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By: Andrew Rosen, CFP®, CEP® Many of us like to get a sense for our place in the world. This sense comes in different forms: spiritual, emotional, financial, and more. When it comes to finances, it’s helpful for everyone to grasp how well we are all saving for the future. The sooner all of us can wrap our heads around where we “stack up,” the sooner situations can improve. To help, I’ve created my own “savings assessment test.” It uses a scoring scale from 1-10 (one being the lowest and ten the highest) to determine retirement savings health. Disclaimer! I recognize many things affect our finances and subsequently our ability to save. The purpose of this assessment isn’t to make anyone feel bad about themselves. I’d rather help you get a sense of where you stand and what next steps are needed to improve your score. Remember, it’s about progress not perfection. Score 1: Not Saving and Amassing Credit Card Debt. I don’t believe in giving a zero to anyone, so one is as low as I’ll go. If you currently aren’t saving at all and you are amounting credit card debt, than give yourself a one. Consider this your wake-up call! You need to find a way to live within your means and rid yourself of these detrimental credit card debts. The reality is you are living outside your means; that is simply not sustainable. Score 2: Not Saving, but Paying Down Credit Card Debt. If you’re currently at one, it should be a simple step up to score two. A score of a two means although you aren’t saving, you are paying down credit card debts. Regardless of how you accumulated this credit card debt, you now have a plan to rid yourself of that vicious beast. Although you’re not doing much to increase your savings for the future, you are getting out of crippling credit card debt. So, kudos! Score 3: Not Saving, but Paying Down Student Loan. I rate student loan debt as better than credit card debt because for many, it’s a necessity. Thus, I don’t want to penalize anyone for having it. However, if you are just paying down your student loan debt and not actually saving anything above and beyond for the future, than give yourself a lucky number three. Regardless if these individuals are early in their working lives or not, I’d like to see them find a way to save monthly. Score 4: Paying Down Debts and Contributing to a Retirement Plan. Going from a three to a four should be intuitive by now; I did tip my hand a moment ago. Paying down your debt AND contributing into a retirement account warrants a score of four. Ideally if you work at a place that offers a 401(k) match, you should contribute that matching amount. It has a lovely doubling effect, since the employer is equaling your contributions. (Free money, yay!) If you don’t have the luxury of an employer-sponsored plan, look at a Traditional or Roth IRA as a great alternative. Score 5: No Debts to Pay Down and Contributing Employer Match to Retirement Plans. As it is where most people tend to fall, I give this next one the score of five. Additionally, most people still need to increase their savings to reach their retirement goals. If you have no real debt (outside of car payments, or home mortgages) and contribute the employer match to your retirement plan, that’s a score of five. These individuals don’t have bad habits; they just need some form of coaching or incentive to increase their savings to hit their retirement milestone. Score 6: Saving 10% of Salary into Retirement Plans. Since I consider a score of five as being in a fair position, I’ll classify a score of six as my line between “fair” and “fairly healthy.” Contributing 10% of your salary into employer sponsored retirement plan gets you a score of six. Generally this is considered the minimum threshold to “save enough” for retirement. I don’t necessarily buy that logic, as every situation is different. However, 10% is a great starting place to a healthy retirement. Score 7: Maxing out Employer Sponsored Retirement Plan Savings. To earn the coveted score of seven, you’ll need to do my single favorite financial planning tip. Maxing out your employer sponsored retirement plan to earn a score of seven. Not only do you get that higher score, but you are doing better than most. So you know, the maximum allowable savings in 2018 is $18,500 if you are under the age of 50 (it’s $24,500 if you are age 50 or older). This can be a hefty savings amount, so I understand if it takes you a few years to reach that level. Make your carrot increasing your Employer Sponsored Savings Plan a percent a year, you’ll thank me later. Score 8: Maxing out Employer Sponsored Retirement Plan Savings and Investing in a Non-Retirement Plan. If you are starting to feel good about your retirement position and want that next challenge, here it is. You have to maximize your retirement plans and start an additional non-retirement investment account to reach an eight. Whether it be a monthly savings amount or putting some of those annual bonus dollars away, pat yourself on the back when you get to this one. Score 9: Maxing out Employer Sponsored Retirement Plan Savings and Investing the Same Amount to Non-Retirement Plan. Here is where you can really start to show off. If you are able to pull off the following, give yourself an impressive score of nine. You are maxing out your retirement accounts and saving that same amount in non-retirement accounts. Due to taxes and employer match, the non-retirement account will have a slightly lower account value than those retirement accounts (not to mention it was likely started later in life). Don’t let that stop you though, this is the sign of a real savings Rockstar! Score 10: Maxing out Employer Sponsored Retirement Plan Savings and Having More Accumulated or Saved in Non-Retirement Plan Investments. The grand finale, a perfect score of a ten! Alright hotshot, if you find yourself here, consider yourself a master of ceremony in the retirement savings world. This score is saved for only the most impressive savers. If you are able to max out your retirement plans and actually save more than that in non-retirement investment plans, than I tip my hat to you sir or madam. I always say the way I can tell if someone has entered the world of the wealthy is if they have more saved in non-retirement plans than retirement plans. Generally, I see this in high level executives (who get large bonuses or company equity awards) and those professionals who are very dedicated savers and spenders. Congrats if you find yourself here! I classify you in my top 1% of retirement savers. If you’re here, you’ll find yourself in a great financial position. One to Ten. I can’t stress enough that everyone’s situation is different. My partners and I at Diversified, LLC pride ourselves on never judging and helping out everyone we can. Regardless of where you find yourself on the scale, know that you can move up to the next score. (Heck, there is room to grow even if you are a Savings Superhero with a score of 10). We aim to help improve everyone’s lives we touch. Even if you don’t seek out our assistance, hopefully the above scale will help motivate you to improving your financial status and have a little fun in the process.