Average Saving Per Year???

[Koolau]

Toughest thing about retiring was NOT saving anymore. Used to save 25% (or more in good years). My official family retirement income has never exceeded $50K. Since w*rking family income was easily twice that, we take from savings now. It is painful in the extreme! It's a real surprise to me since, hey, that's what we saved it for - to spend in our old age for heavens sake!

Oddly, taking from cash accounts doesn't hurt as much. Sold old house in midwest and stuffed the cash in several "high yield" (4% heh, heh) CDs, MMs etc. Tacking cash from those seemed, well, OK I guess. But taking from an IRA for a house down payment this month really made me feel sick - I'm serious! Looking forward to selling "old" property and having a savings account again. Wish there were a way to put the proceeds back into a retirement account. It would be safer (from us) there.

Sorry to hijack the thread, but this could be an interesting topic. How do you transition from saving to spending - and not go completely insane? Retired people want to know

 

[ziggy29]

Looking back at 2008, it looks like contributions to savings, retirement accounts and my HSA were about 1/3 of our gross income. If you include the company matches in my 401K and HSA, it rises to nearly 40%.

That will probably go down a little bit this year now that we're about to be DINKS again. I suspect a negative savings rate this year in my savings accounts (mostly the emergency fund) as we feel more comfortable drawing this down somewhat for household projects now. Still maxing out all the other tax-deferred options, though.

 

[travelover]

Retired two years, but still maxing out my deductible IRA ($6K) while DW still works.

In the 7 years before I retired, I used to save about 40% in my 401(k). My employer allowed after tax contributions once the pretax ceiling was hit. I think I can roll this after tax portion over to a Roth next year.

 

[Alan]

Sorry to hijack the thread, but this could be an interesting topic. How do you transition from saving to spending - and not go completely insane? Retired people want to know

It is something I've thought about a lot as we expect to RE very soon. My plan is to treat the money from pensions and SS plus the 3% SWR from retirement accounts as our annual income and then save from that income into CD's or whatever to fund new cars, vacations etc.

Without the need to save for retirement I'm hoping we will be able splash out more on things we want, particularly sports and travel. As you point out we'll have to effect a mind change, unless major events happen such as loss of pension, long economic recessions, other major expense events.....

 

[Alan]

For everyone, I hate to ask the old question, but we are talking savings %age after-tax, correct?

If:
a. mortgage principal payments "count" as "savings,"
b. I get to count my automatic 7% pension contribution (I don't pay into SS),
then, we are saving half our after-tax income (which, as I previously noted, is only a little more than half our gross income).

Are talking savings %age after-tax, correct? - I take total of my savings - 401(k) + non-deductible IRA's + other savings divided by after tax take home pay, so I guess I am a bit of a mix as the 401(k) is before tax money and the rest is after tax money.

mortgage principal payments "count" as "savings," - yes, while I was paying down mortgage with extra principal payments I always counted it as savings.

I get to count my automatic 7% pension contribution (I don't pay into SS) - I have not been counting my SS (FICA) payments as I have no choice, but it is an investment I suppose. My previous company had a voluntary employee contribution pension plan and I certainly would count that as savings.

 

[Zoocat]

I'm semi-retired and save 15% of my income. part of the reason why I work is so I can max out my ROTH.

 

[gryffindor]

Last 3 years savings as percentage of gross salary -- 41%, 40%, 44%
Last 3 years taxes as percentage of gross salary - 30%, 32%, 37%

Will be tough to keep savings rates this high going forward given higher tax rates but that's a topic for another day . . .

 

[Alan]

Last 3 years savings as percentage of gross salary -- 41%, 40%, 44%
Last 3 years taxes as percentage of gross salary - 30%, 32%, 37%

Will be tough to keep savings rates this high going forward given higher tax rates but that's a topic for another day . . .

That seems to be a very high % of taxes. I look at ours for 2008 and get only 22.7% (You paid 14% more than we did)

I calculate this by taking gross ( before 401(k) & FSA are deducted). Then I take total taxes = Fed income + State income + SS + Medicare. Taxes/Income = 22.7%

 

[Bimmerbill]

I have to admit feeling some jealousy about the high salaries listed here! Sometimes I feel like going after that, but am too lazy.

I have my TSP at 10% of my salary. Am saving my FSA and DCFSA reimbursements in a separate account and cash flowing medical/daycare expenses. I may save it, or may use it to pay off my car (5K left).

 

[SecondCor521]

For everyone, I hate to ask the old question, but we are talking savings %age after-tax, correct?

If:
a. mortgage principal payments "count" as "savings,"

My number was of gross (i.e., pre-tax) pay, as I noted.

If you include mortgage principal payments, then that puts me at about 53% of gross at the moment.

2Cor521

 

[Gumby]

We save about 32% of our gross salaries -- 20% in tax deferred (403b, 457 -- no matches) and the remaining 12% in taxable accounts.

We don't count our mandatory pension contributions (currently 5% and 6% of respective gross income) or social security as saving, nor do we count mortgage principal payments (we are prepaying so the final payoff date coincides with our projected retirement date)(currently this is about 7% of gross income)

 

[gryffindor]

That seems to be a very high % of taxes. I look at ours for 2008 and get only 22.7% (You paid 14% more than we did)

I calculate this by taking gross ( before 401(k) & FSA are deducted). Then I take total taxes = Fed income + State income + SS + Medicare. Taxes/Income = 22.7%

Sigh. . . .

[MODERATOR EDIT]
I include Employer paid FICA, include property tax and estimate sales tax. Am in the 39.5% marginal federal tax rate and a combined state / city tax of 8.5%.

