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U.S. Savings Rates vs. The World

by J. Money on Tuesday, November 29, 2011

Save more America

According to the latest Smart Money magazine, who nabbed the stats from the World Bank, the United States’ savings rate is only around 10% – MUCH lower than many other countries like India (28%), Switzerland (32%) and even China (51%!!!). Scary, huh?

There’s a whole bunch of reasoning behind it which I’ll share here in a sec, but needless to say we all gotta kick it up a notch if we’re serious about living a comfortable life later!  I don’t even know how you could live off of 10% in retirement, do you?!  Unless you’re gonna drastically cut your lifestyle, or your bringing home pimp daddy amounts right now, it’s probably best to start saving much MUCH more.  Maybe even 25%? (I think 20% is the “norm” advisors usually suggest, but we all know there’s never a magic number since we all live so differently. And plus some months we can easily save more, and others a lot less – so as long as you are *paying attention* and doing your best at all times, you should be able to beat the average any day.  Especially since you have the upper hand reading this blog!  (haha… just kidding… sort of ;)))

At any rate though, we as a nation have to remember to save save save!! Even though our economy keeps telling us to spend spend spend so we can get out of this recessional mess we’re in (which always seems so counterproductive, doesn’t it?  I swear, if we were all better about saving and not going overboard in the beginning, we wouldn’t have gotten so hardcore off the track in the first place! And I count myself for adding to that trouble too – I’ll freely admit it.)

While it doesn’t do much to physically help us save more, check out some of the reasons below why the other countries are better at this than us…  Not only does it help put things in perspective a lot more (always good to remind ourselves how BLESSED we are to be living in the States!), but it’s also incredibly fascinating.  If you’re in to that stuff, anyways ;)

  • Vietnam (28%): “In countries like Vietnam, where insurance against risk is largely unheard of, household savings often become an important part of preparing for the worst; any costs incurred by a natural disaster or an illness would come out of a family’s pocket.”  How about THAT for an emergency fund?  Pretty scary stuff…. imagine having no health insurance? Or life, house, car, etc etc?  (Actually not sure about the car and all of that, but it still puts things in perspective) Having a nest egg like that could do wonders to anyone’s situation.
  • Brazil (15%): “… Brazil’s recent economic boom has also fueled a hunger for consumption; people often borrow to get what they want, even if it means financing a car at 30 percent interest.”  Wow.  Though much can be said for a lot of Americans too, huh? ;)  Which is why it’s not surprising both our nations rank so low on the scale here.
  • Switzerland (32%): “Swiss citizens enjoy strong government safety nets, including a solid pension system.. Costs like medical and child care are covered, and many dual-earner households are able to put discretionary money into the bank or investments.”  It doesn’t hurt having a 4% unemployment rate too!
  • India (28%): “Many families save to amass dowries for their daughters…” as well as protecting themselves from future hardships in the same way as those in Vietnam do (aka making your own insurance). Imagine if you had dowries to consider?
  • China (51%): “China’s savings rate took off after the country liberalized its economy in 1992, as more Chinese aspired to accumulate assets like homes and cars… The savings culture also derives in part from the government’s population-control policy.”  Since China has way more men than women, the families w/ boys are saving a ton more to make sure they’re “marriage material.”

How much are YOU saving these days, percentage-wise?  Have you calculated it recently?  I tend to go all over the place being self-employed, naturally, but back when the 9-5 was kickin’ I’d range anywhere form 30% to 90% – all depending on what my goals were at the time (mainly, maxing out my 401(k) and Roth).  If I can save or invest 10%+ this year I’d be in goooooood spirits my friend!

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PS: More of the article from Smart Money can be found here.

(Photo by buggolo. Reminder by J$)

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{ 36 comments… read them below or add one }

1 Mercedes November 29, 2011 at 7:38 am

I currently have 13% taken out of my check for my 401k, roth and employee stock purchase program. and I actively save money from each paycheck for other life goals, which can range from $200-1000 a month. (depending on my overtime pay) I could save a bit more if it wasn’t just me supporting myself, but I think I am doing pretty well for a singleton!

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2 KC @ PsychoMoney November 29, 2011 at 8:25 am

It is impossible to have a steady rate of savings when you are self employed. Right out of college we saved right around 50%. It was that initial saving that set me and my family up to never have to worry about money, work for myself, and now affords us all those things that we want out of life. Right now I am saving way more than 50%, all of that money is in investments and goes right back into the investments.

