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When I first started dreaming about retirement I didn’t think about how much I was saving now and how much I would need in the future. All I knew is that I wanted to retire early, who wants to wait until you’re 59 1/2 to be able to tap into your retirement funds and relax any day you want too? I was not one of those people.

Knowing this, meant that I needed to be more mindful of how much money I was saving and also become intentional with where and how it was being saved. 

The first time I calculated my savings rate My rate was just about at 15%. This felt normal. When I first started learning about finances 15% was the gold standard to get you to retirement, but retirement meant waiting until you were old enough to access the accounts tax free and without penalty. None of this felt right for what I wanted.

Therefore, I kept searching for more information that aligned with what I wanted in life and in retirement. Eventually I stumbled on the Financial Independence Retire Early (FIRE) movement and this was more my speed. There were people retiring in their 30s and even earlier, they just needed to be intentional with their saving and spending. 

People in this movement have savings rates at times higher than 80%. For a long time I felt like this was unachievable for my family. We spent so much of our money living in the moment that it felt like we weren’t saving enough. $3,000 a month was spent on our mortgage and our daughters school alone. It felt like we would never achieve FIRE with our current plan. 

In the last couple of years we’ve achieve many of our goals of becoming consumer debt-free, reestablishing our retirement savings, and working towards becoming financially independent but on our own timeline. 

This is not a fixed plan but one that evolves with every bit of knowledge that we take in. In 2020 we took on a new adventure of buying a multiplex and becoming landlords of two properties. This is an ongoing part of our lives that we plan to keep evolving. 

With all of the changes that we’ve been going through and knowledge we’ve been applying our savings rate has dramatically improved. We went from thinking our 15% savings rate was a good place to be at to now having a saving rate of more than 60%. This was intentionally unintentional, if that makes sense. We can talk about how changing our mindsets has changed our money and how we achieve our goals mostly on autopilot in another blog post. Back to savings rates. 

What is a savings rate?

Your savings rate is the amount of money you save each month represented as a percentage of your take home pay. This amount is deducted from your take home pay (don’t forget to include any retirement savings you have deducted from your paycheck). The higher your savings rate the more you are putting away at the end of the month. 

How to calculate your savings rate?

When calculating your savings rate we will be using your monthly net income and the amount you save each month. The reason I do this is because everyone pays taxes, but how you do that is up to you. 

If you are looking at your net income from a W-2 you want to make sure you add back any deductions that you opt to pay for (medical insurance, disability insurance, etc), any retirement contributions, and any employer match. 

Next you add up all the after tax income you may have. 

Then, add up all of the savings you did this month. This includes retirement savings (401k, Roth 401k, 457, IRAs, Roth IRA’s, etc.), employer match, health savings accounts (HSA), brokerage accounts, and savings accounts. You can also choose to add in any mortgage principle you have paid this month as your home is apart of your net worth.

To calculate your savings rate you take your total savings divided by your net income, this will be a decimal number, then multiply that number by 100. This new number will be your Saving Rate percentage.


For a super simple monthly example, let’s say you have a household net income of $4,000 and as a couple you save $1,500 into your 401(k)s, IRAs, and other savings. You’d be saving 37.5% of your income.

For a super simple annual example, let’s say you have a household net income of $100,000 and as a couple you save $50,000 into your 401(k)s, IRAs, and other savings. (Just work with me on these numbers for easy math.) You’d be saving 50% of your income. If each of your employers is contributing $5,000 per year to your 401(k) and you count that in your savings rate, you are now saving 60% of your income.

If you also add the $10,000 of your employer contribution to your income, now your savings rate is 54.5%. Which is actually the most accurate.