How to calculate your savings rate
Savings rate = (Take-home income − Spending) ÷ Take-home income × 100
Use take-home pay plus anything you save before it hits your bank account, such as 401(k) contributions and HSA deposits. Count the employer match as savings too if you want, as long as you add it to income as well.
Why your savings rate decides your retirement date
Your savings rate controls both how fast your portfolio grows and how big it needs to be. Starting from zero with a 5% real return and a 4% withdrawal rate, the working years needed look like this:
| Savings rate | Years to financial independence |
|---|---|
| 10% | about 51 |
| 20% | about 36 |
| 30% | about 28 |
| 40% | about 21 |
| 50% | about 16.5 |
| 60% | about 12 |
| 70% | about 9 |
Your income level doesn't appear in the table at all. A household earning $60,000 and saving 50% reaches FI at about the same time as one earning $300,000 and saving 50%.
Ways to raise your savings rate
- Cut the big three first: housing, transportation and food usually make up over half of spending.
- Save raises and windfalls instead of raising your lifestyle.
- Automate: send savings to investment accounts on payday.
Frequently asked questions
What is a good savings rate?
15% is a common target for a traditional retirement in your mid-60s. FIRE followers often aim for 40% to 70%.
Should I use gross or net income?
Take-home (net) income plus pre-tax savings like 401(k) contributions gives the most useful number, because it's what you actually control.
Last reviewed: 2026-10-09