Count Employer Contribution?

Brian on Twitter asks if employer contributions count toward the 15% Dave recommends putting toward retirement.

QUESTION: Brian on Twitter asks if employer contributions count toward the 15% Dave recommends putting toward retirement.

ANSWER: Employee contributions would. Employer contributions don’t. I want you putting 15% of your money into retirement. That’s your rule.

Baby Step 4 is 15% of your income going into retirement. The first thing you should put money into is a matching retirement account. If you’ve got a 401(k) or a Roth 401(k) or a 403(b) and they offer a match, up to the match, you do that before you do anything. Once you’ve gotten up to the match, let’s say they match 3%—we said 15%, so you’ve got to do some more—so you’re going to take the first 3% over in that 401(k), get the match, then you’re going to do Roth IRAs. And if the Roth plus whatever match you have does not equal 15%, then you’re going to go back to your 401(k), 403(b), whatever it is, and fund the rest of it up to 15% of your income.

I want you putting 15% of your income in. What your company matches, what your pension is, what your military retirement is does not enter into that equation. I want you having money in your name that you put in there because guess what? If your company goes broke, you have a pension, you get nothing. Nothing. Ask these people whose companies have gone broke. They got nothing. If you have a 401(k) and your company goes broke, it’s your money. You don’t lose it. It’s in your name. It’s your money. You put it in there. You own it, including the company match that was put in there. It’s in your name. You don’t lose it. I want you in control of your destiny.

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