What Is a Good Savings Rate? → 15–20% of Income, Explained

Short answer

For most working adults a good savings rate is 15–20% of income. Fidelity suggests at least 15% of pre-tax income for retirement, employer match included, and the 50/30/20 budget sets 20% of take-home pay for savings and extra debt payments. Under 10% is a starting point. Measure it the same way each month: money saved divided by income.

How to calculate your savings rate

Savings rate = money saved ÷ income, for the same month or year. Money saved is income minus spending: transfers to savings, retirement contributions and extra payments on debt principal all count, because none of them is spent.

You can use gross income (before tax) or take-home pay. Pick one and stay with it, so this month compares with last month. One detail changes the result: contributions taken from your pay before it reaches your account, such as a workplace pension. Add them to both sides of the fraction, or the rate looks lower than it is.

Moving money to your own savings account is saving. Only money that leaves your accounts as spending lowers the rate.

Savings rate benchmarks

Two published benchmarks frame most advice. Fidelity suggests saving at least 15% of pre-tax income each year for retirement, employer match included, assuming you start at 25 (Fidelity). The 50/30/20 budget sets 20% of take-home pay for savings and extra debt payments; see the 50/30/20 rule. Between them, a range of 15–20% is a sound target for most working adults.

Savings rate	What it usually means
Below 5%	Little room for surprises. Build a starter emergency buffer first and look for one large expense to cut.
10%	A reasonable first target, and a habit worth protecting while debts or high rent take the rest.
15%	Fidelity’s retirement guideline: 15% of pre-tax income, employer match included.
20%	The savings share of the 50/30/20 budget, measured on take-home pay.
25% and above	Faster goals: a house deposit, paying off debt early or retiring earlier than planned.

Starting later, retiring earlier or wanting a richer retirement lifestyle pushes the number up; Fidelity notes the 15% guideline moves with those choices.

What each rate builds in a year

A higher rate works twice: you save more, and you live on less, so each dollar saved covers more of your spending. The table uses take-home pay of $4,000 a month:

Savings rate	Saved / month	Saved / year	Months of spending saved per year
5%	$200	$2,400	0.6
10%	$400	$4,800	1.3
15%	$600	$7,200	2.1
20%	$800	$9,600	3.0
25%	$1,000	$12,000	4.0
30%	$1,200	$14,400	5.1

Arithmetic example. Months of spending = yearly savings ÷ monthly spending at that rate.

At 10% a year of saving covers about 1.3 months of your spending; at 25% it covers 4. That is why the rate matters more than the dollar amount when you plan an emergency fund or financial independence.

Know your real savings rate

Finman reports income, spending, net savings and savings rate for any month or year from your own transactions. Free during the open beta.

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How to raise your savings rate

Save on payday. Move a fixed amount to savings the day pay arrives and spend what remains. Pay yourself first explains the method.
Raise it with every raise. Send part of each pay increase to savings before your spending grows to match it.
Work on the large categories. Housing, food and transport take most of a typical budget: in Canada in 2023 they made up 66% of total consumption for the lowest-income fifth of households and 63% for the highest (Statistics Canada). A change there moves the rate more than skipped coffees. How to save money each month walks through it.
Count debt payoff. Extra payments on principal count as saving. If you carry high-interest debt, they are often the best “savings” you can make.

Track your savings rate in Finman

Finman calculates the savings rate from your own transactions: (income − spending) ÷ income, in your base currency. Reports show it for this month, last month, this year or a custom range, next to total income, total spending and net savings, and the dashboard can show it as a widget. Transfers between your own accounts and opening balances are left out, so moving money to savings never counts as spending. The AI CFO’s monthly summary includes the rate too.

Bring transactions in from CSV, OFX or QFX bank statements or enter them by hand; set a savings goal, and Finman shows how much to put aside each month to reach it on time.

Frequently asked questions

What is a good savings rate?

For most working adults, 15–20% of income. Fidelity suggests at least 15% of pre-tax income for retirement, employer match included, and the 50/30/20 budget puts 20% of take-home pay toward savings and extra debt payments. Below 10% is a starting point; above 20% reaches goals faster.

Is saving 10% of income enough?

It is a good start and a habit worth keeping, but for retirement alone Fidelity’s guideline is 15% of pre-tax income including any employer match. Raise the rate a little with each pay increase until you reach 15–20%.

Should I calculate my savings rate on gross or net income?

Either works if you use the same base every time. Net (take-home) income is simpler to track from your bank account. If pension contributions are taken from your pay before it arrives, add them to both the amount saved and the income.

How do I calculate my savings rate?

Subtract what you spent from what you earned in the same period, then divide by income. Example: $4,000 take-home, $3,400 spent, $600 saved, so the rate is 15%. Transfers to savings, retirement contributions and extra debt principal count as saved.

Does paying off debt count toward my savings rate?

Extra payments on principal do, because they raise your net worth the same way saving does. Minimum payments and interest are part of spending.

Is a 20% savings rate good?

Yes. 20% of take-home pay is the savings share in the 50/30/20 budget and sits above Fidelity’s 15% pre-tax retirement guideline. At 20%, one year of saving covers about three months of your spending.

See your savings rate every month

Finman works it out from your real income and spending and keeps transfers to savings out of the math. Free during the open beta.