2014: taxes vs spending vs saving

[eyeonFI]

Just finished my taxes (and feeling slightly sick about how much I have to pay), I wondered if I am giving more to Uncle Sam than I am spending. So I figured out that my 2014 gross income was distributed as follows:

28.6% income-related taxes (Fed/State/FICA/Med)
31.2% spent
40.2% saved

If I switch my real estate taxes from the spending category to the tax category, I paid more in taxes than I spent last year.

Yes, it's great to have such a high gross that I owe so much in taxes, but nonetheless I am really looking forward to next year when that tax % should fall way down (I plan to quit working in August). And the next year, when it should approach 0 as I live off my after-tax stash.

 

[Fermion]

Similar figures. Ours, rounded to nearest 5%:

35% taxes (fed, SS, medicare, state, ACA extras)
20% of gross spent
45% saved

 

[FIREd]

We pay about twice as much in income-related taxes as what we spend:

41% income and FICA taxes
20% spent
39% saved

 

[GrayHare]

roughly 20% tax, 50% spent, 30% saved

 

[doneat54]

22.5% income and FICA taxes
44.5% spent
33% saved

 

[PhrugalPhan]

I decided to check, and came up with the following (single guy here & no mortgage)

24% taxes (fed, SS, medicare, state)
25% of gross spent
51% saved (457 plan, IRA, brokerage, & pension contribution)

 

[marko]

...and no one's figured in the local gas, meals, excise, sales taxes etc.

One time, for one day, I tallied all those little incidental $.60 taxes on meals, sales taxes etc and, while I forget the actual number, it was something like $9 a day or about $3000 a year.

Around here, I get whacked $.07 for a dollar coffee at McDonalds.

 

[scrabbler1]

Back in my working days, there were some years I paid more in taxes (federal income, state income, local property, and FICA) than I spent on other things. I excluded large, lump-sum paydowns of debt such as paying off the mortgage.


In years where I had large spending such as buying a car, the spending always exceeded taxes. In other years, starting in 1992 after I refinanced the mortgage, the spending and taxes were about the same. Later in the 1990s, my investment income began to rise thanks to the booming stock market. That, along with paying off the mortgage in 1998, sent my tax bill up a lot while reducing my spending below my taxes.


The taxes dropped in 2002, my first year of working part-time, along with the beginning of the Bush tax cuts. Taxes spiked in 2008 when I cashed out my company stock after ERing then dropped a lot but are now only 1/3 of what I spend now that I am ERed. The last time my taxes were this low was in 1986, the year before that year's big Tax Reform Act became effective (and I had a low income in my first year working full-time; also no property taxes because I renting).

 

[ChicagoGal]

Interesting to calculate. For me:

23% taxes (income-related)
30% saved
47% spent (18% mortgage pmt, 28% all else including property taxes)

Really looking forward to downsizing and dumping that mortgage payment!

 

[Independent]

Back when I was working, I'd do this calculation every year. Sometimes it was 1/3, 1/3, 1/3.

Then my oldest started college.

(However, I always included charitable contributions in the "taxes and charity" bucket, rather than the "spending".)

 

[audreyh1]

We only pay federal income taxes and property taxes. The latter plus sales taxes I count as "spending".

We're retired, so no savings, and no FICA taxes either.

For 2014 it was 40% Federal income taxes and 60% other spending.

Any charitable contributions as well as gifts to family are counted as part of that "other" spending.

 

[Meadbh]

I am retired without a pension, so I do not have "savings" as such. If I have money left over from withdrawals, I reallocate it. But I saved it previously.

In 2014 the breakdown was
Taxes: 18%
Spending: 82%, including debt repayment

In 2015 the breakdown will be more like
Taxes: 5-10%
Spending: 90-95%

In 2016 the percentage of taxes will increase again as I draw down on some tax sheltered savings while in a low tax bracket.

