Should I count my employer’s contribution to my retirement plan as part of the 15% that you recommend I save? - East Idaho News (2024)

FAQs

Should I count my employer’s contribution to my retirement plan as part of the 15% that you recommend I save? - East Idaho News? ›

That's a great question. Employer contributions do not count toward the 15 percent I recommend setting aside for retirement. It's great if you work for a company that offers perks like that, but I want you putting 15 percent of your money into retirement.

Key takeaways

Fidelity's guideline: Aim to save at least 15% of your pre-tax income each year for retirement, which includes any employer match.

For a successful retirement, you should aim to save at least 15% of your income annually over the course of your career. Saving steadily and increasing your contributions periodically should help you hit that target over time.

You should consider saving 10 - 15% of your income for retirement. Sound daunting? Don't worry: your employer match, if you have one, counts.

Most retirement experts recommend you contribute 10% to 15% of your income toward your 401(k) each year. The most you can contribute in 2023 is $22,500 or $30,000 if you are 50 or older (that's an extra $7,500).

These are essentials, such as housing, food and transportation. 30% covers wants, which can range from dinners out to vacations to charity. 20% covers debt repayment and savings, such as retirement contributions and credit card payments.

Does Your 401(k) Contribution Limit Include Employer Matches? Employer matching contributions are not included in the annual 401(k) contribution limit for elective deferrals. No matter how much your employer contributes to your 401(k), you are entitled to contribute up to $23,000 of your wages to your 401(k) in 2024.

It's the million-dollar question — quite literally: How much should I save for retirement? There is a general rule of thumb: When saving for retirement, most financial experts recommend an annual retirement savings goal of 10% to 15% of your pre-tax income.

For an income of $80,000, you would need a retirement nest egg of about $2 million ($80,000 /0.04). This strategy assumes a 5% return on investments, after taxes and inflation, no additional retirement income, such as Social Security, and a lifestyle similar to the one you would be living at the time you retire.

What is a good monthly retirement income for a couple? ›

The ideal monthly retirement income for a couple differs for everyone. It depends on your personal preferences, past accomplishments, and retirement plans. Some valuable perspective can be found in the 2022 US Census Bureau's median income for couples 65 and over: $76,490 annually or about $6,374 monthly.

So, if you're aiming for $100,000 a year in retirement and also receiving Social Security checks, you'd need to have this amount in your portfolio: age 62: $2.1 million. age 67: $1.9 million. age 70: $1.8 million.

Fidelity says by age 40, aim to have a multiple of three times your salary saved up. That means if you're earning $75,000, your retirement account balance should be around $225,000 when you turn 40.

However, if you can't afford to max out your 401(k), consider what Fidelity recommends: a 15% retirement savings rate, including employer contributions. 16 That means if your employer matches up to 4% of your salary, you would save 11%.

Certain strategies, such as continuing to contribute to retirement accounts, can reduce the higher taxable income for someone older than 73. Depending on specific circ*mstances, workers over age 73 can still contribute to an IRA, a 401(k), and other retirement accounts.

You should aim to contribute enough from each paycheck to take advantage of any employer match. If your employer offers a 3% match, contribute at least 3% of each paycheck to your 401(k). After you reach the match, increase your contributions when you can afford to, aiming for 10% to 20% of your paycheck each month.

Experts recommend saving 10% to 15% of your income each year, but you can calculate a more personalized goal in four simple steps. Arielle O'Shea leads the investing and taxes team at NerdWallet.

Invest in an IRA

Anyone earning income can open and contribute to an individual retirement account, or IRA. A traditional IRA is taxed when you withdraw funds in retirement (defined as age 59 ½ or older), giving you more money to invest before then.

Employer matches for 457(b) plans are rare

With 401(k) and 403(b) plans, the annual contribution limit applies only to employee deferrals, not any money “matched” by the employer. However, if a government employer does make a contribution to a 457(b) plan, it counts toward the total allowable limit for the year.

More In Retirement Plans

5) Your 403(b) plan doesn't limit the total employer and employee contributions to not exceed the IRC Section 415(c) limits. Determine types of contributions allowed in the plan and total employee and employer contributions per participant. Compare with the current year's dollar limit.