Savings Rate

What is a 'Savings Rate'

A savings rate is the amount of money, expressed as a percentage or ratio, that one deducts from his/her disposable personal income to set aside as a nest egg or for retirement. The cash accumulated is typically put into very low-risk investments (depending on various factors such as expected time until retirement), like a money market fund or a personal IRA comprised of non-aggressive mutual funds, stocks and bonds.

BREAKING DOWN 'Savings Rate'

For years, the savings rate in the United States has declined. In the 1970s and 1980s, personal savings rates were in the 5% to 7% range but then decreased to 1% to 3% range in the 21st Century. These averages figure tend to fall even lower as the American population, as a whole, continues to age. The national average savings rate is often determined by how a particular culture views debt and values possessions.

RELATED TERMS
  1. Nest Egg

    A substantial sum of money that has been saved or invested for ...
  2. Disposable Income

    The amount of money that households have available for spending ...
  3. National Savings Rate

    An estimate from the U.S. Commerce Department's Bureau of Economic ...
  4. Accumulation Period

    1. The phase in an investor's life when he/she builds up his/her ...
  5. Retirement Money Market Account

    A money market account that an individual holds within a retirement ...
  6. Spending Phase

    The period in a person's life following retirement in which earning ...
Related Articles
  1. Retirement

    5 Retirement-Wrecking Moves

    These common mistakes can sabotage your nest egg and your plans for retiring.
  2. Retirement

    Why Saving 10% Won't Get You Through Retirement

    Retirement experts often tout the 10% rule: To have a good retirement, you must save 10% of your income. The truth is, most people need to save far more.
  3. Retirement

    Add It Up: Key Retirement Numbers

    Learn these magic numbers for a comfortable retirement. Here's how one investment manager calculates how much you'll need.
  4. Retirement

    I Make $250K a Year: How Much Should I Invest?

    Learn how to determine the right level of monthly investments to make, how much to save for retirement and how big your emergency fund should be.
  5. Retirement

    Retirement Lessons To Teach Your Children

    If your retirement plan hasn't worked out, at least your children can learn from your mistakes.
  6. Retirement

    Is the Middle Class Giving Up on Retirement?

    Americans aren't completely giving up on retirement, but many haven’t put away enough to take off at the traditional age of 65 (or Social Security's 66).
  7. Retirement

    10 Retirement Savings Myths That Won’t Go Away

    If you’re confused about the different retirement investment vehicles or don’t know how to save for retirement, it’s important that you do your research.
  8. Financial Advisor

    Retirement Savings: How Much is Enough?

    Sure, you can never save too much for retirement, but just how much is enough?
  9. Retirement

    How To Start Saving For Retirement

    If you establish these money-saving habits and patiently allow your wealth to build, you will be taking some huge steps forward in making your financial future more secure.
  10. Retirement

    Retire From Work, But Not Personal Financial Planning

    Here are some personal finance tips for those who want to live well after work ends.
RELATED FAQS
  1. What is the size of the average retirement nest egg?

    Learn about the average nest egg for retiring Americans and why you certainly do not want to be average when it comes to ... Read Answer >>
  2. How soon should I start saving for retirement?

    Learn about the basics of retirement planning and the reasons why it is so advantageous for individuals to start saving for ... Read Answer >>
  3. Are mutual funds considered retirement accounts?

    Learn why mutual funds are not classified as retirement accounts but can nonetheless offer a highly effective way to save ... Read Answer >>
  4. Should I put money into a retirement account even if it isn't tax deductible?

    One of the biggest and most often-touted advantages of putting money into a retirement account is the tax savings that come ... Read Answer >>
  5. Can mutual funds outperform savings accounts?

    Learn why moving money from savings accounts to mutual funds may be one of the wisest financial decisions you ever make, ... Read Answer >>
  6. What are the best ways to plan for retirement?

    Learn the basic steps to creating a solid retirement plan that can support you and your family, and find out how to manage ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center