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How much do you save???
Old 03-19-2006, 08:30 AM   #1
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How much do you save???

Hi All

I've been following this site for a while and just thought I'd jump in.* My wife and I make very good salaries and try to save and invest what we can.* That amounts to about 25% of our gross (before tax) income.* Taxes take another ~ 30% and thus we live on the remaining 45%.* I was wondering how much others save (%* of both gross and after taxes income) so I can assess how we are doing.* *

Thanks

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Re: How much do you save???
Old 03-19-2006, 08:42 AM   #2
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Re: How much do you save???

It's a little early in the year still, so my numbers are skewed a bit for the better. Anyway, as of my last paycheck, here are my standings for 2006:

*Taxes as a % of gross income: 34.09%
Living expenses as a % of gross income: 30.45%
Savings as a % of gross income: 35.46%
Savings as a % of net income: 53.80%

*For some reason my company was taking about 4% too much for the first two months of the year. Also, I like to do contract jobs on the side that are 1099, and I put 40% of that income aside in an interest bearing account to cover any tax bills the next year.
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Re: How much do you save???
Old 03-19-2006, 08:43 AM   #3
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Re: How much do you save???

Quote:
Originally Posted by MedicalDoc
I've been following this site for a while and just thought I'd jump in. My wife and I make very good salaries and try to save and invest what we can. That amounts to about 25% of our gross (before tax) income.
Welcome to the board from a fellow medical type. I have really gained from the collective wisdom here. One of the first things I have learned is not to put much credence in the financial advice of our well-meaning colleagues! Much more street-wise here.

I am in an academic position. Between my 403B, 457 state plan, and supplemental annuities I am pushing 25% of my gross saved and/or tax-deferred. I'd do more if I could tax defer it.
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As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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Re: How much do you save???
Old 03-19-2006, 09:34 AM   #4
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Re: How much do you save???

For "taxes" do you mean
Income taxes
FICA and Medi taxes
Property taxes
Sales taxes
Any other taxes?

For 'income", I guess you count salary income as well as "realized" investment income like dividends and capital gains? Do you count employer contributions to retirement plans?
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Re: How much do you save???
Old 03-19-2006, 10:05 AM   #5
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Re: How much do you save???

I saved far too little. I am telling my kids to save 15% of their gross if they want to retire at all and at least 20% if they want to retire anytime early. They won't be in the pay range of doctors, but they will be professionals (a teacher and a nerd--we have some hope, but also apprehensions).
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Re: How much do you save???
Old 03-19-2006, 10:44 AM   #6
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Re: How much do you save???

When my DW and I were at our peak 6 earning years as computer consultants we saved about 33% of our gross, 33% for taxes, and lived off of 33% (including private health insurance premiums). We had reached a comfortable living standard and as our income increased we saved more rather than spent more. I think that a successful savings program, and therefore an ER, is to cap your expenses at some point that you are comfortable with and can maintain and then save any earnings above that point. It seems that many people keep spending (bigger houses, new cars, fancy vacations, etc.) as their earnings increase and then when they get in their 50’s wonder where all the money went. That comfortable living standard is different for everyone; the key is that you should recognize it when you reach it and don’t get caught up in ever increasing spending just because you have the money to do so.
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Re: How much do you save???
Old 03-19-2006, 11:10 AM   #7
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Re: How much do you save???

Although it is less threatening to talk about percentages than amounts, it is also less informative.* Someone who makes a million per year in Appleton WI could save an enormous percentage and still live very well; someone making $50K in NYC would be hard pressed to save equivalently.

So ... my wife and I together have salaries of about $240K (GS-15/10 and GS-14/4 in the DC area).* We save (TSP and taxable) about $85K = 35%.* (The TSP match is 5%=$12K, but I'm not counting that.)* If you count the equity part of our mortgage payment (which I do), then add another $20K = 8%.

Spending: about $30K, plus mortgage payment of about $34K (per year).* Don't really make a strong effort to LBOM, but both of us are naturally frugal -- and we have no kids.* Could probably spend $5K less, but why bother?* A cup of Starbucks in the afternoon isn't going to hurt, not at our current level.* But we still brownbag it every day (partly because there are NO decent eating options at our worksites).

Interestingly, I kept fairly close track of our investments last year for the first time, and realized that they rose in value by over $100K (besides what we saved directly).* This realization is partly why I started thinking about FIRE, and lurking around here.

(I like parentheses, if you didn't notice.)
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Re: How much do you save???
Old 03-19-2006, 11:15 AM   #8
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Re: How much do you save???

About 1/3 goes to taxes, 1/3 goes to savings and 1/3 is what we have left to live on.

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Re: How much do you save???
Old 03-19-2006, 12:04 PM   #9
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Re: How much do you save???

On around $80K income, I save 30%, live on 50%, and pay 20% in income and FICA taxes.
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Re: How much do you save???
Old 03-20-2006, 08:56 AM   #10
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Re: How much do you save???

From my gross salary, about 27% goes to taxes, 31% to savings and 52% for expenses.
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Re: How much do you save???
Old 03-20-2006, 12:01 PM   #11
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Re: How much do you save???

Not much for most of my life, then almost all of it for two years and off to ER land.
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Re: How much do you save???
Old 03-20-2006, 12:36 PM   #12
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Re: How much do you save???

Off the top of my head.......

We saved the max. in both our 401ks last year. $25k

We payed down a stock loan by $30k.

We payed additional principal on our mortgage of over $10k

We saved some $$ in our MM account. $10k

There are some other things but I can't remember them right now. So we "saved" about $75k last year in one form or another....actual savings or prepayment of principal to avoid future interest expense.

This year we will max. 401k and also do the $5k catch up too.
We expect to continue to pay down our loan and mortgage and still save a few $$ in our MM account.
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Re: How much do you save???
Old 03-20-2006, 01:16 PM   #13
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Re: How much do you save???

Quote:
Originally Posted by Robert the Red

Interestingly, I kept fairly close track of our investments last year for the first time, and realized that they rose in value by over $100K (besides what we saved directly). This realization is partly why I started thinking about FIRE, and lurking around here.

(I like parentheses, if you didn't notice.)
This is it. Normally at a given point in time your investments' returns should by far outpace your salary making your effort to work meaningless (in financial terms) and your mind less flexible so that the workplace will like you less and push you into the ER land :-)

Welcome.
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Re: How much do you save???
Old 03-20-2006, 01:40 PM   #14
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Re: How much do you save???

Let's see......
Maxed out 401K = 20K
Company match=3K
Mortgage principal=6K

Looks like around 30% of gross.* Taxes were 15%.* We must be spending around 55%.* That sounds about right.* That included a couple of weeks in Paris.* In two weeks we leave for Italy!

I've got plenty of money budgeted in my FIRE plan for travel.* 2 months/year in foreign travel.* That will be easy to cut back in a lean year.
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