How Much Money Does The Average American Save A Year & How To Save Much More Than Average

The use of money is all the advantage there is in having it.
~ Benjamin Franklin

Answering the question of how much money does the average American save a year is a tough challenge. I searched for about a half hour and came up with a whole hodgepodge of different numbers.

One number I got said Americans are saving less than $400 per year, but that’s from July of 2008 just before the housing bubble burst. Maybe folks were up to their eyeballs in debt and leveraged to the hilt and that’s why they weren’t saving much.

Another number from CNN from March of 2010 suggested that more than 43% of Americans had less than $10k saved for retirement. The same article mentioned that 27% of workers had less than $1k saved for retirement. But perhaps more alarming was the statistic they shared that said only 69% of workers were actively saving for retirement.

As much as I find these numbers interesting they are not necessarily helpful. Because what does it mean that almost half of people have saved less than $10k for retirement. We don’t want to be average, we want to be living life abundantly at OPOB.

Average is for the worker bees. But it is telling when so few of us are saving much if anything at all.

Perhaps the most important figure that I want to share with you is the savings rate of Americans shared with us from the Bureau of Economic Analysis. The most recent number I found from them said that the average savings rate of Americans had dropped to 3.5% of disposable income in November from 3.6% in October.

These are not near the lows that Americans have saved which has been as low as 1% as recently as 2005. It has also been as high as over 14% in 1975.

So if the average savings rate of an average American is 3.5% of disposable income. The average income of an average American or Average Joe was $25,000 per year according to Wikipedia in 2005. Let’s say it is now around $30k a year.

The marginal tax rate for an American earning $30k per year and filing as a single person is 15%. So let’s use some rough numbers and suggest that an average American’s disposable income is therefore $25,500 per year. $30k per year – 15% tax rate = $25,500.

So Joe Sixpack our average American is saving $892.50 per year. $25,500 x 3.5% = $892.50.

This my friends is atrocious. No wonder none of us are getting free and becoming captains of our own destinies. We need to do better than this. Even the historical high of 14% back in 1975 is not good enough. 14% of $25,500 is only $3570 or just under $300 a month.

How do you get free on that kind of money? You don’t. You’ll be a wage slave for the rest of your life and then an indentured servant to the government as they dole out scraps called Social Security when you’re 65 if there is any and though I believe there will be some for us (those of us in our 30s and 40s right now), it will be doled out to us at later ages. We might only have access to Social Security when we turn 68 or older.

If you’re going to work for 50 years and save $3570 per year you’ll end up with $178,500 plus whatever interest you might get on it. Maybe at the point you retire it’ll be worth double or about $350k.

Not bad, but that’s taken you 50 years of working right out of high school and you’re now 68 years old.

And not all of us have the determination and diligence or patience to save consistently for that many years. No my friends, we have to do better than that, and you can. There are two approaches I recommend.

The first is earning more money and the second is saving more money. You need to do them both.

If you’re reading this blog, you’re not average. You’re not Joe Sixpack or Average Jane. You’re looking to suck the very marrow from life and you hunger and thirst for more out of life. As you should. Life can be and should be a rich tapestry of experience that doesn’t cost an arm and a leg.

So don’t settle for $30k a year. You can do better than that. I bet that you can easily earn another 50% more than that within a year.

Take a second job. Take on the job training that will make you more valuable. Start selling things you make on Etsy. Look into earning a side income through online activities. I recommend this program which is free for the first month. In a year you should be able to find a way to make a few hundred dollars or more a month.

Perhaps on another post I will write more detailed about how to find ways to earn more money. But these few ideas above should get you started.

You also need to start saving money. This is the easiest place to start. The key is learning to live your live inexpensively and finding things that you enjoy and love to do that cost little money. If you are unable to do this, it means that you will feel like you are sacrificing greatly and that will make it harder to save money.

You don’t have to give up everything, but you must take a sharp look at your expenses.

For example, I love working out and I recently wrote a post about working out at home because currently I am unwilling to pay for a gym membership of $50 or more a month when I can save that money and workout with great effect at home.

You might be able to give up cable and just have regular TV. Or for an even more radical idea, how about doing away with your television. It is a mindless sap that will eat into any extra time you might have to create extra money for yourself.

Eating a whole foods plant based diet can also save you money. Brown bagging it is a great option. Only treat yourself on Friday’s for a falafel at the local pita joint.

You just have to start thinking about these things. Start realizing that the only non-renewable resource in your life is your time. You can get any more time, but you can find ways to make more money as I’ve shown.

Wouldn’t you want to be the ultimate master of your time? You can if you are willing to make the choices to prioritize your life appropriately.


  1. Great article.

    I’m 21. In the military. Currently saving 70% of my entire income. (while I can) I only allot 2400 a year to my Roth IRA. After reading this, I might just in fact put 5,000 into it this year. Thanks for the good advice.

  2. Hey Ryan,

    You’re welcome. That’s an amazing savings rate you’re managing on a modest salary. You’re gonna go far with that mindset. Keep it up, and thanks for your service.

    All the best,


  3. This is a good article.

    I’m here in China now and I work as an English Teacher. Pay isn’t big but the cost of living here is pretty low. Which means I could save a lot. As a matter of fact, I save like 60 % of my pay, that’s $ 700 and still I enjoy a good life here 🙂

  4. I had some friends who worked for many years teaching English overseas. They’ve come back recently with a boatload of cash they’ve been able to put down on a huge house. Not what I would’ve done, but I hear ya about being able to save money even when your income is low especially when you also have very low expenses.

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