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employer retirement match included in % net/gross income saved?
Old 07-22-2010, 07:07 PM   #1
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employer retirement match included in % net/gross income saved?

When one calculates the % of net or gross income saved, is a company's retirement match to 401k/403b typically included in the calculations?

e.g. assume 100k gross, 50 k net (after taxes, insurance, and voluntary/mandatory retirement contributions), plus employer matches 8% gross into 403b.

assume 40k saved (retirement and other).

how does one typically report the figure?

% of net = 40/50 or 48/50 ?
% of gross = 40/100, 40/108, 48/100, or 48/108

or does one exclude retirement contributions entirely and calculate solely net income-expenses? what is the common practice? thanks.
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Old 07-22-2010, 07:38 PM   #2
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I guess it depends on why you are calculating "the % of net or gross income saved".

If you are using it to determine total amount saved x years from now to project retirement savings/income, then I would say yes. Other than that, I would say no.

I periodically calculate what "% of our gross" and what "% of our disposable" we are savings. I don't include it then - because I am not really "saving" that - it is being given to me.
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Old 07-22-2010, 07:55 PM   #3
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thanks. i was using the calculation to project a possible retirement date and $ saved.
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Old 07-22-2010, 08:04 PM   #4
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Quote:
Originally Posted by phardwid View Post
thanks. i was using the calculation to project a possible retirement date and $ saved.

Given that, I would include it. Otherwise you will be understating your savings and you could end up projecting a retirement date much later than absolutely necessary
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Old 07-22-2010, 08:37 PM   #5
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I include it, generally 48/108 since calculating after tax savings seems wierd to me with pre-tax money.

But it's 100% vested from day 1 match and is basically 10% of salary. I include it in part of my compensation also when (mentally) calculating what I make and what it would take for me to switch to a different job.
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Old 07-22-2010, 10:39 PM   #6
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I would go with 48/108, unless it's not immediately vested. Then I would only count the contributions as they vest. But I am weird in that I consider taxes to be an expense that I can try to minimize.

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Old 07-23-2010, 10:22 AM   #7
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I would tend to include it to the extent that it is vested. If it were 0% vested I wouldn't include it, if it were 100% vested I'd include all of it, and if it were 50% vested I'd include half of it. No counting chickens before they've hatched.
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