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3 John @ Frugal Gearhead November 29, 2011 at 9:05 am

Man, the Swiss are rocking it! Even with all the government programs and slightly higher taxes. They still managing to squirrel away 32%

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4 J. O. November 29, 2011 at 9:06 am

I save 10% pre-tax for retirement accounts and 10% post-tax for savings automatically through payroll deduction. Then, I pay my bills for the week, fill up my gas tank, buy groceries, do my weekend thing and whatever’s left in my account on the next pay day goes to savings (usually an additional 10% – 30% weekly). I do it all again the next week.

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5 Trinnie November 29, 2011 at 9:15 am

My 401k is maxed out w/my percentage at 8% (can’t divulge what my company matches, however)…husband’s 401k is maxed and LAME! He has 4% invested w/a 2% match from his employer. The lame part is after 10 years of employment, this is the first year his company matched anything! I’ve sat down w/our financial advisors and definitely need to follow their advice and invest/save more.

Even though I’m only 32 yrs old, I am FREAKING OUT about retirement!

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6 Jeffrey Trull November 29, 2011 at 9:20 am

Even though the other countries save a higher rate, I would presume that Americans save more dollar-wise than some of these countries (right?) Not saying that’s the most important factor or anything (and I think Americans suck at finances), but something to think about.

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7 Happy Homeowner November 29, 2011 at 10:03 am

Damn, I’m moving to China!! Or Colorado…haha. In a typical month, I save about 24% and send 16-17% extra to my mortgage.

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8 Well Heeled Blog November 29, 2011 at 10:16 am

For retirement, we saveda little over 20% of our gross combined income this year. We also saved more for other stuff. But I find saving for things other than retirement and maybe paying down mortgage hard to calculate – what do you count as savings? If we put away $5k this year for a trip next year, is that really savings? How about $50 this month for a trip next month? Savings is just another word for delayed spending…

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9 Vanessa November 29, 2011 at 10:33 am

My savings rate varies month to month (some months 60%, some months -20% :P). Overall I average about 50%

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10 Brian November 29, 2011 at 11:08 am

My wife and I save around 35% or so. I would like it to be higher, but I think we are doing alright.

I wonder how much of the savings in Switzerland is really in the form of insurance. They are a very highly insured people. Personally I don’t consider insurance savings, so I wouldn’t count that, but I don’t know if that is left out in their methodology.

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11 thefrugallery November 29, 2011 at 11:25 am

What is crazy to think about is how much less people in other countries make in comparison to the United States. China saves over 50% of their income, but their income is considerably less than ours. If they can figure out how to save 50% when they are making less than $5,000 a year, then certainly Americans should be able to figure out how to save a little more!

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12 Jen @ Master the Art of Saving November 29, 2011 at 12:06 pm

That’s nuts! China is totally rocking their savings, like 5x more than us. My last 2 $ Reviews say that we’re only saving 12% between savings and retirement. I know this isn’t anywhere close to what we should be doing, but it beats the -20% we were doing a couple years ago. We don’t make much money, so I’m slowly improving our financial situation, little by little. It all adds up!

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13 Yana November 29, 2011 at 12:18 pm

You inspired me to do the math for the past year, November 2010-October 2011. After-tax income, the savings were 9.217%. Very low, and that is because we had to pay for my father-in-law’s funeral costs.

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14 C November 29, 2011 at 12:42 pm

We save 15% of gross for retirement (plus company match), and another 13% of gross for other goals, including some short-term ones, like vacations.

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15 Laura in ATL November 29, 2011 at 1:06 pm

Ooh, I love stuff like this.

I make $48K a year and save 10% to a 403B, 6% (plus 3% match) to a TIAACREF account. I also contribute $5K a year to a ROTH. For regular savings, I do $500/month that goes into CDs. That’s a lot of money each month going to savings, but it makes me feel good to have it there. I live a pretty low key life with no debts and no mortage (own the house via inheritance) and dont have a lot of expenses. I feel pretty good about the amount of money I save (roughly 25%), but at the same time, I feel like its not enough!