 

[RetireAge50]

Ours has been about the same the last few years:
Taxes: 21%
Savings: 20%
Spending: 59%

Taxes is about 18% Federal 3% State

Spending includes mortgage repayment, college tuition, and charitable.

 

[W2R]

I'm retired. The percentages of my AGI spent in these three categories for 2014 were:

52%: Spending, other than state/federal income tax. This does not include amortization of replacement expenses - - it just includes what I actually spent.

11%: Income tax, both state and federal. My income tax was intentionally a higher percentage than in prior years of retirement, for strategic purposes.

37%: Savings. What I am calling "savings", will simply apply to the cash purchase price of my dream house if/when I find it, and/or other big purchases and big replacements in the future. Being retired, "savings" is hard to define so I defined it as the part of my 2014 AGI that I didn't actually spend in 2014.

 

[SumDay]

Good exercise. I love benchmarking.

25% taxes (includes state & property)
23% saved
52% spent

We're debt free and kid free, so I know we spend too much. But there's no one here to stop us, so we keep on.

 

[Meadbh]

I'm retired.

37%: Savings. What I am calling "savings", will simply apply to the cash purchase price of my dream house if/when I find it, and/or other big purchases and big replacements in the future. Being retired, "savings" is hard to define so I defined it as the part of my 2014 AGI that I didn't actually spend in 2014.

So you withdrew dividends and income, and invested the excess in cash. I call that reallocation.

 

[LOL!]

If one counts taxable severance pay, we had two full-time jobs in 2014 and had more income than in 2013. If one counts all our income including all earned wages, 401(k) matches, and taxable dividends (no net cap gains in 2014) we paid:

06.4% in Federal income tax
12.5% in Federal, State, SS, Medicare taxes
15.6% in Federal,State, SS, Medicare, Property taxes

I'm thinking people may be using adjusted gross income or taxable income instead of their true gross income in the their calculations. I took a deduction for sales taxes of about $4,000, too on Schedule A since we do not pay much in the way of state income tax, so I did not deduct state income tax.

If I use TurboTax and add $100 of interest income, then our taxes go up by $33, so we are in the 33% marginal income tax bracket.

 

[Fermion]

I'm thinking people may be using adjusted gross income or taxable income instead of their true gross income in the their calculations.

Just our effective tax on federal alone, not counting medicare or SS was 22%. Real estate and state sales taxes bump it up even more.

 

[Alan]

I paid taxes on an IRA to ROTH conversion so I just re-ran my taxes and deleted that 1099-R. So using all income as being pensions + dividends + interest + cap gains distributions + cap gains from sale of shares, the breakdown from that true gross income was:

Taxes 8.3% (I have no State, FICA or Medicare taxes).
Spending 91.7%

 

[audreyh1]

I'm thinking people may be using adjusted gross income or taxable income instead of their true gross income in the their calculations.

I did not use my income. I used my actual spending versus federal taxes paid for 2014.

 

[Meadbh]

I did not use my taxable income. I used my actual spending versus [-]federal[/-] income taxes paid for 2014.

+1

 

[sanfanciscotreat]

No earned income; all investment.
14% Federal and State taxes
30% spent
56% reinvested
We had to sell some of former employer stock at a record valuation to diversify and reinvest.

 

[youbet]

For 2014 it was 40% Federal income taxes and 60% other spending.

I must be misinterpreting this Audrey....... Are you saying that your Fed income tax bill in 2014 was 0.4 X Gross Income? That would seem higher than possible.

If not, what is the 40% Federal income taxes you state?


Edit. Never mind. Just finished reading the entire thread and got to your explanation of how you're doing it.

 

[Ronstar]

11.45% State and Federal taxes (based on AGI)
Spent the rest (except 401k contributions not included in AGI)

 

[GoodLife]

Perhaps this will make you feel better

Taxes (incl Fed/State/Local/Medicare/FICA): 35%
Spent: 5%
Saved: 60%

(Gross income included some unusually high cashed in stock options)