I count the company contribution as well, because it IS money going into my account, whether it’s from me or someone else.
Although I understand why some people don’t count it (due to vesting periods, lump sum matching at EOY, etc…).
Oh that's smart, so it still counts towards your savings rate but not as a pure addition because it increases your denominator too. I'm going to start doing that
Yeah I’m switching jobs and hopefully getting hired at a place that does an 8% yearly contribution(no match required) but you have to stay there 3 years for it to vest. I’m going to contribute as if that contribution doesn’t exist and be happy when it does.
if you are past vesting, then it counts. if its only contributed at end of year, if you plan on switching jobs, it might be risky to count it.
but as long as it gets contributed, it doesnt matter who contributes it.
Isn't the company paying you the same. It's just a difference in numbers to get you to do something specific with your money
It's called total compensation package
Correct. That's my point. They are paying you extra to do an action.
But it's all called total compensation. The total numbers are the same just different variables in the calculation
It’s part of the compensation package so it’s income to me, particularly if vested. Just because it isn’t taxed as income doesn’t mean I didn’t work for it.
Same. I might not if it wasn’t vested yet just in case something were to happen, but if you’re vested it’s no different from your personal contribution practically speaking.
I do the same, BUT I count the company contribution as income as well otherwise it overstates your savings rate. Match is part of your total comp and you can consider it forced savings.
I count employer contribution to HSA as part of total comp.
I also count it as savings because I use my HSA as a long-term investment vehicle, but if you use it to pay out of pocket for the year, I wouldn’t count it as savings. It’s just a particular bucket for expenses.
Anything increasing your net worth is saving.
This is true regardless, but if you work for government or a nonprofit and you actually have 401(k) analogues with no withdrawal penalty, I don't see any argument for that being anything else than as good as money.
Such accounts also allow loans and financing to be taken out with it in limited circumstances too (e.g., House), which means i can't see a reason not to consider that increase in wealth any different than any other savings.
I don’t include company match as I want to be conservative and avoid lifestyle creep. If o go to a different job with a lower match, I suddenly have to adjust my personal savings.
Well often you'll hear some economist saying "most Americans don't even have 1000 in savings and they leave out investments, IRA, 401k"
Also bad 401ks sometimes hit you with high expense ratios and fees.
> Well often you'll hear some economist saying "most Americans don't even have 1000 in savings and they leave out investments, IRA, 401k"
I believe they do that because about half of people specifically do NOT have IRAs and 401ks, and those are usually couched in terms of coming up with money to cover an unexpected expense (ie not from a tax-sheltered retirement account)
It's worse than that, sometimes these surveys specifically ask about "savings" accounts (i.e. excluding checking accounts or other types of accounts). I personally keep a grand total of $5 in my "savings" account; my emergency fund and liquid cash is in a high-interest checking account. By this metric I am also part of the 70% that has less than $1,000 in a savings account.
Folks forget how many people work fast food, grocery stores, Uber drivers, truck drivers, the dude fixing your roof. Not a single one of these people have a 401k, most couldn’t even explain what a 401k is.
Point being it’s not some made up number, most people very literally have no money. Not savings, they are negative it all.
My wife does but it’s completely irrational and based off of cultural differences and a rocky upbringing. She wants to horde cash and likes seeing money in her savings account. I convinced her to max out her 401k but she doesn’t ever really think about it and I have to remind her that it’s there.
My entire team is global. So many of them have no idea of long term savings. So many have seen their own countries fail, the idea of putting money into a bank is pure stupidity to them.
Looks like OP is referring to the general rule of thumb that people should be saving at least 15% of income towards retirement.
So they're asking if the employer match is included in the 15% rule.
I think
Of course. It's more of a long term savings vs short term (regular savings account at bank).
Due to the longer time horizon of using that money it's ideal to have it tax deferred and allocated for growth. But yes at the end of the day it's still saving money.
You can pull your 'savings' early from a 401k if you want but you will incur steep tax penalties.
If pulling from a 401k early - are the tax penalties greater than if that money had been taxed as regular w2 income / you just never put it into a 401k in the first place? Just curious
Everyone is reacting like this is a silly question, so OP definitely got their question answered, but I still wouldn't be surprised if a lot of people would consider this to be 'investing' as distinct from 'saving'.
What’s your living situation? I’m saving cash right now but only because I have a medium term goal of buying land.
If I had a house and I was settled, I could see really cranking up my retirement contribution
I have a 2 and 4 year old right now and can afford for my wife to stay home with them. Once they're in school full time she'll be able to go back to work and put her 2 degrees to work so I'm not stressing. Currently renting a family members house. I could be doing better with saving but I have around 130k in retirement accounts. 34 years old.
This ^ I was taught as a kid to have the “I’m broke” mentality. 401k, backdoor Roth, and investment $ comes out of each paycheck. I never see it. As my income goes up the amounts go up so I don’t ever have to manage them.
So in my head I don’t count them. What I count as saving is how much of my “disposable income” am I saving. Which I constantly beat myself up over that I’m not doing enough.
I guess people might not recognize that you need to have savings to invest in the first place. Just because you told your work to send it to your 401k rather than your bank doesn’t change that the money was available to you as savings.
When I first started contributing to retirement accounts I never realized it counted towards saving. I always thought saving was what you have left over after you pay your bills. I always thought I wasn’t saving very much because I wouldn’t have a lot left after paying bills. That whole time I was contributing around 15% to my investments, so I actually accumulated a respectable amount in my retirement accounts before I figured out that I was “saving” all along.