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16 Stephanie November 29, 2011 at 1:10 pm

Wow, I’m impressed with everyone’s savings rates here! At the moment I’m saving right around 10% for retirement, but I’d like to make that number closer to 15-20% once I pay off my student loans (which I will hopefully do early!). And usually another 10% (give or take a little) goes into short-term savings to cover things like home repairs, car downpayments/purchases, etc. Plus we have a pretty decent emergency fund that should cover us for around 6 months (assuming we have no income at all, longer assuming we don’t lose ALL of our 6 separate income streams!).

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17 J. Money November 29, 2011 at 1:25 pm

@Mercedes – I would agree w/ that statment! Ms. Singleton, haha…
@KC @ PsychoMoney – NICE work! Esp for someone who’s self-employed. Way to keep killin’ it man :)
@John @ Frugal Gearhead – Not too shabby, right?
@J. O. – That is dope!! 20% at the least, and 50% at the max – you are rockin’ it!
@Trinnie – Haha, you guys are doing so well though!! No need to freak out, just keep things moving and shakin’ as they are and you’ll be SO well off girl ;) And the good part here is that you are both so very SMART. Which means you can always earn more later worst-case scenario…. would be scarier if you had no brains, haha…
@Jeffrey Trull – Oh man, I dunno – I guess it’s possible. That could be another fun research project for sure :)
@Happy Homeowner – Great! Def loving the mortgage-plan you’ve build in there — can’t wait to make our 3rd awesome payment ourselves this week — woohoo!
@Well Heeled Blog – Haha, I can see that. I guess “savings” in the way we’re looking at it here is for future retirement and investments. Over “spending soon” type of funds :) Though you know I’m a HUGE fan of vacation saving!!
@Vanessa – Haha, -20%? You go in debt? You’re funny :) Good work too on hitting the 50%s!!
@Brian – Yeah, not sure here either. I’m guessing it’s just cash stocked away or invested *to be used* as insurance if it’s ever needed?
@thefrugallery – OOOOH GREAT POINT!! Hadn’t thought about it that way, I like it! :)
@Jen @ Master the Art of Saving – That’s all you can do! Put the game plan in motion and work toward it one month at a time :) Glad you’re sticking with it so far!
@Yana – Aww, I’m sorry :( That’s no fun for anyone… hope things have gotten better for you and your family!
@C – You’re killing the average! Keep it up!
@Laura in ATL – Oh wow, that IS great! Yeah we all always think we need more for sure, but every now and then we gotta remember to pat ourselves on the back for how far we’ve come too :) It’s only natural for us money-lovers to keep pushing ourselves to do better! And it will all pay off later on too – literally.
@Stephanie – Ooooh very cool!!! 6 income streams? That’s awesome!! I’m impressed :)

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18 retirebyforty November 29, 2011 at 1:31 pm

We are saving around 50% at this time. I’m planning to leave my job at some point so we are preparing for that.
The key is to get other people to spend money while you are saving. That way the economy improves and you have enough for retirement. :)

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19 Cassie November 29, 2011 at 2:34 pm

My savings percentage got turned on its head recently when I decided to put my savings money into my line of credit repayment (it made more sense on the interest rate front), and use the account as my EFund until it was paid off and I could save up again. Currently I’m sitting at 12.5% of my gross income going into retirement savings, and another 10% being slapped onto the principal of my line of credit.

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20 Stephanie November 29, 2011 at 3:22 pm

@J Money – Yup! Not all of them are necessarily big, but they all help. We each have one main source (me at the county courthouse, him at a local school district), one secondary, but still reasonably substantial source, usually anywhere from about $250-700/month each (me at the library, him doing standup comedy), and one smaller, more infrequent (but still helpful) source – in my case, my jewelry business, in his case the occasional freelance writing job. It makes for a pretty crazy schedule between the two of us, but we both enjoy what we do and it’s nice to know that if we lose one of those jobs, we can make up at least some of the income by focusing more on one of the other jobs.

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21 Corey @ 20's Finances November 29, 2011 at 3:47 pm

Right now it’s around 20%, but it is going to be ridiculously high soon as the Mrs. just got a promotion! I agree with retireby40 – save money and get others to spend it (in an honest way) so that the economy improves. :)

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22 Edward Antrobus November 29, 2011 at 8:06 pm

“I don’t even know how you could live off of 10% in retirement, do you?!” Of course, the counter-argument is that I plan on spending a lot longer time saving for retirement then spending my retirement savings. Okay, not 10 times longer but I figure I’ve got 40 to go till my body won’t let me work and 5-10 of being the guy who sneaks up the ladder to clean the gutters when the family isn’t around to stop me. (yeah, we found my grandfather on the roof three days after having surgery last year…that’s MY role model!).

