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To: Les H who wrote (161248)	4/21/2002 6:45:44 PM
From: GraceZ	Read Replies (2) \| Respond to of 436258

Are they using disposable income as income after tax or income after tax and contributions to a tax advantaged pension plan? When people in the US max out their 401s and pension plans they do it from the gross. Actually its figured out before and after. Like I could put in 25% after but it amounted to 20% of my gross after subtracting 1/2 SS. If someone maxes out their 401 they are doing 12% of their gross, not their net. A SEP would be maxed out at 12.5 which is 15 after. If they figure the saving rate as disposable income saved after the pension contribution its no wonder no one looks like they are saving. Meanwhile I don't have a client who doesn't take advantage of these tax deferred plans and max them out as frequently as they can. Say you have someone who makes 100k and saves 12% of their gross in a 401, but spends every last take home dollar. Is that person's savings rate zero or 18%? (assuming for simplicity sake a 25% average tax, with 66k take home).