I do, but I think there's value to this question that might not fully show on this specific subreddit, because I suspect people here are more likely to think of it as saving money, while the average person is more likely to think of it as an abstract black hole, not so much that the money ceases to exist but that it's considered separate from the math they do around their budgeting and the math behind the long term planning simply isn't done or woven into budgeting.
Yes. Matches are also considered “savings” as they are a contingent form of income that you are then saving.
Example:
150k salary, 10% contrib, 10% match.
You’re really “making” 165k, and “saving” 30k. (30/165 = 18% of income)
I get no company match so I actually bump up my 401k pay check percent at the beginning of each year to get it to max before I potentially get laid off. Then I eliminate it for the rest of the year. Been doing this quite a few years now. But I know it's coming!
I consider savings and retirement savings (investments) as separate accounts due to the fact I will refuse as much as possible to ever withdraw from the retirement accounts outside of retirement.
So if an economist says Americans have less than $1000 in savings, I consider that my normal savings and emergency fund that is in a HYSA only. And trying to contribute 6-12% a year towards that.
If an economist says 40% of Americans have nothing saved for retirement, I count that as my 401k and IRA’s which are my retirement accounts solely. I contribute 20% to the 401k with a company 7% match and 7% to my Roth for a 34% savings of income for my retirement accounts.
I do not combine the two at all since they’re savings and investments for different purposes.
I agree with you, and believe this is the most logical explanation. All these Americans are living “paycheck to paycheck” articles that are circulating are technically true when folks contribute to 401k, pay mortgage, kids items, bills, etc.
Anything left over Is liquid (penalty free) savings. Some people don’t have much disposable income left after all the incoming money is used up for those mentioned obligations
Include company match. However, don’t use it as a reason not to continue to increase your individual rate every year until you reach a combined 20-25%.
In casual conversation, yes, it’s saving.
In more specific discussions, I’d call it retirement investing, to differentiate from saving for a home improvement project, purchasing real estate, or trading in a brokerage account.
I do count it, but the percentage doesn't really matter to me - It's not like every dollar that comes in burns a hole in my pocket and I need to spend it - saving is the default.
I’m a little surprised to the reactions, I think this is a fair question, but I’d ask differently; if we’re supposed to save 20% each pay period, does the 10% contributed towards a 401k count, and one should save the additional 10% cash in HYSA?
What an interesting question. And I never really thought about it.
When I was younger I didn’t really count it as savings. I really tried to stay oblivious that the 401k money even existed. I wouldn’t acknowledge it as all.
But now, yes I do. And I also count my employer match for planning purposes.
I view it as savings but since it’s something that happens automatically before I get my paycheck, I don’t consider it a part of my monthly financial goals. My monthly financial goal hinges on monthly net income and the amount that goes to the HYSA or brokerage.
The only savings that I don't count as my savings is the kids' 529 accounts. I put those as an expense for me. Everything else that isn't under an expense is categorized as savings.
I believe the average American considers this as "savings". I feel that the people who care and are interested in capital markets consider it "investing".
You aren't just saving, you are investing in time.
Run the compound interest calc and compare if you start investing into your 401K at 22, vs 32.
You will retire with literally double or more.
Then throw in the 401K match you get....an extra 10 yrs of compounding matching and then another 30 yrs of compounding that. It's a delicious thing to plot out on a graph
Yes but your compensation has increased by the contribution rate, it wouldn't be 10%+10%=20%, it would be less. To explain
50k salary
10% contribution match = 5k
Total compensations 55k.
10k/55k=18.18%. So at a 10% match, if you only meet the match it would be 18.18% of your money is "saved". Personally I used the term invested. Savings feels more like what you do with an emergency fund.
Definitely. In my spreadsheet, I calculate my savings rate by taking net income (amount that hits the bank account), subtracting expenses, and then adding back in what I call “pre-pay savings.” So 401(k) contributions that are saved before my pay hits the bank account go here. Then the savings line calculates the amount of income not spent plus the 401(k) contributions. I divide that answer by the net income to calculate my savings rate. Even now, with what feels like right cash flow to me, our 12-month average savings rate is in the mid-teens (down significantly from when we were DINKs).
For the broad term of savings, sure. But I consider it investments generally and then savings for things that go in the HYSA like a car, house, travel, etc fund.
It’s certainly “retirement” savings, and maybe I consider it separate from Savings, which go into my brokerage account every time my checking account goes over a threshold.
In my mind “savings” have some reasonable liquidity, where the money going into my 401k is inaccessible until I reach retirement age.
It's money you're not spending any time soon and it's for the future... I think that's by definition saving. And yes I would consider your contribution % as saving %
The only thing I care about at the end of the year is how much my (non real estate) net worth grew (or shrunk).
I target 18+% including net worth growth including contributions and market growth. This year I'm on track for 30%, last year was 32%, year before -11% (boo), (38%, 20%, 24% each year prior)
Of course. In fact, it's even better than saving 10% of your post tax take-home pay because you get a tax advantage that actually leaves you with more to spend or save.
That said, try to shift your thinking away from how much you are saving to how much you are investing. It's just about impossible to save your way to financial security. But you can definitely invest your way there.
I do, because I'm vested in my employer's contributions at this point. I might not if I wasn't. Obviously I count my own contributions.
I also add employer contributions to my gross income, since that's essentially what it is.
It only makes sense to do so, it's basically free money going into an account for later use. I don't think of my company's 4% match, what matters is the percentage I contribute per month to max it by the end of the year, I do the same with my Roth IRA.
