The Savings Rates chart displays the full range of savings percentages required to meet your financial goal no matter what happened in the markets. Use this to determine minimum savings requirements, identify the safe savings rate, and study the impact of your career and money choices on reaching your important milestones.

Chart

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Overview

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The purpose of the Savings Rates chart is to help you determine the amount of savings required to meet your financial goals. For every investing timeframe from 1 to 30 years, it looks at every historical start year for your selected portfolio and home country and calculates the percentage of income you would have needed to save to reach the goal in each case. Each bar spans the full range of outcomes, from the savings rate that sufficed in the luckiest start year at the bottom to the rate the unluckiest start year demanded at the top. That range is the honest answer to “how much should I save?”, and it illustrates just how different the experiences of otherwise identical savers have been.

The settings above the chart tailor the picture to your own situation. Enter your starting value, annual income, and savings goal, and the chart updates instantly. Then drag the vertical line left and right to select your target timeframe, and the markers report the minimum and safe savings rates for that number of years.

To see the same tradeoff from the other direction, with the savings rate fixed and the working years as the output, check out the Financial Independence chart. And to watch the individual growth paths behind these numbers, try Portfolio Growth.

Featured Discussion

The Right Savings Rate Will Conquer Any Bear Market

Calculations

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Minimum Savings Rate

The Minimum Savings Rate (MSR) is the percentage of income that achieved the goal in the single best historical timeframe for that particular portfolio. While it worked out for people lucky enough to start investing in that year, there’s a good chance it might not be enough on your own particular timeframe.

Safe Savings Rate

The Safe Savings Rate (SSR) is the percentage of income that achieved the goal even in the single worst historical timeframe for that particular portfolio. While there’s no guarantee that the future won’t set a new low, this is a good measure of a savings rate that is highly likely to meet your goal.

Insufficient Income

An “X” at the 100% line means the required savings to meet the goal exceeded your entire annual income for all start years.

No Savings Needed

A “+” means the goal was reached through the natural growth of the starting value alone, with no additional savings required.

Assumptions

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• All returns are adjusted for inflation and expressed in the home country’s currency.
• Portfolios are rebalanced annually, and returns include reinvested dividends.
• Returns ignore taxes and fund fees.
• Calculations cover every year since 1970 for the selected home country.
• The savings rate is a percentage of net income after taxes.
• The full annual contribution is made at the beginning of each year on January 1st. That’s a simplification for most people saving from each paycheck, but the numbers should be in the same ballpark.
• The first contribution equals the savings rate times your stated income, and every later contribution adjusts with inflation regardless of how your income changes. It is similar to the Withdrawal Rates methodology in reverse.
• The goal is expressed in today’s purchasing power. A target of $1,000,000 in 30 years means $1,000,000 in today’s dollars, and the nominal account value will be higher than that after inflation.

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