Eli5: Why do most media outlets and fiscal institutions say 15% is the highest recommended savings rate.



A lot of recent news articles and personal finance books I’ve read all heavily disparage saving more then this, to the point of sounding like propaganda.

In: Economics

Because they are all owned by people who want you to spend money. consumer spending is the lifeblood of the American economy and when you stop spending, the American economy takes a hit, at least the way it exists today.

all i know is that the money you save, is money you dont spend and if everyone starts to sit on the money the economics go down and the prices go up which causes more people to rather save more money which ends in a downspiral

Just did some googling, I didn’t see any articles which disparage saving more than 15% for retirement. Most of them just said that it should be a minimum goal. Can you provide a link to a particular media outlet?

15% is recommended, because 15% over 40 years, at 10% annual, would allow you to earn the same in retirement as you were making working. Saving more is unnecessary unless you started late or you are getting poor returns.

Of course everyone’s situation is different, and you shouldn’t blindly follow a number from the internet. Do your own math. Plan your own future. Figure out what you need and try to save that, nothing more. You’ll probably find 15% to be pretty close to your target.