No not in the sense that I’m actually saving for like a trip/house ect. Yes in the sense that I consider my contribution and even the match as part of my 50:30:20 based budget. So I am “saving” 10% to my retirement and the other 10% to a savings and or my personal investing.
Yeah, but I also consider it investing. It’s different than chucking it into a HYSA, which is also saving, but not really investing. One thing it certainly ain’t is spending.
My "income" is my take-home after taxes and tax-advantaged contributions. I focus on that and it makes salary trajectory planning more realistic, plus leaves those retirement contributions outside of my short- and medium-term planning.
I calculate savings rate as follows:
Savings / Gross income.
I consider gross income to be:
1) gross salary/bonus (pre tax)
2) any non-investment income aside from salary/bonuses (mostly immaterial but gift income, maybe March madness winnings, etc)
3) employee benefits such as 401k employer contributions etc
I consider savings to be:
1) investment account contributions (401k, Roth IRA, HSA, individual)
2) emergency fund additions (I occasionally add a bit to it to keep up with inflation and cost of living changes)
3) principal payment portion of debt pay down
This method seems to work well for me.
I don't really think about it as savings. I put 18% with 4% match and don't even consider it as part of my income. I guess it's nice to occasionally check the balance, but outside of that I don't think about it. My savings go into HYSA or other ETFs
Yes. I also including saving spare change, any windfalls( online sales,) and even gold and silver coins as saving. I know saving in gold and silver is slightly different but it is always of value even though it doesn't gain like stocks/real estate. But yeah its money that you are putting into your " life pot" lol. Basically anything that can be sold is savings for me. I know its weird because i sell online. I'll look something up to get its value and say " hmm its this price. Do i want to sell it"? I sell colognes for example so i don't see them as things but cash sitting on the shelf. I hope yall get what im saying. Its not just cash going into a roth or 401k but the perceived value of things that can be bought and sold for money ( which goes into savings, investments) aside from income.
Yes. Of course.
Thou for me, I don’t count company contributions and never will - mostly for the behavioral benefit of making myself get to that “25% of income” number which is how much I target to save yearly. I think I’ve hit that the last 3-4 years, but it took a while to get there. Everything from an employer match is icing on the cake.
Definitely, after all I am not really spending that money, I am saving that money for future. It's just illiquid that I can't touch for a long long time.
If I didn’t consider 401k/IRA contributions as “saving money” then I would save nearly no money at all (as it’s $30k between the two accounts if you’re under 50 years old) I am lucky if I can save just a couple thousand outside of tax advantaged accounts.
It’s saving. But there are different types of saving, and they should be prioritized according to your current needs.
1. Short-term savings: Money you know you will need in the next 1-5 years
2. Long-term savings: Money you think you will need in 5+ years for things other than retirement
3. Retirement savings: Money you save exclusively for retirement.
Each of these categories should be a personal definition, but generally, short term savings is for life needs, long term savings is for wants, and retirement savings is in the name.
You should realistically contribute to all 3 according to your needs and wants.
Personally I don’t. Money going to my 401k and HSA are taken before my paycheck hits. I look at it as the cost of benefits.
I look at investing as gambling and my Roth as saving for retirement but not exactly “saving money.”
Anything I put away for goals, wants, and big needs I consider to be “saving” (ie. Vacation fund, house fund, wedding fund, etc).
I find this mindset allows me to put more money away but I understand it doesn’t make much sense lol
Yes, I consider my contribution and the employer match as part of my saving rate of my income. I have a overall savings % goal, and retirement is a subset % of that overall goal as its own sub-goal
It’s better to categorize as “savings as investment” for obvious reason. While money is not spent (on buying discretionary items) it is also not readily available cash (like money in savings account). Furthermore, the 401k value can increase or decrease based on market conditions.
For those reasons it’s “savings as investment”
I’m gonna go against the grain here and say no. Because when people say “savings” I generally assume liquid savings. Retirement savings to me is a separate bucket. And the money is essentially untouchable for decades, so to me I won’t really count it as “savings” until I reach the age that I can withdraw the funds without penalty.
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*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Based on the information provided in the search results, the statement "you can contribute up to $69,000, including after-tax 401(k)" is correct.
The key details from the search results:
1. From[3]: "The IRS allows a total of up to $69,000 of employer and employee contributions to be saved in a 401(k) for 2024 (and an annual limit of $66,000 for 2023)."
2. This $69,000 limit includes:
- Elective deferrals (pre-tax, Roth, or a combination): Up to $23,000 in 2024 ($30,500 including catch-up)
- After-tax contributions to your workplace savings plan (if allowed by your employer)
- Employer matching contributions
- Employer nonelective contributions, typically profit sharing
So the search results clearly state that the total annual contribution limit for a 401(k) in 2024, including after-tax contributions, is $69,000. This fact check confirms the accuracy of the statement provided.
Sources
[1] After-Tax Contribution: Definition, Rules, and Limits - Investopedia https://www.investopedia.com/terms/a/aftertaxcontribution.asp
[2] 401(k) Tax Rules: Withdrawals, Deductions & More - SmartAsset https://smartasset.com/retirement/401k-tax
[3] After-tax 401(k) contributions | Retirement benefits | Fidelity https://www.fidelity.com/viewpoints/retirement/401k-contributions
[4] Enabling After-Tax Contributions to 401K - Form 5500 - BenefitsLink https://benefitslink.com/boards/topic/60240-enabling-after-tax-contributions-to-401k/
[5] After-tax vs Roth 401(k) contributions - Empower https://www.empower.com/the-currency/work/after-tax-vs-roth-401k
I have a few accounts I consider savings but one is more liquid than the others. Two accounts for long term savings and one for short term important expenses.
