Takeaways
- Your personal savings rate is the percentage of your disposable income saved.
- The personal saving rate for U.S. consumers was 4.6% in February 2025.
- High personal savings rates can reflect long-term focused, worried consumers.
- Low savings rates indicate increased consumption and economic confidence.
- Savings can include cash stored in checking and savings accounts, certificates of deposits, money market accounts, and retirement funds.
What Is Personal Savings Rate?
Your personal savings rate is the percentage of your disposable income you set aside for savings and retirement. It measures how much money you are currently deciding to put toward long-term savings and delay consumption.
Economists closely track the personal savings rate because savings, by definition, is the choice to forego consumption today for increased consumption later. In other words, it is an economic term for delayed gratification. You can also determine the marginal propensity to save, or the percentage of each extra dollar earned that would go towards saving or retirement.
- 4.6% was the personal savings rate for U.S. consumers in February 2025.[1]
Personal savings are calculated using the dollars you save, including cash held in emergency and slush funds. Cash savings deposited in checking and savings accounts, money market accounts, Traditional and Roth IRAs, and retirement accounts all count toward your saving rate.
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How Personal Savings Rate Works
When you get your paycheck each month, what ends up in your bank account is considered your take-home pay or your disposable income. All taxes and mandatory charges, like Social Security and Medicare, have been removed based on your Form W-4 elections. Your savings rate is the ratio of your disposable income you put toward savings and retirement.
You can calculate your savings rate on a personal level. However, financial media, investors, and economists like to analyze personal savings on an economy-wide basis. They do this because it shows them trends within the economy and whether consumers are more consumption-oriented or deferring consumption in the form of savings.
Analysts and investors might forecast higher revenue and growth with lower savings rates as consumers tilt toward spending more of their paycheck within the economy. Increased spending could signal economic expansion. Conversely, when people save too much, an economic downturn or recession might occur.
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Savings Rate Example
Let’s look at an example of calculating the personal saving rate. Say you are a graphic designer earning $120,000. Your gross income is $10,000 monthly, and your disposable income is $7,500. After paying for rent, groceries, transportation, credit cards, and other monthly bills, you have $1,500, which you put toward your emergency fund.
Using the personal savings rate formula of savings dividend by your disposable income, your savings rate is 20% ($1,500/$7,500).
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High Personal Savings Rates Lets You
More savings usher in more financial flexibility and the ability to increase your net worth. Here’s what you can do with a high savings rate:
- Save an Emergency Fund: Financial experts recommend an emergency fund of between $1,000 and $3,000. These funds allow you to pay for unexpected expenses and distance you from relying on debt.
- Build a Slush Fund: After saving for an emergency fund, savers usually move on to stashing enough to cover at least 3 – 6 months’ worth of living expenses. These funds allow you to find new jobs, take career breaks, or enjoy mini-retirements.
- Invest in Assets: High savings rates can give you the excess cash to invest in stocks, bonds, real estate, or other income-producing assets. You can invest in many different types of asset classes.
- Save for a Home: Delayed consumption is part of meeting certain life milestones, like buying your first home or paying for a wedding. By saving extra cash today, you can save up for a down payment on your dream home.
- Retire Early: If someone told you that you could Retire 10 Years Early, you would probably listen to them. Investing for retirement is a bulletproof way to ensure your future self is well accommodated. You don’t need to be part of the Financial Independence Retire Early movement to enjoy the benefits of a well-planned retirement portfolio.
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Smart Summary
Personal saving rates are an essential marker for the health of an economy. It predicts economic growth and consumer behavior. Depending on your financial situation, you should increase your personal savings rate by stashing extra cash in a high-yield savings or 401(k) retirement account. Alternatively, you might need a low savings rate when you are achieving financial goals like paying off debt. The good news is that both strategies increase your net worth.
Next Steps
- Explore our picks for the Best High-Yield Savings Accounts
- Learn about Annual Percentage Yield (APY)
- Calculate How Much Should You Have in Savings
Frequently Asked Questions
Economists and Wall Street investors monitor the U.S. personal savings rate closely because it is an indicator of economic health and consumption patterns. When the savings rate increases dramatically, consumption decreases, and business profits tend to decline.
Your personal savings rate should align with your financial goals. To pay off consumer debt, you should use more of your discretionary income towards this goal. Conversely, your personal savings rate might skyrocket if you increase your retirement savings. Tools like our 50/30/20 Budget Calculator give you insight into how much of your disposable income to allocate to different goals.
U.S. savings rates spiked to 34% in April 2020 due to the Covid-19 economic crisis. 34% is the highest rate on record since the Federal Reserve started tracking the U.S. savings rate.[2]
Smart Money requires our expert writers to rely on trusted primary sources—academic research, government reports, expert interviews, original reporting, and peer-reviewed data—to deliver precise and up-to-date content. All of our content is thoroughly fact-checked. We also incorporate relevant research from reputable publishers when it aligns with our editorial focus. For a closer look at our rigorous journalistic standards, explore our editorial guidelines.
(1) U.S Bureau of Economic Analysis. Personal Savings Rate. Last Accessed April 4, 2025.
(2) Federal Reserve of St. Louis. Personal Savings Rate. Last Accessed April 4, 2025.
