Americans Are Saving More. Are You?

The Wall Street Journal reported this weekend that the personal saving rate was 6.9% in May, which is the highest it’s been since 1993.

One would think this is a good thing. But, in a consumer-driven economy such as ours, saving money is a bad thing—at least in the short run because savings represents money that could be used to stimulate the economy.

The personal savings rate can be defined as…

Personal Savings Rate = (disposable income – consumption) ÷ disposable income


Disposable Income = personal income – tax payments

From what I can tell from my reading, consumption is the amount spent on autos, other durables, nondurables, and services. That means that 401(k) contributions must be a part of the personal savings rate. Call me crazy but 6.9% seems like a fairly low number for personal savings if it includes retirement savings.

My family is saving way more than 6.9% of our household income (including retirement plan contributions). What about your family? Has the current economic situation inspired you to save more?

NOTE: If I’m wrong here, please enlighten me. I think I might have slept through some of my economics courses in college.

16 thoughts on “Americans Are Saving More. Are You?”

  1. Using the formula above, savings could also be interpreted as paying down debt. I think more americans are paying debt down as opposed to increasing savings.

  2. We save much, much more than 6.9%. We always have saved more than that — the financial crisis isn't affecting our savings rate.

    You've got to remember this is an average, right? So some people are saving 35% and others are digging themselves in deep by "not-saving" 10%.

  3. Counting the debt I'm paying off, plus retirement savings, my rate is above 20%.

    And yes, this is considered 'bad' for our consumerist economy, which is why interest rates are so low. Of course, healthy savings shouldn't be a bad thing. It's just that for the U.S. it kind of ruins the whole smoke and mirrors show of a growing economy that produces very little outside of 'services'.

  4. I don't know our monthly perccentage of saving, but we are actively attempting to save more now and also pay down debt more. We have gotten rid of 1/3 of our debt in the past 18 months (including paying off both cars and two credit cards of five) and probably increased our overall savings total by about 75% in that same time period. But we are still spending in this economy because we have two young children that grow like weeds and are always hungry after being in the neighborhood pool all day. So we're buying lots of kid clothes and food over the past couple of months. All hand-me-downs go to my sister who has younger children than us, so that she can save money in that regard as well.

  5. Counterintuitive as it is, I don't believe the personal savings rate — as calculated by the federal government — includes retirement savings, notably 401(k) investments.
    Can we establish the precise definition of the stat?
    Someone out there know definitively?

  6. Saving some from your income is very necessary not only during recession but throughout your life. Like the economy, you'll never know when it shoots high or when it hits the ground. Whatever your income is, may it be big or small, you have to save a percentage of it for your future needs.

    For tips on personal finance, visit

  7. LOL,

    I meant to delete Mark’s comment but forgot.

    I can’t believe that he doesn’t know it’s in poor taste to do that.

  8. Definitely saving more. In cash alone I save 13% of my gross income and I'm prepaying my rental mortgage while also maxing out 401k. I'm trying to use as little discretionary income as I can. The economy is too unstable to spend like before.

  9. As much as I try to be frugal, I am not; and yet, I am able to save on average 58%, with 26% going to my 401k. The current economic conditions have no effect on my savings rate, but they have pushed me to look into additional income.

  10. I think the problem is the assumption that we need to keep spending to be prosperous. At some point we switched from a production nation into a consumption nation. I fear that will be our eventual downfall if we do not change. The government telling us to keep spending for the good of the nation would be like you advising someone drowning in debt to apply for more cards and keep buying stuff. It is insane. We need to stop buying junk and start figuring out what we can produce and export or produce and sell domestically.

  11. We are saving about 20% of our after tax pay. This is in addition to the 6% of the before tax income that goes into 401k.

    Unfortunately this is down from six months ago as a result of my employer cutting pay by 10% (which has pretty much cut into savings rate, since we have not cut into our spending) and also not putting in the 3% 401k match.

    Overall I think my raw dollar savings has gone down ~30% as a result 🙁

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