When figuring out what percentage of our income we're saving we are supposed to use take home pay - is it right that is gross pay minus taxes, but all other deductions added back in (dependent care FSA, health insurance, etc) regardless of whether the deductions are tax advantaged?
Are we allowed to include employer contribution to a 401k in our savings rate? For example, if I am contributing 7% and employer is contributing 8% (to answer anticipated comments, yes my employer contributes 8%, yes I am ramping the contributions up this year, yes I am contributing enough to get the full 8% match), do I count that as a savings rate of 15%? Or do I only count my 7% contribution?
Do contributions made to HSA's count in your savings rate? Or just retirement accounts? Currently I max out my HSA which translates to around 5.5% of my gross (not take home) pay. However, I haven't been counting that money in part because I expect to blow through all of it over the next two years - we plan to have another kid and I have complicated pregnancies. From my last one I learned to anticipate hitting the OOP max during the pregnancy year and also the year after delivery. So I don't know if I should be counting this money or not, this will likely be last pregnancy so expenses should stabilize after that.
Thank you for your insight.
It really depends on what you are trying to do. If you are using it to compare to say MMM or JL Collin's charts on savings rates and time to retirement, you need to copy how they do it. If you are looking to track your own progress, you just need to be consistent. I would argue there are some ways that are inaccurate (for example, you can't include your employer match in the savings number and not in the denominator), but it's not going to derail you.
My two cents on the other questions:
Employer match in savings rate? Already addressed above, but if you are going to include it in the numerator (your savings), also include it in the denominator (your income). So a 7% contribution with an 8% match doesn't get you to a 15 percent savings rate. It gets you to something like a 13.88% savings rate (if that's all the savings).
HSA contributions in savings rate? -- Again, it's six of one, half a dozen of the other. I would say that if you include it in your income but not your savings, when you get spend money eligible to be reimbursed from teh HSA, that spending shouldn't be included in your spending (nor should the reimbursement be included in your income, since it was already included when you saved it). If you track it that way, you are basically treating your healthcare as somewhat of a levelized expense. The benefit of that is that it will let you track the spending in your control, and not swing your savings rate wildly based on when you need healthcare. Even though that has some benefits, I personally would rather go ahead and include it, since it utlimately can be used as a retirement account if you don't need the healthcare spending.
