Ask how much of a paycheck you should save, and you can expect a dozen different answers.
That’s a good thing – today’s workforce (and its paychecks) is far different from even a decade ago. As shifts continue at a rapid pace, today’s personal finance landscape has become more nuanced. Gone are the days of taking a one-dimensional approach to savings, said Elisabell Ricca, a personal finance and consumer analyst at TopCashBack USA.
“There’s no one-size-fits-all savings rate. Factors like age, lifestyle, income amount, career stability, and financial goals can help determine what savings rate is right for you,” Ricca told The Independent in an email.
The classics
One classic savings style is to put 10 percent of every paycheck into savings. This approach goes back decades, but surged in popularity in the past few years as people struggling with higher daily costs look for reasonable savings strategies, TIME Magazine pointed out in March 2024.
Another time-honored approach is the 50/30/20 rule – a budgeting and savings tactic introduced by Sen. Elizabeth Warren in 2005. Here’s how it works:
- 50 percent of pay check goes to “needs” – essentials like rent, mortgage, utilities and car payments
- 30 percent goes to “wants” like hobbies, entertainment and going out with friends
- 20 percent is held for saving and paying off debt.
Because this savings strategy uses half a paycheck for wants, savings and debt repayment, it works best for those who regularly earn more than they spend.
By dividing up money into specific buckets, savers can avoid wastefulness, said certified financial planner Christina Lynn, a director and wealth strategist at Mariner Wealth Advisors.
“I’m a fan of the 50/30/20 rule for budgeting,” Lynn told The Independent in an email. “You avoid the temptation of spending what should be saved.”
Times have changed, though, Ricca countered. Solid strategies embraced by previous generations may not work for today’s emerging challenges. “In the past, saving 10% of your income was widely considered a healthy amount, but that number may not be enough anymore,” she said.
“Enough” is the critical word for those saving for retirement because of what might happen to their Social Security payments in the near future.
A key supplemental Social Security fund is on track to run out of money by 2032 and experts estimate payments will drop by up to 25 percent. That’s a major cut that people likely didn’t account for when they built their savings and retirement strategy.
“Previous generations relied more heavily on Social Security retirement income, but today’s generation cannot depend on that alone,” Ricca said. “Today’s consumers need to allocate a larger portion of their savings to retirement accounts to be adequately prepared.”
Planning for the next generation
There are 71.9 million independent contractors and freelancers in the U.S., workforce tech firm MBO Partners found in a 2025 study. The emergence of contract and freelance work over the past decade calls for a new savings strategy.
Older models of saving were tailored for those with predictable income. Freelancers typically have income that can vary by thousands each month. So, setting a fixed savings percentage or using the 50/30/20 method may not work.
Instead, yo-yo savings strategies are needed for freelancer income that tends to rise and fall from month-to-month.
“Individuals with a variable or freelance income may want to consider saving a higher percentage during high-earning months to offset income fluctuations,” Ricca said.
And while she emphasizes a flexible savings strategy in the right situation, Ricca also supports a fixed savings percentage for retirement.
“While there’s no fixed amount every consumer should save, a good rule of thumb is 25% of your income,” she said. “If you have more aggressive financial goals, like early retirement, saving 50% or more of your income may be necessary.”
Workers can also take a step-by-step approach to saving. The first step: building an emergency fund. Set a small goal – $1,000, for example – and save a portion of your paycheck to build up the fund. Put the money in an account that earns interest, Ricca said.
“Keep it in a high-yield savings account or a money-market fund so that the money is earning interest while still easily accessible,” she said.
Withdrawals from a savings or money market account tend to be easier and come with far fewer restrictions than pulling money out of a 401(k) or IRA, a last-resort option which usually leads to penalties and income tax on withdrawals.
Once you’ve reached your small emergency goal, set another goal that’s big enough to cover three to six months of a job loss. If you’re already contributing to a 401(k) and have an employer match, keep that going while building your emergency fund, Ricca said.
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