Should Employer Match Count Toward Our 15% Contribution?

Libby says her husband's company matches retirement up to 6%. Does that 6% count toward their 15% in retirement?

QUESTION: Libby in Atlanta says her husband’s company matches retirement up to 6%. Does that 6% count toward their 15% in retirement? They have no debt, and they need to save for a car. Her husband makes $150,000 a year. Dave helps Libby determine how much goes into retirement and how much for the car.

ANSWER: It’s not the way I measure it, no. The way I measure it is I want you to put 15% of your money into retirement. The match is extra.

If he’s saving 21% of your household income and 6% of that is match—15% you’re putting in—yes, that would be what I recommend.

Usually what happens is that in the reality of, “Hey, I’m doing the Dave Ramsey thing. I got out of debt. I’ve got my emergency fund. I’m putting 15% of my income away,” that’s all awesome, and in the reality of that is most people don’t save every single month for a car their whole life. What they do is they say, “Okay, in about a year, we’re going to buy a car, and we want to buy a $24,000 car, so we need to save $2,000 a month for the next year.”

You need to say, “How much do I need to add to what that car’s going to be worth to move up in car?” and divide that by 12 and set that into your budget.

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