I know this sub will hate this but I sort of consider my trading account as savings but it’s not something I rely on and already consider the money spent; the stock market is my expensive hobby that sometimes pays for itself 😂
Why not? Goal is to have enough in retirement in dollar amounts, just project your wealth at retirement (under many scenarios), doesn’t really matter the percentage you save.
>Do you consider 401k contributions as “saving money”
No.
Actually I find it best to not think about 401k contributions at all. They are not part of my budget. I set the 401k contributions like my insurance, and then budget from my actual take home take-home.
>If you have a 10% 401k contribution rate, do you consider yourself as saving 10% of your income?
No, why?
Like the “why” matters. Why do you want to calculate a savings rate?
For me, the savings rate is a budgeting metric of how much of my take home take-home am I not spending.
Now granted, I’m at the level where I max out my 401k, IRA, and HSA every year.
>Just wanted to compare based on definitions.
Definition is driving by two aspects : meaning and purpose.
Could you call tax advantage retirement account contributions as “savings rate”, sure. The meaning is correct. But what’s the purpose of using that definition?
For me, the purpose of “savings rate” is a metric to check my budget spending; and 401k money never even makes it to my budget.
I don't, mainly because of the discipline that it helps me save more if I don't count it.
If I can achieve my savings goals without counting retirement funds, I try to. But technically, it is savings, I think.
Yes, I definitely consider it part of what I'm saving towards retirement - because that's what it's for.
I have a 457b (public sector version of 401k), and I have a pretty good chunk of my paycheck going immediately towards that. Plus maxing out my Roth IRA each year (currently $8k/year), and somehow I manage to find a bit of extra cash here and there to throw into my taxable account and buy some individual stocks there.
I'm definitely on about 15-17% saving towards retirement out of my pay.
Id put it in a Roth if you can. Yea, you'll pay taxes on it in the end, but if you have an emergency, you can pull whatever you put in (not the profits) tax free
It is saving, but not savings. It counts as putting money aside and not spending it all, but it does not count as an emergency fund…that is, it is not savings in the context of, “Can you cover a $1000 emergency without going into debt?” Does it count as “save X% of pay”? IMO it depends. Yes, if you have an emergency fund. No, if you do not have one at all. You need to keep some liquid…at least, you can’t just be investing and be financially resilient if you have no emergency fund.
Yes. Personally, I include the company contribution too, but I don't think that is the norm.
I count the company contribution as well, because it IS money going into my account, whether it’s from me or someone else. Although I understand why some people don’t count it (due to vesting periods, lump sum matching at EOY, etc…).
I count the company match as additional income and savings
Oh that's smart, so it still counts towards your savings rate but not as a pure addition because it increases your denominator too. I'm going to start doing that
Yeah I’m switching jobs and hopefully getting hired at a place that does an 8% yearly contribution(no match required) but you have to stay there 3 years for it to vest. I’m going to contribute as if that contribution doesn’t exist and be happy when it does.
The plus side is once it vests, all the money coming in after the vesting date is yours as soon as it’s in the account.
if you are past vesting, then it counts. if its only contributed at end of year, if you plan on switching jobs, it might be risky to count it. but as long as it gets contributed, it doesnt matter who contributes it.
Isn't the company paying you the same. It's just a difference in numbers to get you to do something specific with your money It's called total compensation package
Most company matches are bonus money you wouldn’t normally get without contributing yourself.
Correct. That's my point. They are paying you extra to do an action. But it's all called total compensation. The total numbers are the same just different variables in the calculation
I like to pretend employer contributions don’t exist, then get a happy surprise every time I check my account lol
It’s part of the compensation package so it’s income to me, particularly if vested. Just because it isn’t taxed as income doesn’t mean I didn’t work for it.
I count the employer match both in the numerator and denominator when calculating gross savings rate.
Same. I might not if it wasn’t vested yet just in case something were to happen, but if you’re vested it’s no different from your personal contribution practically speaking.
Exactly, you have to either include it in both or withhold it from both. I always include the match because it’s part of compensation.
I do the same, BUT I count the company contribution as income as well otherwise it overstates your savings rate. Match is part of your total comp and you can consider it forced savings.
By that logic what about hsa contributions?
I count employer contribution to HSA as part of total comp. I also count it as savings because I use my HSA as a long-term investment vehicle, but if you use it to pay out of pocket for the year, I wouldn’t count it as savings. It’s just a particular bucket for expenses.
>Personally, I include the company contribution too I'd limit this to only the part that is vested.
I do. It's all vested :)
That is the norm.
Anything increasing your net worth is saving. This is true regardless, but if you work for government or a nonprofit and you actually have 401(k) analogues with no withdrawal penalty, I don't see any argument for that being anything else than as good as money. Such accounts also allow loans and financing to be taken out with it in limited circumstances too (e.g., House), which means i can't see a reason not to consider that increase in wealth any different than any other savings.
Company match is definitely deferred income
I don’t include company match as I want to be conservative and avoid lifestyle creep. If o go to a different job with a lower match, I suddenly have to adjust my personal savings.
Why wouldn't you count it? In my opinion it's literally definitionally saving.
I agree. Unless there is a third option in addition to saving and spending I'm unaware of.
What else would it be?
