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TOPIC: Percentage to Save in a Savings Account

Percentage to Save in a Savings Account 5 months 3 weeks ago #1

  • FrankN
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How about other people? Do you even track or set a goal for a certain percentage or do you just try to save as much as you can?
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Percentage to Save in a Savings Account 6 months 3 weeks ago #2

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Very strong start. I usually start to get behind in the summer, but hoping this year is different.
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Percentage to Save in a Savings Account 6 months 3 weeks ago #3

  • Wanderer
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So far I have save 13% for 2018 and hope to increase that to 15% to 20%.
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Percentage to Save in a Savings Account 6 months 3 weeks ago #4

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With almost 2 months gone in 2018, how is everyone doing toward their savings goal for 2018? For me, I am on track to saving 25% of my income!
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Percentage to Save in a Savings Account 8 months 1 week ago #5

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I was referring to withdrawing from your 401K early prior to your retirement age. Once you hit retirement age, you can withdraw at no penalty and pay normal taxes on the income. However if its a ROTH 401k, you have already paid the taxes on it.

If you are not of retirement age, you have to pay a penalty and that is what I was referring to.
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Percentage to Save in a Savings Account 8 months 1 week ago #6

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FrankN needs to weigh in again but, I think it is based on the idea that when you earn less income (such as in reitrement) you are in a lower tax bracket and will pay less in taxes. Now with the new US Tax Law starting in 2018 things may have changed. FrankN said that a tax write up would be forth coming when he could get accurate information ... fingers crossed! Now you mentioned age ... generally we are older by age when we would tap the aforementioned funds so in a sense age too. Need FrankN to provide more detail.
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Percentage to Save in a Savings Account 8 months 1 week ago #7

  • Lexie
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Are you sure about that FRANKN? I am retired and have transferred one of my 401Ks to my local bank just so I could get to it quickly if need be. They told me regular taxes still apply if I withdraw anything. Does it have something to do with age?
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Percentage to Save in a Savings Account 8 months 4 weeks ago #8

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JacksonM wrote:
Lexie wrote:
My question still remains the same. How is the best way to get that money out of a 401K without having to give at least a third to Uncle Sam. There must be a way.

Lexie, I found this helpful article on The Balance: https://www.thebalance.com/what-you-need-to-know-about-401-k-early-withdrawals-2894147. It looks like there are reasons you can withdraw money early, but no matter what you'll end up paying something since withdrawals are subject to ordinary income taxes.

If you take money out early, there really is not a clear way. But if you wait until retirement, you pay very little to uncle sam.
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Percentage to Save in a Savings Account 8 months 4 weeks ago #9

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Lexie wrote:
My question still remains the same. How is the best way to get that money out of a 401K without having to give at least a third to Uncle Sam. There must be a way.

Lexie, I found this helpful article on The Balance: https://www.thebalance.com/what-you-need-to-know-about-401-k-early-withdrawals-2894147. It looks like there are reasons you can withdraw money early, but no matter what you'll end up paying something since withdrawals are subject to ordinary income taxes.
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Percentage to Save in a Savings Account 9 months 1 week ago #10

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JGibbs wrote:
JacksonM wrote:

Each month you pay your bills: home, utilities, phone, etc. When you "pay yourself first" you treat your savings account or Roth IRA or another account like you owe it a monthly payment, and you make it your first payment after you get your paycheck. Even if you're loose with your budget you can determine an amount you can move even if it's only $20. On payday, mine's automatically set up to transfer so I never see my payment to myself as part of my spending money.
That makes sense! Anytime I get a raise, I automatically kick it over into my 401k, so I never miss the money. I just continue as though I'm getting paid my usual, starter salary. Thank you for explaining the "paying yourself first" concept so throughly! I have heard that phrase time and time again, but I seemed to be the only one who didn't get it.

My question still remains the same. How is the best way to get that money out of a 401K without having to give at least a third to Uncle Sam. There must be a way.
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Percentage to Save in a Savings Account 11 months 3 weeks ago #11

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I love the pay yourself mentality. I strive to save 30% of my earnings, but am glad/satisfied if I save anywhere from 15%+. That is my baseline goal.
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Percentage to Save in a Savings Account 11 months 3 weeks ago #12

  • JGibbs
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JacksonM wrote:

Each month you pay your bills: home, utilities, phone, etc. When you "pay yourself first" you treat your savings account or Roth IRA or another account like you owe it a monthly payment, and you make it your first payment after you get your paycheck. Even if you're loose with your budget you can determine an amount you can move even if it's only $20. On payday, mine's automatically set up to transfer so I never see my payment to myself as part of my spending money.
That makes sense! Anytime I get a raise, I automatically kick it over into my 401k, so I never miss the money. I just continue as though I'm getting paid my usual, starter salary. Thank you for explaining the "paying yourself first" concept so throughly! I have heard that phrase time and time again, but I seemed to be the only one who didn't get it.
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Percentage to Save in a Savings Account 11 months 3 weeks ago #13

  • Lexie
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You are exactly right Jacksonm and I have done this for years. Now my challenge is gaining access to that money without the government taking almost half. Does anyone have suggestions here?
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Percentage to Save in a Savings Account 1 year 2 days ago #14

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JGibbs wrote:
What does "pay yourself first" mean exactly? I've heard that term my whole life, but never understood what that well used phrase meant for my finances.

Each month you pay your bills: home, utilities, phone, etc. When you "pay yourself first" you treat your savings account or Roth IRA or another account like you owe it a monthly payment, and you make it your first payment after you get your paycheck. Even if you're loose with your budget you can determine an amount you can move even if it's only $20. On payday, mine's automatically set up to transfer so I never see my payment to myself as part of my spending money.
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Percentage to Save in a Savings Account 1 year 4 days ago #15

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I really like this philosophy. I will try to work this out however, it means after taxes, I'll only have 40% to live on. This, as they say, will make me a mathematical genius as suggested by someone below. Thanks for that bit of advice on percentages.
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