I also have some concerns about the effect of saving on the economy. I remember hearing that one of the reasons that Japan had such a tough time pulling out of it’s recession back in the 90′s was because their savings rate was pretty high.

That said, we are currently saving about 25% of my wife’s income (the stable one) towards a down-payment.

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23 Matt, Tao of Unfear November 29, 2011 at 8:35 pm

Right before I lost my job, I was saving about 50% of my take home pay (after money was already taken out for my 401k). Of course, I was planning on being self-employed/unemployed for the long haul.

My savings waxed and waned before that, at least, after I got the first thousand in my emergency fund. Some months I wouldn’t save anything other than what was taken out for my 401k. Other months I would save about half of my take home pay.

I’d really like to have enough money saved up to make insurance obsolete.

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24 fabulouslyfrugirl November 29, 2011 at 9:49 pm

I have been aggressively saving for the past year and my savings rate is hovering around 50 – 60%.

Having been to Vietnam, it is very obvious why the people there need to save as much as they do. Everyone is on their own and there is no credit card/insurance/pay-day loans to bail them out.

Maybe we just have too many options of spending in North America?

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25 Melissa November 29, 2011 at 10:38 pm

Yikes! 10%? I’d like to know what the rate is in Canada. Though I expect it’s probably not too much better.

Previously, I saved about 30-35% of my net income. Savings was my next largest expenditure after rent! NOW, however, I’ve just resigned from my job and am entering the awesome and terrifying world of freelance writing so…I’m saving nothing. Or rather, I’ll be spending my savings over the next couple of months, while I get going.

Is that technically considered negative saving? Gulp.

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26 Neo November 29, 2011 at 10:40 pm

I don’t understand how people who don’t save at least 15% of their income can even sleep at night. I save at least 30% of every dollar that comes in the door. Don’t get me wrong, I am not bragging here; I save this much because I am highly sensitive to the fact that I can easily be out of job, become injured or face some other expense emergency and it can happen in a flash. I save because I expect the worst and hope for the best, not because I have high disposable income… I wish…

Question, can someone with higher income but who does not save or saves very little, provide a bit of detail about how you are comfortable spending and not saving for tomorrow or in case of an emergency?

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27 Matt, Tao of Unfear November 29, 2011 at 10:49 pm

@Melissa – That’s exactly the boat I’m in right now. Negative savings, for the lose. Job freedom, for the win.

@Neo – The contract I was working on just got moved to India, and I can’t imagine being most of my coworkers. Except for one who had had a stroke and was legitimately spending a large percentage of his money on medical bills, the rest of them were spending money on crap they didn’t need and not saving a dime. Didn’t they realize how easily they could lose their jobs? It’s hard to feel sorry for any of them, since I was working the same job and was still able to save up a sizable emergency fund, while also paying off all of my private school loans. Was it fun? Not usually. But I’m sleeping a lot better at night than they are, I’m sure.

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28 Yana November 29, 2011 at 10:49 pm

Neo, I hear you on that. I was most comfortable saving 30-35% of our income, which is not at all a large income. A very close friend of mine whose household income is at least double what our is does not care much about saving. The biggest difference I see between her and me is that she has full faith in promises, such as pensions, social security and work-related benefits/investments. I, on the other hand, have minimal faith in promises. I think it’s both a matter of faith, and an inability to imagine financial needs that are not in the present moment.

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29 NICOLE C. November 30, 2011 at 12:34 am

I hope the 10% saving rate is on top of the money that we save for retirement.

So, up to now, I contribute 9.5% (plus employer match) into my 401(k), 8.4% after tax money into ROTH IRA. Then I save 12.9% after tax money for emergency and car fund.

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30 StackingCash November 30, 2011 at 3:55 am

@Neo, you might want too boost your insurances up a little if you have that much fear.