When you're a W-2 earner not much you can do to lower rates legally. The only major loophole that we found a few years ago was a conservation easement when purchasing property where we were able to write off many hundreds of thousands and preserve land.

So usually about 30% living expenses 30% taxes 40% savings. I count FICA as a tax, definitely not a savings.

[MODERATOR EDIT]

 

[Alan]

Sigh. . . .

[MODERATOR EDIT]

I include Employer paid FICA, include property tax and estimate sales tax. Am in the 39.5% marginal federal tax rate and a combined state / city tax of 8.5%.

When you're a W-2 earner not much you can do to lower rates legally. The only major loophole that we found a few years ago was a conservation easement when purchasing property where we were able to write off many hundreds of thousands and preserve land.

So usually about 30% living expenses 30% taxes 40% savings. I count FICA as a tax, definitely not a savings.

[MODERATOR EDIT]

I did include FICA - called it SS in my post - and also included my state income tax of 6% so I guess the main difference between the 2 of us is that I didn't estimate sales taxes.

Also, the highest federal tax bracket in 2008 was 35% for taxable income over $357K. (I was in the 33% bracket in 2008).

 

[gryffindor]

I did include FICA - called it SS in my post.

Fair enough -- question is whether you included it as a 7.65% rate or 15.3%. Even though the employer paid portion is not visible on the W2, I capture it as 15.3%.

You are also right about 35% highest visible marginal tax rate. I misspoke. Although when you look at phase outs of deductions and the AMT I wonder whether the "effective" federal marginal tax rate is higher than 35%.

 

[Culture]

You are also right about 35% highest visible marginal tax rate. I misspoke. Although when you look at phase outs of deductions and the AMT I wonder whether the "effective" federal marginal tax rate is higher than 35%.

I am with you. Considering AMT, the "effective" tax rate is higher than the published one.

 

[Fireup2020]

Whee! Just ran my percentages based on my gross taxable income:

1) Cash & MM -- 41.6% (emergency, vacation, and car fund)
2) Retirement (TSP & Def'd Comp-NO match) -- 39.2% (and I just hit my 09 limit - it's only June!)
3) Investment (meaning incomes goes into taxable account) -- 19%
4) Kids education (429 plans...) -- none, no kiddies

My numbers look goofy because I have been on active duty, and have been living off my tax-exempt allowances The actual dollar amounts are not as high as many here, but the percentages make me feel wonderful!

 

[Enuff2Eat]

wow, there are a ton of high achievers here. I am disappointed in myself. However, I didn't see anyone here actual saves all 100% of their earning last year, meaning just living off their existing dividends and stuffs the rest in the pillows somewhere.

 

[W2R]

wow, there are a ton of high achievers here. I am disappointed in myself. However, I didn't see anyone here actual saves all 100% of their earning last year, meaning just living off their existing dividends and stuffs the rest in the pillows somewhere.

When you put it that way, I lived on an amount equal to my dividends last year (well, $194 more for the whole year)*. I just didn't take it out of Vanguard, since I am still working. I took it out of my salary.

So, that didn't result in my saving 100% of my salary. I saved the dividends in my portfolio at Vanguard, which dropped like a rock despite that fact. You can't win.

*Not counting $10,000 for my daughter's wedding, an expense that I will only pay one time in her life.

 

[RetireBy90]

First my reply to the initial question:

1) Cash - 5%
2) 401K - 15% + 8% match
3) Investment house 11%
4) Kids grown but try to put in about 3% to roth IRA for them

Not to get too mushy, but need to consider 5-10% for charity also.
It is also an investment.

-----------------------------------

now to my questions:
1) How many that have retired don't save any more ?
I plan to keep some saving in retirement for emergencies and
for big ticket purchases and just cause I don't think I want
to stop.

2) Is the savings listed only for retirement ? I have savings
for big ticket items like when I need to replace a car, when
we want to take splurge vacation, or project on the house.

Thanks for the postings. Now I feel bad I'm not saving enough

 

[CuppaJoe]

My retirement experience is less than one year. I still save, in a way, but the meaning of saving has changed. My tax refund plus a couple of other extra earnings was equal to about two months expenses so I didn’t withdraw from PF for two months, that money is treated as rainy day or fun savings.

I received a small pension/annuity and opted for a 10-year payout at a higher rate than life payout. I literally put the difference into a separate savings account, perhaps to extend the idea of getting that pension.

I’m thinking about paying back social security at say, age 70, to get the higher payout. In a way, that works as a savings idea(?).

I will also try to find ways of paying less in taxes which is a form of savings.

Saving has been a lifetime habit and now I try to spend almost all of the 4% planned but there is still those two months withheld from PF, the difference from the pension, and left-over money sitting in my checking account. This doesn’t strike me as much of a problem.

 

[vt74]

I dont save anymore. I use to with my other company when I put in a percentage of may salary and they would match it.

I figured it would take too long to save enough money and then be comfortable to withdraw as needed.

I don't have a high paying job and my wife has not work in 4 years. We have two kids. Still I will be able to call it quit before I am 40 years old, if I decide to chose it.

 

[Amethyst]

I dont save anymore. I use to with my other company when I put in a percentage of may salary and they would match it.

I figured it would take too long to save enough money and then be comfortable to withdraw as needed.

I don't have a high paying job and my wife has not work in 4 years. We have two kids. Still I will be able to call it quit before I am 40 years old, if I decide to chose it.

VT74,

You sound very confident, as well as kind of different from the usual poster on this forum. Would you mind enlightening us a little more on your situation, and how you would manage to FIRE before 40?

 

[REWahoo]

Amethyst, check out vt74's into thread: http://www.early-retirement.org/forums/f26/slum-lording-21526.html#post397712