Savings rate calculator

$15,000 out of $75,000 of gross income is 20 percent. The same $15,000 against take home pay is a higher percentage, because the denominator is smaller. Neither is wrong and they are not comparable, so the useful habit is to state which one a figure uses.

Gross is the more common basis in retirement planning, because it lines up with the income that has to be replaced later. Net is more useful for budgeting, because it is the money that actually arrives. See net pay for the difference the tax line makes.

Retirement contributions, an employer match, taxable investing and cash added to savings all count. Mortgage principal repayment is a judgement call: it builds equity rather than a portfolio, and including it raises the rate substantially, which is why the decision has to be stated rather than assumed.

What does not count is money that is merely unspent this month and spent next month. A savings rate measured across a single month is mostly noise; a year is the shortest period that means much.

A 30 percent savings rate says two things: 30 percent of income is going into assets, and the life being funded costs 70 percent of income. The second half is what sets the target, because a smaller spending base needs a smaller portfolio to sustain it.

That double effect is why a rise from 20 to 30 percent shortens a plan by more than the extra saving alone suggests. How FIRE numbers work sets out the target side, and the FIRE number calculator prices it.

One period, one income figure, one saving figure, stated as a percentage. It is the single most portable personal finance number there is, because it compares directly across incomes and countries in a way that a dollar amount never can. The 50/30/20 budget is one common target for it. This is educational material, not financial advice.