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31 Maria Nedeva November 30, 2011 at 5:58 am

This is very difficult to say because comparison between countries are next to impossible. For instance, 18% of my pay cheque goes before I see anything in my bank account (on my pension scheme and on National Insurance which in the UK gives access to different benefits). Does this count as saving? It should because a lot of savings in the US are in pension funds. On top of that we put aside 20% or over (depends on the month). Problem is: my financial awakening took a bit of time so now need to run very fast. I do want to be able to leave employment in 5 to 7 years.

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32 neo November 30, 2011 at 12:26 pm

@matt @yana. I am with you guys. I have firends who spend every dollar that comes in and I am baffled by it!

@stackingcash. I have plenty of insurance I just don’t have much faaith in relying on my employer to keep paying me and I don’t want to sacrifice the fun in my life if I do lose my job hence I save like crazy to insure I don’t get burned. Plus insurance reallly won’t help with job loss

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33 Monica November 30, 2011 at 1:06 pm

We were saving 12% (only one income for over a year) but now that we gotten a little in over our heads, we are at 7% in an IRA. I am looking for a job and as soon as that happens, we will get back to our 20%.

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34 J. Money December 1, 2011 at 12:00 pm

@retirebyforty – Hahahahaa.. I love it. “The key is to get other people to spend money while you are saving. That way the economy improves and you have enough for retirement. :)” (And congrats on staying strong at 50%! You’re gonna be there in no time!!)
@Cassie – Ooooh be careful w/ that though! I did that in 2008 and then when all housing prices crashed I couldn’t take out my money anymore!! I didn’t “lose” my $10,000 per say (it just paid down the HELOC) BUT I lost access to it. Hopefully we’re all over that mess these days, but just a fair warning ;) It was actually one of my very first blog posts! Haha… Operation HELOC: The Bad
@Stephanie – COOL!!! Your man does stand up comedy?? He TOTALLY needs to do a Side Hustle post with us! It would be awesome because not only is it interesting as HELL, but it would be FUNNY! Haha.. right? Ask him :) Pleasssssse!
@Corey @ 20′s Finances – Nice! Keep it up! :)
@Edward Antrobus – Huh… saving too much can crap out a Nation? Never really thought about it that way. Though it’s not gonna change me for continuing to do it ;) If there’s one thing I’ve learned over the years, it’s that only WE care – and have the power – to make sure we’re okay financially. As long as we continue pushing forward and trying to better our own situation, as it makes sense, we should be fine later. Doesn’t mean we stomp over anyone or anything like that, just that we make sure we got our own backs ;)
@Matt, Tao of Unfear – I know right? Wouldn’t THAT be heavenly :)
@fabulouslyfrugirl – Oh man, I can’t even imagine. That’s GREAT you got to experience it there and have that better understanding! Gonna go over and check out your blog after submitting these comments :) Thanks for stopping by.
@Melissa – Haha.. no, it’s called LIVING YOUR DREAM!!! :) So proud of you!!!! Welcome to the dark side, haha…
@Neo – AGREED!!! GREAT question!! And you’re not bragging at all, just putting your feelings out there – that’s what we love about blogging!
@Yana – I think you’re on to something there :) Better to make sure 100% that you’re fine, but doing it YOURSELF than relying on others (or other organizations). Worst case you’ll then have double the money! Woo!
@NICOLE C. – Nice work! That is a LOT of savings!
@StackingCash – I think he’s making his own insurance ;)
@Maria Nedeva – Hey, we all start somewhere right? I hope to join you in 5-7 years :) Well, I’ll still be blogging, but I want to give up all the other annoying stuff, haha… always gotta be working towards a goal!
@Monica – Awwww, well I hope you find that job soon then! And that it’s MUCH better than the last one :)

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35 Andrea Travillian December 2, 2011 at 6:50 pm

I am actually surprised the rate is 10%! It scares me that we are not saving enough since our social security system is not great and most companies are getting rid of pensions. This means we all have to finance our own retirements. Right now we are only saving 10%, but in the past have been between 15 – 25%. I actually added a line in my excel monthly/yearly expense/income summary that tracks our actual savings for the year/month. This way I always know exactly where we are at for savings.

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36 J. Money December 3, 2011 at 11:25 am

Sexy!! Love spreadsheet calculations ;)

Was actually just reading Money Mag last night, and they said the average American is saving only 3% now?? Not sure how these numbers differ so drastically, but either way 3 or 10 is still not enough. It’s damn better than 0% though! Haha…

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