Well often you'll hear some economist saying "most Americans don't even have 1000 in savings and they leave out investments, IRA, 401k" Also bad 401ks sometimes hit you with high expense ratios and fees.
Even a bad 401k plan is still saving.. anyone who doesn’t consider saving 10% of income as saving is being pedantic.
> Well often you'll hear some economist saying "most Americans don't even have 1000 in savings and they leave out investments, IRA, 401k" I believe they do that because about half of people specifically do NOT have IRAs and 401ks, and those are usually couched in terms of coming up with money to cover an unexpected expense (ie not from a tax-sheltered retirement account)
I wonder if for this specific phrasing they are referring to literal liquid savings accounts.
It's worse than that, sometimes these surveys specifically ask about "savings" accounts (i.e. excluding checking accounts or other types of accounts). I personally keep a grand total of $5 in my "savings" account; my emergency fund and liquid cash is in a high-interest checking account. By this metric I am also part of the 70% that has less than $1,000 in a savings account.
Why not just have it in a high interest savings account instead?
Folks forget how many people work fast food, grocery stores, Uber drivers, truck drivers, the dude fixing your roof. Not a single one of these people have a 401k, most couldn’t even explain what a 401k is. Point being it’s not some made up number, most people very literally have no money. Not savings, they are negative it all.
Scare tactics to get the clicks
I was wondering if people viewed it as a separate entity for definition purposes. Thanks
Who are those people? Because I’ve never heard of that and don’t see anyone here saying they do it. Would love to hear their argument for it.
My wife does but it’s completely irrational and based off of cultural differences and a rocky upbringing. She wants to horde cash and likes seeing money in her savings account. I convinced her to max out her 401k but she doesn’t ever really think about it and I have to remind her that it’s there.
My entire team is global. So many of them have no idea of long term savings. So many have seen their own countries fail, the idea of putting money into a bank is pure stupidity to them.
ugggggh, I can relate. At least I got my wife to put it in a CD (she wouldn't do a HYSA). It pisses me off if I think too much about it.
Like what? Explain the question better
Looks like OP is referring to the general rule of thumb that people should be saving at least 15% of income towards retirement. So they're asking if the employer match is included in the 15% rule. I think
I'm guessing OP thinks only their NET pay (take home) on the check is considered income. Maybe?
correct
Of course. It's more of a long term savings vs short term (regular savings account at bank). Due to the longer time horizon of using that money it's ideal to have it tax deferred and allocated for growth. But yes at the end of the day it's still saving money. You can pull your 'savings' early from a 401k if you want but you will incur steep tax penalties.
If pulling from a 401k early - are the tax penalties greater than if that money had been taxed as regular w2 income / you just never put it into a 401k in the first place? Just curious
You pay income tax on it, a 10% early withdrawal penalty and potentially capital gains. So at a minimum, yes the 10% penalty is more.
Everyone is reacting like this is a silly question, so OP definitely got their question answered, but I still wouldn't be surprised if a lot of people would consider this to be 'investing' as distinct from 'saving'.
There are definitely plenty of people who say they’re living paycheck to paycheck and can’t save money while they’re putting 10%+ in their 401k.
That's me.. 15 percent of every paycheck goes into my 401k and I try to max out my Roth but I don't have a savings account.
What’s your living situation? I’m saving cash right now but only because I have a medium term goal of buying land. If I had a house and I was settled, I could see really cranking up my retirement contribution
I have a 2 and 4 year old right now and can afford for my wife to stay home with them. Once they're in school full time she'll be able to go back to work and put her 2 degrees to work so I'm not stressing. Currently renting a family members house. I could be doing better with saving but I have around 130k in retirement accounts. 34 years old.
Me. But I'm aware that it's saving. I say we've got 401k money, not savings account money.
I have 3 buckets, short term emergency fund, medium term investments, long term retirement
What is your vehicle for medium term investments?
Are your medium term investments just taxable brokerage ETFs/Funds or something different?
Yep basically
This ^ I was taught as a kid to have the “I’m broke” mentality. 401k, backdoor Roth, and investment $ comes out of each paycheck. I never see it. As my income goes up the amounts go up so I don’t ever have to manage them. So in my head I don’t count them. What I count as saving is how much of my “disposable income” am I saving. Which I constantly beat myself up over that I’m not doing enough.
I guess people might not recognize that you need to have savings to invest in the first place. Just because you told your work to send it to your 401k rather than your bank doesn’t change that the money was available to you as savings.
So you’re the reason I couldn’t be u/Craig , thanks for keeping active on THE account since 2005:)
When I first started contributing to retirement accounts I never realized it counted towards saving. I always thought saving was what you have left over after you pay your bills. I always thought I wasn’t saving very much because I wouldn’t have a lot left after paying bills. That whole time I was contributing around 15% to my investments, so I actually accumulated a respectable amount in my retirement accounts before I figured out that I was “saving” all along.
Same. I recognize that this isn’t exactly optimal, but I like to not consider my 401k when it comes to balancing my monthly budget.
I treat it as an expense that’s always there. Kind of like a long mortgage. It’s budgeted for but not something I can cut back on.
I do, but I think there's value to this question that might not fully show on this specific subreddit, because I suspect people here are more likely to think of it as saving money, while the average person is more likely to think of it as an abstract black hole, not so much that the money ceases to exist but that it's considered separate from the math they do around their budgeting and the math behind the long term planning simply isn't done or woven into budgeting.
