What percentage of your gross income do you save annually?
26 August 2006AllFinancialMatters is running a series of questions for people on personal finance issues, with different blogs posting a “question of the day” for people to answer. It’s a neat idea and there are a number of good questions in there, so I thought I’d highlight this one over at Single Ma’s Fabulous Financials: what percentage of your gross income are you saving each year (i.e., overall income before taxes or anything else)? Mine came in at around 25%, which I thought would be pretty high - but there were a couple of people on there who surpassed me. Most seemed to fall into the 10%-15% range, which is a healthy goal to have. For me, it was very easy to save a high percentage of my income because I have only been working for the last year. Coming off the student lifestyle for the last six years, it wasn’t hard to both spend more money and save a big chunk of my income. Since I’d never had it to spend anyway, I don’t miss it. I’m not sure this is the best way to calculate how much you need for retirement - with a flat amount, it’s easier to get a rough idea how much you’ll actually have. But it’s pretty simple and it has the benefit of scaling itself relative to how much your income is. Generally people who make lots of money will want to retire with lots of money. People who make less won’t have a problem retiring on less - for the same reason I don’t have a problem living on a lot less than what I make right now.
Discuss this in the Free the Drones Retirement Forums.
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