What’s your personal savings rate?
Here’s how to calculate it:
Disposable Income = Personal Income - Personal Current Taxes
Personal Savings = Disposable Personal Income - Personal Outlays
Personal Savings Rate = (Personal Savings / Disposable Income) * 100
Note: Disposable Income includes things such as your rent, house payments, utilities, etc. (Don’t confuse disposable income with discretionary income.)
Are people saving enough?
Here are some metrics. In 1959, the average personal savings rate in the United States was 8.3%. By 1975, it had risen to 14.6%. It fell to 12.2% in 1981, attributable to the recession. But it fell even more during the 1990’s, because of unbridled consumer confidence. By year 2000, it was only 3.5%, and it’s 4% now in year 2010.
Are you saving enough? That depends on when you want to retire, and what your objectives are. See a fee only financial planner if you want an unbiased assessment.
Mike Dayoub is a fee-only planner in Alpharetta/Milton. 770 361-3139 website