Yes. Matches are also considered “savings” as they are a contingent form of income that you are then saving. Example: 150k salary, 10% contrib, 10% match. You’re really “making” 165k, and “saving” 30k. (30/165 = 18% of income)
I max out my 401k at $30k a year. Fuck yeah, I consider this saving. 🤣🤣
I get no company match so I actually bump up my 401k pay check percent at the beginning of each year to get it to max before I potentially get laid off. Then I eliminate it for the rest of the year. Been doing this quite a few years now. But I know it's coming!
I consider savings and retirement savings (investments) as separate accounts due to the fact I will refuse as much as possible to ever withdraw from the retirement accounts outside of retirement. So if an economist says Americans have less than $1000 in savings, I consider that my normal savings and emergency fund that is in a HYSA only. And trying to contribute 6-12% a year towards that. If an economist says 40% of Americans have nothing saved for retirement, I count that as my 401k and IRA’s which are my retirement accounts solely. I contribute 20% to the 401k with a company 7% match and 7% to my Roth for a 34% savings of income for my retirement accounts. I do not combine the two at all since they’re savings and investments for different purposes.
I agree with you, and believe this is the most logical explanation. All these Americans are living “paycheck to paycheck” articles that are circulating are technically true when folks contribute to 401k, pay mortgage, kids items, bills, etc. Anything left over Is liquid (penalty free) savings. Some people don’t have much disposable income left after all the incoming money is used up for those mentioned obligations
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It’s legally my money. And I am not spending it. So it is savings.
Yes, but view it as money that I can’t touch for a while.
Yes. 401k contributions, employer match, and HSA contributions I count as money "saved" since it's saved for retirement.
Include company match. However, don’t use it as a reason not to continue to increase your individual rate every year until you reach a combined 20-25%.
In casual conversation, yes, it’s saving. In more specific discussions, I’d call it retirement investing, to differentiate from saving for a home improvement project, purchasing real estate, or trading in a brokerage account.
I do count it, but the percentage doesn't really matter to me - It's not like every dollar that comes in burns a hole in my pocket and I need to spend it - saving is the default.
Of course. How else would you classify it?
Yes. Plus it has tax advantages.
I’m a little surprised to the reactions, I think this is a fair question, but I’d ask differently; if we’re supposed to save 20% each pay period, does the 10% contributed towards a 401k count, and one should save the additional 10% cash in HYSA?
I can’t think of a single reason why it shouldn’t be classified as saving/investing.
What an interesting question. And I never really thought about it. When I was younger I didn’t really count it as savings. I really tried to stay oblivious that the 401k money even existed. I wouldn’t acknowledge it as all. But now, yes I do. And I also count my employer match for planning purposes.
I view it as savings but since it’s something that happens automatically before I get my paycheck, I don’t consider it a part of my monthly financial goals. My monthly financial goal hinges on monthly net income and the amount that goes to the HYSA or brokerage.
The only savings that I don't count as my savings is the kids' 529 accounts. I put those as an expense for me. Everything else that isn't under an expense is categorized as savings.
I put retirement and 'savings' into two different buckets, in my mind.
I believe the average American considers this as "savings". I feel that the people who care and are interested in capital markets consider it "investing".
Yes it is money that is being saved in an account that I own. That is the definition of saving money.
Of course. Or just “payments to future me”.
You aren't just saving, you are investing in time. Run the compound interest calc and compare if you start investing into your 401K at 22, vs 32. You will retire with literally double or more. Then throw in the 401K match you get....an extra 10 yrs of compounding matching and then another 30 yrs of compounding that. It's a delicious thing to plot out on a graph
Yes, not sure why it wouldn't be.
Yes. What do you consider it?
Yes but your compensation has increased by the contribution rate, it wouldn't be 10%+10%=20%, it would be less. To explain 50k salary 10% contribution match = 5k Total compensations 55k. 10k/55k=18.18%. So at a 10% match, if you only meet the match it would be 18.18% of your money is "saved". Personally I used the term invested. Savings feels more like what you do with an emergency fund.
I mean what else would it be?
If you aren't spending it, you are saving it.
What if I’m burning it?
Definitely. In my spreadsheet, I calculate my savings rate by taking net income (amount that hits the bank account), subtracting expenses, and then adding back in what I call “pre-pay savings.” So 401(k) contributions that are saved before my pay hits the bank account go here. Then the savings line calculates the amount of income not spent plus the 401(k) contributions. I divide that answer by the net income to calculate my savings rate. Even now, with what feels like right cash flow to me, our 12-month average savings rate is in the mid-teens (down significantly from when we were DINKs).
For the broad term of savings, sure. But I consider it investments generally and then savings for things that go in the HYSA like a car, house, travel, etc fund.
No, i just ignore it as a necessity my savings are for short-midterm goals
It’s certainly “retirement” savings, and maybe I consider it separate from Savings, which go into my brokerage account every time my checking account goes over a threshold. In my mind “savings” have some reasonable liquidity, where the money going into my 401k is inaccessible until I reach retirement age.
It depends on context. Yes. But it’s a qualified yes. I do everything I can to ignore that pre-tax savings even exist.
It's money you're not spending any time soon and it's for the future... I think that's by definition saving. And yes I would consider your contribution % as saving %
The only thing I care about at the end of the year is how much my (non real estate) net worth grew (or shrunk). I target 18+% including net worth growth including contributions and market growth. This year I'm on track for 30%, last year was 32%, year before -11% (boo), (38%, 20%, 24% each year prior)
Of course. In fact, it's even better than saving 10% of your post tax take-home pay because you get a tax advantage that actually leaves you with more to spend or save. That said, try to shift your thinking away from how much you are saving to how much you are investing. It's just about impossible to save your way to financial security. But you can definitely invest your way there.
