Are You Saving Enough?
If you go by the book, you would shoot for 10% to 20% of your gross income. But that ballpark figure can be deceiving.


Savings and retirement estimators are helpful, but often misleading, tools. These calculators can be insufficient to determine how much money you should be saving based on a few calculations.
It’s not wise to solely trust calculators to tell you if you’re adequately prepared for an emergency or retirement. In addition, some people trying these calculators may be so discouraged by the numbers they see that the tools end up not helping at all.
If you looked in a financial planning textbook, an individual should be saving 10% to 20% of his or her gross income. However, that number, in and of itself, doesn’t tell the entire story. To estimate how much money you should be saving you can’t rely on general advice. And maybe that isn’t the right question to be asking anyway. Maybe instead of asking how much should you be saving, you should ask yourself how much can you save? Are you saving as much as possible?

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In a time when many Americans live without an adequate safety net, prioritizing savings is increasingly difficult for many people. Here are a few things to consider as you start thinking about your savings goals and how to ramp them up.
Lifestyle Choices Affect Savings
One of the biggest obstacles to savings is living outside of one’s means. Acquiring debt, installment payments and frequent “Keeping up with the Joneses” spending binges consume funds that could otherwise be saved and earn interest. That probably doesn’t come as a surprise to you, but what if you are living within your means? Your money decisions money can still have an impact on your ability to save. We all can do better.
Not being purposeful in aligning your current spending with your priorities will undoubtedly leave you falling short of achieving your goals. I have seen many people who say being prepared financially for retirement is extremely important to them. However, when you look at their finances you quickly see that they’re spending a major portion of their income maintaining their current lifestyle.
For example, I knew one man who was saving 6% of his gross income in a retirement account, while also receiving a 3% match from his employer. The problem was that he was also spending, on average, 20% more a month than what he made, running up credit card and home equity debt while depleting his savings. While he was saving for his future, at the same time he was destroying his current wealth and on the path to financial distress.
The Curse of Instant Gratification
Another problem many families face is the drive for instant gratification. Instant gratification is a curse to savings, in part because of the ease and convenience of both online shopping and digital banking. Advancing technologies facilitate spending money, and consumer demand drives technology’s march forward.
More than simple wasteful spending, instant gratification may sometimes include necessary and functional purchases — just at the wrong time. For example, many people like driving a new car with the latest technology, but do you really need it? You may need a car because of where you live or your job, however do you need to purchase the latest model factory delivered with all of your specifications?
Ways to defer gratification include:
- Make a list of wants, and save toward large purchases so you can pay in cash. These don’t have to be major purchase like a home or car, but could be a family vacation, a new washer and dryer or that new Ultra 4K TV.
- Use a debit card for purchases, not a credit card. If the money isn’t in the account, don’t make the purchase.
- Leave credit or debit cards behind completely and use only cash.
Basically, don’t blow your money. Simple enough, right? But even the rich and famous can have trouble with that concept. Take Johnny Depp. His business managers, whom he is suing, say his “lavish spending” — $30,000 per month on wine, $200,000 per month on private jets and reportedly $75 million to buy homes, a horse farm in Kentucky and several islands in the Bahamas — has put him in dire straits.
Saving enough for wants, emergencies and other unpredictable expenditures means having enough money left over from paychecks to save. For many this will be a difficult change to make. It will mean that you are willing to exercise financial discipline and delay purchases until you can afford them while also meeting your savings goals.
Conclusion
No calculator or estimator can come up with the exact amount for any one person to save. Knowing what to prepare for is personal to each individual situation. Every person who wonders how much to save must first examine a larger picture that includes long-term financial goals, lifestyle choices, spending habits, wants, desires and necessities. It is a personal decision that deserves thoughtful contemplation and strategic financial planning.
If you are currently wondering how much you should be saving to reach your version of financial success, you can always reach out to a Certified Financial Planner. The time you take now to prepare for your financial future can make all the difference in your long-term quality of life.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Paul Sydlansky, founder of Lake Road Advisors LLC, has worked in the financial services industry for over 20 years. Prior to founding Lake Road Advisors, Paul worked as relationship manager for a Registered Investment Adviser. Previously, Paul worked at Morgan Stanley in New York City for 13 years. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network (XYPN).
-
Think a Repeal of the Estate Tax Wouldn't Affect You? Wrong
The wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term Care
Many people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?
Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Such Attractive Yields in High-Grade Munis Are Rare and May Not Last Long
According to this munis expert, the last time munis were this cheap was a brief period in 2023. If you kicked yourself for missing out then, you have a second chance now.
-
Financial Analyst Sees a Bright Present for Municipal Bond Investors
High-tax-bracket investors have an excellent opportunity to secure low-volatility, high-quality returns at yield levels rarely seen in over a decade.
-
I'm an Insurance Pro: How Not to Get Dumped by Your Insurance Agent
Your insurance agent or broker might show you the door if you do any of these five things. Being a good customer is about more than paying your bill on time.
-
Two Estate Planning Issues You Should Never Overlook
This estate planning attorney explains why proper asset titling and beneficiary designations make a big difference when it's time to transfer your wealth.
-
The Four D's That Could Force You to Sell Your Business
Business owners (or their heirs) can be rushed into a sale of their company if they haven't planned for a major change in circumstances — or the four D's.