Your savings rate — the share of take-home pay you keep rather than spend — predicts your financial trajectory better than your income does. It is also the number most people estimate rather than measure.
How it works
Divide what you saved over a year by your take-home pay for the same year. The Bureau of Economic Analysis defines the national personal saving rate the same way, as saving measured against disposable income.
Measure against take-home pay, not gross salary
This is where homemade calculations usually go wrong. Tax was never available to save, so including it in the denominator understates the rate. Saving $15,000 on a $100,000 salary looks like 15%, but if take-home pay was $75,000 the real rate is 20% — a materially different picture of the same year. BEA uses disposable income for exactly this reason, and this calculator asks for take-home pay to match.
What this does not include
Counting is a judgement call this calculator leaves to you. Employer retirement contributions, mortgage principal payments and debt repayment are all treated as saving by some people and not others. Whichever you choose, apply it consistently year to year — the trend in your own number is far more informative than its level against anyone else’s.
How to use this calculator
- Enter what you actually saved over the year, including retirement contributions if you count them.
- Enter your take-home pay for the same period.
- Compare the result against your own previous years first, and national figures second.
Frequently asked questions
What is a good savings rate?
There is no authoritative threshold, which is why the bands here are described as above or below average rather than as targets. What is defensible: a higher rate shortens the time to any financial goal, and the rate matters more than the income producing it.
Do employer retirement contributions count?
Reasonable people differ. Including them shows total wealth accumulation; excluding them shows what your own decisions produced. Both are useful — just do not switch between them, because that makes your own year-on-year trend meaningless.
Does paying off debt count as saving?
Paying down principal increases your net worth exactly as saving does, so many people count it. Interest does not. If you count principal repayment, say so to yourself and keep doing it consistently.