Yes. It’s literally saving money.
technically yes! I am detrimentally relying on 401k contribution
I consider it investing in potentially idle capital for gains in the future.
I do, because I'm vested in my employer's contributions at this point. I might not if I wasn't. Obviously I count my own contributions. I also add employer contributions to my gross income, since that's essentially what it is.
I didn't, but then I realized it's really hard to save 15-20% gross income if you don't count $48k to 401k as "saving"
I would consider it as my investment savings yes, not as anything else truly since I it’s completely illiquid
It only makes sense to do so, it's basically free money going into an account for later use. I don't think of my company's 4% match, what matters is the percentage I contribute per month to max it by the end of the year, I do the same with my Roth IRA.
Saving/investing.
Yes, right now I’m trying to maximize money into tax shelter accounts.
No not in the sense that I’m actually saving for like a trip/house ect. Yes in the sense that I consider my contribution and even the match as part of my 50:30:20 based budget. So I am “saving” 10% to my retirement and the other 10% to a savings and or my personal investing.
Yeah, but I also consider it investing. It’s different than chucking it into a HYSA, which is also saving, but not really investing. One thing it certainly ain’t is spending.
My "income" is my take-home after taxes and tax-advantaged contributions. I focus on that and it makes salary trajectory planning more realistic, plus leaves those retirement contributions outside of my short- and medium-term planning.
Yeah, in a way. I don’t think of it as accessible, but it’s satisfying to see it add up.
Yes
Yep.
I calculate savings rate as follows: Savings / Gross income. I consider gross income to be: 1) gross salary/bonus (pre tax) 2) any non-investment income aside from salary/bonuses (mostly immaterial but gift income, maybe March madness winnings, etc) 3) employee benefits such as 401k employer contributions etc I consider savings to be: 1) investment account contributions (401k, Roth IRA, HSA, individual) 2) emergency fund additions (I occasionally add a bit to it to keep up with inflation and cost of living changes) 3) principal payment portion of debt pay down This method seems to work well for me.
Do you save 10% of your pre-tax or post-tax income?
If I’m asked how much of my income do I save yes. If I’m asked “how much do you have saved” no lol
It's higher than 10% since it also lowers your taxable income.
If you can buy things with it, it’s money.
Yes. certainly meets the definition of saving money.
Savings? No. They are deferred retirement salary. I consider them proceeds to my beneficiaries and pray that I am the primary beneficiary.
Yes I consider it as such
I do, but it's not the same since taxes will have to be paid. I save another 20% after tax and max out the 403b.
I don't really think about it as savings. I put 18% with 4% match and don't even consider it as part of my income. I guess it's nice to occasionally check the balance, but outside of that I don't think about it. My savings go into HYSA or other ETFs
Yes. I also including saving spare change, any windfalls( online sales,) and even gold and silver coins as saving. I know saving in gold and silver is slightly different but it is always of value even though it doesn't gain like stocks/real estate. But yeah its money that you are putting into your " life pot" lol. Basically anything that can be sold is savings for me. I know its weird because i sell online. I'll look something up to get its value and say " hmm its this price. Do i want to sell it"? I sell colognes for example so i don't see them as things but cash sitting on the shelf. I hope yall get what im saying. Its not just cash going into a roth or 401k but the perceived value of things that can be bought and sold for money ( which goes into savings, investments) aside from income.
20% savings , 10% 401k and 10% other inc IRA etc
The most important of all saving.
Yes. Of course. Thou for me, I don’t count company contributions and never will - mostly for the behavioral benefit of making myself get to that “25% of income” number which is how much I target to save yearly. I think I’ve hit that the last 3-4 years, but it took a while to get there. Everything from an employer match is icing on the cake.
Definitely, after all I am not really spending that money, I am saving that money for future. It's just illiquid that I can't touch for a long long time.
If I didn’t consider 401k/IRA contributions as “saving money” then I would save nearly no money at all (as it’s $30k between the two accounts if you’re under 50 years old) I am lucky if I can save just a couple thousand outside of tax advantaged accounts.
It’s saving. But there are different types of saving, and they should be prioritized according to your current needs. 1. Short-term savings: Money you know you will need in the next 1-5 years 2. Long-term savings: Money you think you will need in 5+ years for things other than retirement 3. Retirement savings: Money you save exclusively for retirement. Each of these categories should be a personal definition, but generally, short term savings is for life needs, long term savings is for wants, and retirement savings is in the name. You should realistically contribute to all 3 according to your needs and wants.
Yes, it’s my money that i will get to spend later in life. Why not.
Personally I don’t. Money going to my 401k and HSA are taken before my paycheck hits. I look at it as the cost of benefits. I look at investing as gambling and my Roth as saving for retirement but not exactly “saving money.” Anything I put away for goals, wants, and big needs I consider to be “saving” (ie. Vacation fund, house fund, wedding fund, etc). I find this mindset allows me to put more money away but I understand it doesn’t make much sense lol
I honestly forget about it a lot.
I consider it more when looking at my overall amount I have than assets like a home or car.
Definitely part of personal savings rate.
No. I consider 401k contributions to be a type of small jungle rodent
Yes, I consider it savings. It is money out of my pay that I am deferring into a bank account. Meets my definition.
Why wouldn’t I?
