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URL:  http://boards.fool.com/i-agree-with-your-sentiments-here-why-do-people-20115032.aspx

Subject:  Re: What percentage of gross? Date:  1/8/2004  5:21 AM
Author:  peteyperson Number:  1746 of 5084

I agree with your sentiments here.

Why do people save? To fund retirement? Okay.

If so, isn't a far better analysis to consider what percentage of your planned retired annual budget was saved from salary? Or what percentage of your target total investments needed was saved this year? That's after all what you'll be using the money for, to fund your lifestyle, so it is a much more relevant test than an arbitary percentage of gross pay. It's a personal "This is what I'm going to spend when retired" review.

It is also useful to break out gains via human capital vs. gains/losses from investments the past year. This can reflect where more attention may be needed. People tend to be strong in one area but weak in others and this is a drag on overall performance.

Petey


Hi Diana,
Glad you found our little corner of enthusiasm here on TMF. One thing I would caution with using percentages of gross is that they can be quite misleading. If savings are allowed to be gross (ie in a tax deferred plan), it is much easier to hit a higher target. This means the percentages that everyone quotes are not really comparable.

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