar figure goals. The percentages fluctuate every year, depending what we are comparing to, but the age and dollars remain the same.
66% is based on 2X the average U.S. personal savings rate. Ive always had the mindset of doing twice as much to get the same amount as everyone else. So in my mind, it’s not that arbitrary. We need to save more than the average to get ahead financially.
When the average was 5-8%, all of us should easily been saving 10-20%.
Feel free to save what you are comfortable with. And if you are not comfortable with a higher number, all good! No need to worry about it at all, unless there is some other issue.
A mindset of doing twice as much as the average person is quite arbitrary, a great mindset, but quite arbitrary nonetheless. Why not 2.5? or 3X? I’m missing the reasoning or systematic thought that justifies the 2X in lieu of other multiples.
And again, it depends on what numbers we are dealing with. A billionaire is already getting significantly ahead, even at a 1% savings rate. Percentages and factors are great conversation starters, but they break down at varying values along the spectrum for different folks.
I guess my point was everyone should be comfortable and satisfied with any percentage if the dollars meet their goals. Saving 66% or hitting a 20X net worth is nonsensical for most people earning a significant income.
It’s great to push people to save, but how much money are we trying to die with?
For sure. Thank you for agreeing with my point that people should do what’s right for them.
If you don’t want to try and significantly outperform the average, that’s all good. Feel blessed that you enjoy your job and feel you are saving enough.
Related: Every Investment Decision You Make Is Market Timing
For me a net worth of 20x my income is not feasible and also not necessary. It is not feasible because it would require a net worth of over 16M and because I had a late start due to medical training so shorter time frame to save as well.
It makes far more sense to shoot for a multiple of my annual expenses and not try to cheat the system but keep those expenses at a level where could enjoy a lot for where I live. I’m shooting for a portfolio to provide me with $125k/yr indefinitely which to be honest I think I hit last year.
Still haven’t pulled the retirement trigger because I am cautious and want to build an even better safety of margin.
Yes, $16 million net worth is probably not necessary. But it might be fun to shoot for, especially if you’re earning $800,000 a year now and got a later start.
I would think spending all that time training and now making $800,000 would motivate you to work for longer, no?
It does seem like doctor burnout is real… but walking away from $800,000 after all that time training seems tough.
I will admit that it will be a shock to the system when I do retire and no longer can have that kind of cashflow coming in.
But to be honest my “burn rate” for living is incredibly low (helps I am debt free and live in a very low cost of living area). I think the past 2 or 3 years my annual living expenses (not including taxes) was in the $125-140k range and that include $20k/year for private school for my daughter (3 more years of that and that should disappear and then just college left). That typically also includes at least 1 $10k vacation a year and some minor ones too (so I am definitely not Mr. Money Mustachian it and denying myself of luxury things).
At a certain point for me building up wealth is only going to have a small incremental increase in lifestyle (they say maximum happiness is around $90k/yr). I think everything I have passively coming in (not including retirement accounts) already exceeds that (It’s pretty close to $110-115k range).
Our savings rate has been pretty much at zero since last July.
It’s hard to quantify how much we are saving now, as we don’t have actual jobs anymore. While we were saving up for FIRE, the rate was between 40-50% of our incomes in addition to achieving mortgage free property.
Since covid lockdown we spent more on grocery but zero on takeout/delivery, cut booze, groomed the dogs ourselves, sourced used baby items, no hair salons/ personal services, no entertainment, and reduced fuel consumption. We are frugal when it comes to recurring daily costs, so these actions weren’t much of a departure from our usual spending.
We continued to spend money, as budgeted, to complete our house renovation and stuck with preferred appliances/finishings. We also decided to keep our contractor going on another house project slated to start mid- July. He’s a talented tradesman and has been fantastic to work with (zero cost overruns).
I really hope that some of the savings you speak of is sustainable – but I’m kind of doubtful. Achieving a high savings rate over the long term is a grind, especially at the start. And when people earn a low income they really can’t see how cutting the small stuff will change their lives that much.
A 0% saving rate is impressive! Can you remind me how old you guys are again?
Ever since I left my day job in 2012, I haven’t been able to stop saving… it’s alike a frugality disease.
In March, we did almost spend all our passive income b/c our expenses shot up due to the night doula. But now we’re back down to saving a lot since the night doula is gone and our other expenses are lower.
How did you overcome the fear of spending money?
We’ll check the age box of 35-39, haha.
We had no choice but to continue spending on our house renovation because we already sold and moved out of our previous primary residence. No way I was going to halt work and move into something half finished with a baby- just to save money.
We decided to keep paying our contractor to do renovation work on another house because the value he provides is worth the investment. Conditions are perfect in the arrangement.
I read your “Frugality is a disease” article and can identify! We both came from nothing and know all about the discount food section, shower timers, clothing closet at local church, etc.
Hi Sam,
This is interesting data I hadn’t seen–thank you for highlighting it.
I’m not too surprised as I’ve seen a similar change in my personal finances. For us, the change has been completely because our spending on eating out and travel dropped to 0. Combined with daycare expenses that another commenter noted I would think that accounts for a lot of the change.
Hi Sam,
Thanks for the interesting article. I’m blown away that the US savings rate shot up this high. Hopefully, it’ll stay higher than it was before the Coronavirus and economic shutdown once the US economy reopens in the coming months / years.
I’m curious about how wage growth factors into net worth multiples over time. For instance, when I originally started reading your site after college my income was closer to $50K. However, my current income is substantially higher (low six figures) and I anticipate that it will continue to grow year over year. In your opinion, should I set my net worth goal based on my historic income, my current income, or my projected income in future years?
