America’s savings rate is plunging. Here’s how to calculate yours

Americans are saving less than half of what they did a year ago, as inflation continues to eat away at bank accounts across the country.

The personal savings rate—which is the percentage households save of their after-tax income—plunged to 2.6% in April 2026, according to data from the Bureau of Economic Analysis. That’s down by more than half from April 2025, when the savings rate was 5.8%.

Outside of the “revenge” spending era of 2022, when Americans were on a spending frenzy post-Covid, this is the lowest savings rate since the Great Recession. And it’s well below the 30-year average personal savings rate of 5.7%. (Here’s a fun fact: In the European Union, the household savings rate is over 14%.)

It’s not difficult to understand why it’s happening. President Donald Trump’s tariff regime has pushed prices up for both consumers and businesses, and his war in Iran has sent energy prices sky-rocketing. At the same time, wages are not keeping pace with inflation.

To keep up with the ever-rising costs, more Americans are accruing credit card debt and taking hardship withdrawals from their 401(k)s.

How to calculate your personal savings rate

Understanding your own savings rate can help you better understand your holistic financial health and reach your future goals.

The BEA calculates the personal savings rate by first subtracting personal taxes from income, and then subtracting personal outlays from that.

There are a few different ways to calculate your own, based on your gross income (meaning before taxes and other deductions from your paycheck) or your post-tax, or net, income.

If you are using your gross income, you should:

Add up your savings contributions, including pre-tax retirement contributions, such as those made to a 401(k). If your employer matches your contributions, those count.
Divide your total savings by your total gross income.
Multiply by 100 to get your savings rate.

For example, say you earn $100,000 a year. You save $1,000 a year in your high-yield savings account, $5,000 a year in a Roth IRA, $5,000 a year in your 401(k), and your employer contributes another $1,000 to your retirement account. Your total annual savings is $12,000. Divided by your gross income of $100,000, your savings rate is 12%. (Good work!)

If you are using post-tax income, you should:

Add up your savings contributions, including any pre-tax retirement contributions, employer match, emergency fund deposits, etc.
Divide by your actual take-home pay for the year.
Multiply by 100 to get your savings rate.

Different financial experts recommend different savings guidelines. A good rule of thumb is to aim for at least 15% of your pre-tax income for retirement and 10% of your post-tax income for emergencies and other goals, according to Fidelity. If your employer offers you a 401(k) match, that counts toward the 15%. Under the popular 50-30-20 budget, 20% of your income should be earmarked for savings.

That said, there’s no right answer for everyone. If you’re a 22-year-old who just got her first job, chances are your savings rate is going to be lower than someone who has been working a while and has managed to increase her income. Saving 15% of your income for retirement or 20% of your income overall are admirable goals, but it’s okay if you’re not there yet.

Boost your savings

Americans are saving less because the cost of living keeps climbing higher. So it’s no easy feat to save more when everything also costs more.

But there are a few things you can try. First, if you don’t have automatic contributions set up to a savings account, do that ASAP. Even $50 a month can add up over time. Plenty of research shows that making saving as friction-less as possible is the key to ramping up your accounts. The same goes for your 401(k) or other retirement accounts

Second, make sure your emergency savings is sitting in a high-yield savings account. These offer interest rates that are far superior to a standard savings account. Big banks like Capital One offer them, as do online banks like Ally, as well as credit unions. Currently, look for rates of 3% or higher. (And watch out for these potential pit-falls of certain high-yield accounts.)