May 1998

What Are Personal Savings?

  • Two different methodologies are used to measure personal savings in the United States: the National Income and Product Accounts (NIPA), produced by the Bureau of Economic Analysis of the Department of Commerce, and the Flow of Funds Accounts (FFA), produced by the Board of Governors of the Federal Reserve System.
  • NIPA methodology is more frequently cited by the media. Under this methodology, the number for personal savings is residual. It is derived by subtracting the following items from personal income: payment for income taxes and non-tax payments (called "disposable personal income"); personal consumption expenditures (what individuals spend on food, clothing, etc.); consumer interest payments; and personal transfer payments to foreigners.
  • Key to understanding this methodology are the items the NIPA includes in personal income. These include: wage and salary disbursements; public and private employer contributions to pension and profit-sharing plans; individual contributions to pension and profit-sharing plans and individual retirement accounts; benefit payments from employment-based pension and profit-sharing plans; life insurance savings attributable to premiums paid; and transfer payments from the government (i.e, Social Security benefit payments, Supplemental Security Income benefit payments, etc.).
  • NIPA does not include employee and employer contributions to Social Security in personal income. The employee share of the contribution to Social Security is deducted from wages and salaries. The employer share of the contribution is not regarded as received by the employee.
  • FFA methodology differs from that used by NIPA in two ways: the treatment of consumer durables and the definition of personal income. The FFA treats the acquisition of consumer durables (i.e., automobiles, major household appliances, etc.) as a form of saving, whereas the NIPA treats expenditures on consumer durables as a component of personal consumption. The FFA has a slightly different definition of personal income. The FFA includes certain credits from government insurance programs and capital gains distributions. It is important to note that FFA does not include unrealized capital gains. For example, an individual purchases 10 shares corporate stock at $10 a share. The stock then increases to $30 a share. The increased value of the stock is not considered part of personal income until the individual sells the stock and realizes the capital gain.
  • Whereas in the NIPA the number for personal savings is residual, in the FFA personal savings is a direct measure of the net acquisition of assets by households.

Personal Savings as a Percentage of Disposable Personal Income

1946 9.2% 20.4%
1950 6.8 15.0
1955 6.6 13.4
1960 6.7 11.9
1965 7.8 14.9
1970 8.5 14.4
1975 9.3 14.7
1980 8.5 12.7
1985 7.2 15.0
1990 5.3 14.0
1995 4.8 6.9
1997 3.8 7.1

Source: (table F.9, Derivations of Measures of Personal Savings).

For more information, contact Ken McDonnell, (202) 775-6342, or see EBRI's Web site at

Source: David F. Bradford, What Is National Savings? Paper prepared for Saving: The Challenge for the U.S. Economy" sponsored by American Council for Capital Formation, Center for Policy Research, October 11-13, 1989. Washington, DC, and