Employer Contributions to Savings

Written by The Dividend Guy on June 23, 2006

The company I am with is going through our annual benefit reselection process and part of that is deciding how we want to allocate flex credits. For the upcoming year, I am going to increase the amount of savings I do. Last year, with all the employer and my own personal contributions to the pension plan and savings plan, I contributed 16% of my earnings. This year, I am bumping that up to 16.25% of my earnings. My own personal contributions are less than half of this so it is an awesome deal - I work for a great company.

I know that and extra 0.25% a year does not seem like much, but in the long run I strongly believe that it will help. From a future value perspective, this means an extra $35,000 in portfolio value (assuming an 8% growth rate over 35 years). That is an extra $1400 per year in income (assuming an yield of 4%). