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Savings Rates and What do you Count?
Old 11-22-2008, 07:11 PM   #1
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Savings Rates and What do you Count?

In another thread, a poster said he had a gross income of $165,000 and lived on $48,000 (including taxes)---a savings rate of 71%. An amazing testament to what you can be done with sacrafice and LBYM. I am no where near that level, and until I read that post, thought I was doing ok. I wanted to see what you guys "counted" as savings---as it occurred to me, what I am counting may not be the same as the poster above (though, even if I counted "everything" I would not be close to 71%).

This is what I count:
$31,000 in 401-K contributions
$5800 in HSA contributions (no intention to spend--pay for medical out of income)
$30,000 Paydown in Mortgage Principal ( I pay extra each month in addition regular payment on 15 year note)
$4500 in an online savings account with no real plans to spend---sort of an emergency fund

Total: $71,300 or approx 34% of gross

What I do not count:
$10,500 in employer matching for 401-K
$10,500 to MMF for things like vactions, house/car maintenance, budgeting for a new car (known longer term major expenses)

Total: $21,000 or 10% of gross

Even if I included both categories I am at 44% of gross--way below my impressive friend above.

What do you include/count as savings, and where does it go?

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Old 11-22-2008, 07:54 PM   #2
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You might prefer to look at your question from a different perspective, i.e. how much do you spend?

Seems you've got an income of around $210k gross out of which (best case--but remember even in retirement you may want vacations, house/car maintenance, and new wheels) you're spending around $120k annually. That's $10k a month. Is this how you intend to live in retirement? You can assume away a certain percentage of that spending as taxes and SS that won't be spent but it's still a healthy amount. The point is not to "sacrifice" but to learn to live with less needs and trade the cost of those "necessities" for years of your life. If you trim the fat on that monthly budget, you will find your savings percentage increases and as a double benefit your required/desired net worth for retirement decreases.

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Old 11-22-2008, 11:20 PM   #3
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That 71% might be a little misleading. I suspect if you subtract out the $40-65K the OP might be paying in taxes you'd come out closer to a 50% rate. Sill quite impressive.

Personally, I always counted the employer match in my savings rate. Just because I didn't personally deposit it didn't mean it wasn't savings. Others may do it differently, but who cares. The bottom line is the only real measurement.
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