[Lex]

Also, do you figure it out after taxes? I’m self-employed so I struggle to keep consistency. One tool I’ve used is just to take a set out each month for retirement, but I’m wondering if anyone has other tricks/thoughts.

Thanks!

[Christopher]

I saw savings rate as mostly a distraction, especially with variable income. Finding your annual spend, a decent amount of padding, and marking progress towards that was more useful for me. Was I maxing my IRA (and wife’s once I got married)? My 401k (when I got a job with one)? My HSA (when I qualified)? Did I add enough to my taxable brokerage to get to where I can bridge the 5-year period for Roth conversion ladder stuff? Those goals meant more than some percentage to be gamed.

Saving 99% of your income in a low income year doesn’t mean much. My kids have a savings rate like that. Savings rate is maybe useful when your income is very predictable and consistent as a way to estimate time to retirement, but otherwise there are more important things to worry about.

Don’t miss: What was your experience going from a high savings/low spending rate to just enjoying any discretionary income?

[Rick]

Your situation sounds like the stock market. Look at it in the short run, and it’s choppy. Zoom out a little, and it looks far more smooth. Consider calculating your savings rate quarterly or bi annually. Regarding your choice of savings rate, I always like to calc both pre and post tax savings rates.

First to watch the trend of both.

Second, I wanted the gap to shrink in a positive way showing that I was continuing smart tax based decisions.

[Elizabeth]

I would not calculate a savings rate with anything less than a full year’s worth of information. Income and expenses will fluctuate too much over any shorter-term period.

[Author]

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