And what is the trend of our savings?
I finally got the savings bug big-time around the age of 36, in the year 2000. Up till then, I had only invested money in the 401K to meet a company match (typically 3% – 4%). I was focused on increasing my income, in order to pay for the normal things of life, as I understood them (house, car, etc.). By 1999 I had finally reached the point where my salary was paying for everything, without incurring additional debt.
Then in 2000 I scored a major pay increase (about 20%) when moving to another company. At the same time, the market tanked, and the money I did have in a 401K/Roth IRA seemed to evaporate overnight. I knew then, that I had to really get serious.
At that time, the word was to save 10% of your income – but I knew that since I was starting late (age 36) I needed to add more. I started around 10%, but immediately pushed to max out my 401K. The goal was to get to 20%, and eventually higher. Note that this is on the gross pay (i.e. before taxes are taken out) so it gets harder as you make more money.
| Year | Savings Rate | 5-year Trend |
| 2000 | 9.9% | |
| 2001 | 10.5% | |
| 2002 | 12.5% | |
| 2003 | 14.5% | |
| 2004 | 16.5% | 12.8% |
| 2005 | 18.4% | 14.5% |
| 2006 | 18.2% | 16.1% |
| 2007 | 16.3% | 16.8% |
| 2008 | 14.6% | 16.8% |
| 2009 | 21.7% | 17.9% |
| 2010 | 21.6% | 18.5% |
| 2011 | 31.1% | 21.1% |
| 2012 | 16.2% | 21.1% |
| 2013 | 19.9% | 22.1% |
| 2014 | 19.2% | 21.6% |
| 2015 | 25.4% | 22.4% |
| 2016 | 29.8% | 22.1% |
| 2017 | 30.1% | 24.9% |
After ten years, I had paid off almost all my debt (just house) and was saving around 30%. I took a slight dip in 2012, because I took a pay cut my company’s 401K didn’t allow me to put in very much. I chose to concentrate on paying down the mortgage and getting debt free.
Well, I’m finally back to 30%, and based on some monetary movement, I should be able to bump it up to 40% in 2018. I’m proud of my trend over the last 17+ years, and the fact that I’m set to be financially independent (without counting on Social Security) in 2020.
So how has your savings rate trend been?
Mr. 39 Months