Short answer is – dunno.
Long answer (and you knew there’d be a long answer, didn’t you) is – it’s complicated. I actually think of my savings rate as two rates – pre-tax and post-tax. Because my pre-tax is easier to calculate and actually happens, and my post-tax savings rate is more aspirational than anything else. So here are my rates:
Pre-tax: I’m required by my employer to save 8% of my pre-tax salary into one of their plans. They offer two pension options and a self-managed investment plan. For a while the pensions were a good deal, but that time pre-dated my employment, and they would have required 10+ years of work. So I went with the self-managed plan. Because I’m overwhelmingly convinced of my own brilliance, and I’m more desperate for growth than concerned about principal protection while I’m paying in, I’m contributing 90% to FXSIX (large blend index) and 10% to FXSTX (intermediate bond). Of my options, these are the best way for me to minimize fees, which are the balance killer.
I must not pay fees. Fees are the wealth-killer. Fees are the little-drain that minimizes total balances. I will eliminate my fees. I will permit them to pass over me and to the other schnooks. And when they have gone past I will turn the inner eye to see their path. Where the fees have gone there will be wealth. Only growth will remain.*
In addition to that I’m also (and this is new the past two months) contributing 20% pre-tax to a 403b. This is 100% FXSIX because I’m apparently very confident in the market. Not really, of course, but I need the growth. As you’ve seen, I don’t have a lot of money, so I need what I have to grow as quickly as possible. And after all, what happens if the market crashes? I’ll keep working! Hell, I’m already doing that. If and when I get to/close to retirement I’ll worry about asset protection. Right now I’m all about three things – growth, growth, and (you guessed it) growth.
Post-tax is a lot more complicated. Ok, it might be a little less complicated if I knew anything about math, but it’s complicated enough for me, so there! I send $200 to savings, and $240 to my brokerage account once per month in after-tax funds. I don’t remember when I figured out how much I was contributing, but I think it was 10% of whatever my gross salary was at that point. So, I have no idea what percentage that is of my current gross or net, but it’s a good lesson that I need to rebalance that, so I can explain it to myself more easily!
So there you have it – what I’m saving, and how. It doesn’t seem like enough…
* – this is from Dune. If you don’t know that then I worry about classical education with you kids today.
I was just trying to figure out my savings rate recently, and I realized that there are so many options and variables in the calculations that trying to compare one person’s rate to another is completely pointless. I think you take whichever number you come up with that makes you the happiest and roll with it!
That’s kind of the way I’m leaning too. I’ll keep track of (and try to increase) my pre-tax savings rate, but I think the after tax portion is going to have to wait until my debt is gone and I can more easily track my spending.