Congrats for your wage growth.
I’ve always challenged myself to accumulate 20X my latest income, which is usually the highest income for most people.
However, you can also take the average income of your last 3 years and multiply by 20X to get a more reasonable goal.
Our household income went from $50k to $350k, and husband stopped working at age 63 6 years ago. Currently our NW is about 20x latest year income. We are naturally frugal people, but I attribute some of our NW to luck as stock market gains have been good during our investment time frame. It has to be much more difficult to accumulate the same multiple on average salary and without working to normal retirement age.
I can see why you said this about hoping people will up their savings rate long-term, but as an early retired person with a lot of their wealth tied up in equity investments, I perversely hope that they don’t do that in some sense. Since I literally own a small amount of every publicly traded company in the US, I want them to go out and spend everything and more coming out of this pandemic to increase the profits of every publicly traded company.
Basically, I’m talking my book… :)
As to your final question, I would focus less on income percentages and more on what you want to be able to spend each year when you don’t have to work for money. A % of income is helpful for planning but it really is more about how much you want to spend each year to be happy. Also, there are so many other variables that it is more important to be approximately right than precisely following a single formula. For example, in my final working years, I was paying a nearly 50% marginal tax rate. That adjusted massively during my post-work years and would throw off any formulaic response.
Does it only include liquid cash or all retirement money? I would assume the latter.
Everything.
Wow that’s impressive! Glad to see people acting rational with their finances given the unprecedented circumstances over the past three months. Even though most physical stores have been closed, people still had the options to shop online but the savings rate jumped up huge, so that’s encouraging. It makes me happy when I hear about people acting responsibly with their money.
A lot will change over the course of the coming months and years as you said. So, I agree the average US savings rate is bound to go back down to single digit/low double digit percentages once the economy fully opens back up. And yes, the economy’s definitely gonna need consumer confidence to strengthen and destabilize!
Great thought-exercise, and I completely take your point, FS.
Agree the 33% savings rate is not sustainable. It doesn’t account for income tax payments delayed until July 15, 2020, all the rent-and-mortgage payments unmet, small business payrolls unmet, etc. Bankruptcies in the U.S. increased 48% in May. Those bills aren’t getting paid, ever.
Some of the big hitters got quite a break, like the executives of Boeing enjoying exercised stock options and the four inside-trading Senators whom the DOJ is now refusing to investigate. The coming months will include unpaid university tuition, car purchases which are now 11% of last year’s, and declining household expenditures associated with new home purchases.
Those of us fortunate enough to be able to save should do it, and appreciate it, because an opportunity like this won’t come again in our lifetimes. Enjoy the decline!:-)
Is it possible that unemployment and stimulus is skewing this metric?
If income for so many is $0, but they are receiving UI and stimulus packages, on top of having nowhere to spend the money, that could make the savings rate over 100% for some.
Or am I not understanding it right?
The US saving rate is before tax. So 33% is pretty amazing for the US. I wrote about this on my blog too.
Our before tax saving rate was 62% in April so probably met your challenge. I include all income in that, though.
There wasn’t much opportunity to spend so it wasn’t too hard.
Curious on the household breakdown versus the individual? Are we mixing and matching here? both bread winners saving x% for a total or are we just looking at the saving percentage of one?
I have a few married friends that live off of one income, and they bank 100% of the second Income. Does that make them 100% savings rate, or would you knock it back down for the average?
I always felt it was an aggressive strategy (one which I was jealous of), but they do it for the following reasons:
1. One day one (or both) of us doesn’t want to work, so this will get us there faster. We pretend the other money isn’t really there. If you don’t have it, you can’t spend it. So we make better choices on what we do spend with our primary income.
2. If one of us takes off time for raising our future kids, we don’t want to feel the struggle or weight of the decision.
3. If we can live fine on one income, why not use the second to take larger risks. We feel we don’t need the money anyway, so anytime the money grows it’s just gravy for retirement.
They just funnel all of the other money into various investment and HYSA, with limited access, from the second income. They also use the second income to purchase rental properties on occassion. However, once purchased they balance all maintenance, cost, etc from their primary account as well. They of course max all tax advantages from the first. All housing, food, etc. comes out of the first account only.
I asked them how they started it, and they said they just began by skipping the use of every other paycheck from the second income. They would use one to cover monthly expenses, then the second would go to savings, and they would repeat. Eventually they realized they didn’t even need to alternate. So they just moved to 100% savings on the second income.
I think it certainly helps that each of them make multiple six figures, have telework-able jobs, and they live in a lowercost area. Still I think it’s something to strive for as a savings goal.
You often challenege people (who don’t currently maxout) to increase thier 401k contribution each month until it hurts or they Max. Eventually you don’t even notice the money difference, and you become used to the new life style. Then once you are maxed out to increase after tax saving by x percent, again until it hurts. “And if it doesn’t hurt, you aren’t saving enough”
Maybe there is an opportunity here for a FS spousal/couple/partner,etc. savings/spending plan…
“Insert fancy FS agronym here” Decrease spending (or increase savings) percentage of one spouse’s paycheck by x% per month, and increase that percentage until you are living off of one salary (or whatever is reasonable). This would increase your overall savings, and it would help focus your spending.
Something to consider at least.
It’s temporarily up since there aren’t many kids at daycare (usually a huge expense), lower commuting costs. I suspect this rate to drop back as unemployment numbers drop….hopefully soon!
I’m at 55% – 60% range and consider myself lucky.
Hi Sam, does the 66% include retirement account and home equity saved? If just cash for investment, the challenge is hard!
Otherwise, I’m ready for it!