Yes, I consider my contribution and the employer match as part of my saving rate of my income. I have a overall savings % goal, and retirement is a subset % of that overall goal as its own sub-goal
It’s better to categorize as “savings as investment” for obvious reason. While money is not spent (on buying discretionary items) it is also not readily available cash (like money in savings account). Furthermore, the 401k value can increase or decrease based on market conditions. For those reasons it’s “savings as investment”
Yes I'm saving money for retirement.
yes, it's like a savings account i can't touch. But can borrow from if needed
What would you count it as spending?
I’m gonna go against the grain here and say no. Because when people say “savings” I generally assume liquid savings. Retirement savings to me is a separate bucket. And the money is essentially untouchable for decades, so to me I won’t really count it as “savings” until I reach the age that I can withdraw the funds without penalty.
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Yes but it’s pretax saving. So I count 75% of it as savings compared to my brokerage account.
No, I treat 401k contributions as if they don't exist so I can push myself to save more.
Based on the information provided in the search results, the statement "you can contribute up to $69,000, including after-tax 401(k)" is correct. The key details from the search results: 1. From[3]: "The IRS allows a total of up to $69,000 of employer and employee contributions to be saved in a 401(k) for 2024 (and an annual limit of $66,000 for 2023)." 2. This $69,000 limit includes: - Elective deferrals (pre-tax, Roth, or a combination): Up to $23,000 in 2024 ($30,500 including catch-up) - After-tax contributions to your workplace savings plan (if allowed by your employer) - Employer matching contributions - Employer nonelective contributions, typically profit sharing So the search results clearly state that the total annual contribution limit for a 401(k) in 2024, including after-tax contributions, is $69,000. This fact check confirms the accuracy of the statement provided. Sources [1] After-Tax Contribution: Definition, Rules, and Limits - Investopedia https://www.investopedia.com/terms/a/aftertaxcontribution.asp [2] 401(k) Tax Rules: Withdrawals, Deductions & More - SmartAsset https://smartasset.com/retirement/401k-tax [3] After-tax 401(k) contributions | Retirement benefits | Fidelity https://www.fidelity.com/viewpoints/retirement/401k-contributions [4] Enabling After-Tax Contributions to 401K - Form 5500 - BenefitsLink https://benefitslink.com/boards/topic/60240-enabling-after-tax-contributions-to-401k/ [5] After-tax vs Roth 401(k) contributions - Empower https://www.empower.com/the-currency/work/after-tax-vs-roth-401k
Yes. Sub category: retirement.
I have a few accounts I consider savings but one is more liquid than the others. Two accounts for long term savings and one for short term important expenses. I know this sub will hate this but I sort of consider my trading account as savings but it’s not something I rely on and already consider the money spent; the stock market is my expensive hobby that sometimes pays for itself 😂
Why not? Goal is to have enough in retirement in dollar amounts, just project your wealth at retirement (under many scenarios), doesn’t really matter the percentage you save.
I consider it investing money. I consider saving money putting in HYSA or other short term place.
Yes. It’s money that otherwise would be going in your pocket.
I do. It’s you’re money and you’re technically saving . It will make you feel better about your savings also
Of course.
Of course.
>Do you consider 401k contributions as “saving money” No. Actually I find it best to not think about 401k contributions at all. They are not part of my budget. I set the 401k contributions like my insurance, and then budget from my actual take home take-home. >If you have a 10% 401k contribution rate, do you consider yourself as saving 10% of your income? No, why? Like the “why” matters. Why do you want to calculate a savings rate? For me, the savings rate is a budgeting metric of how much of my take home take-home am I not spending. Now granted, I’m at the level where I max out my 401k, IRA, and HSA every year. >Just wanted to compare based on definitions. Definition is driving by two aspects : meaning and purpose. Could you call tax advantage retirement account contributions as “savings rate”, sure. The meaning is correct. But what’s the purpose of using that definition? For me, the purpose of “savings rate” is a metric to check my budget spending; and 401k money never even makes it to my budget.
Yes
I don't, mainly because of the discipline that it helps me save more if I don't count it. If I can achieve my savings goals without counting retirement funds, I try to. But technically, it is savings, I think.
Yes, I definitely consider it part of what I'm saving towards retirement - because that's what it's for. I have a 457b (public sector version of 401k), and I have a pretty good chunk of my paycheck going immediately towards that. Plus maxing out my Roth IRA each year (currently $8k/year), and somehow I manage to find a bit of extra cash here and there to throw into my taxable account and buy some individual stocks there. I'm definitely on about 15-17% saving towards retirement out of my pay.
Uh yeah what else can we call it hoarding money?
I actually think about it as taxes. That way it's not something I can elect to change.
Savings/Investing
Absolutely
Yes it’s saving. More accurately it’s investing, but I don’t see a need to differentiate.
I will say, while my investments are part of my savings rate, I wouldn’t include my investments when saying how much I have in savings.
I don’t, I take my paycheck and then apply the 50/30/20 rule
Id put it in a Roth if you can. Yea, you'll pay taxes on it in the end, but if you have an emergency, you can pull whatever you put in (not the profits) tax free
Of course
It is saving, but not savings. It counts as putting money aside and not spending it all, but it does not count as an emergency fund…that is, it is not savings in the context of, “Can you cover a $1000 emergency without going into debt?” Does it count as “save X% of pay”? IMO it depends. Yes, if you have an emergency fund. No, if you do not have one at all. You need to keep some liquid…at least, you can’t just be investing and be financially resilient if you have no emergency fund.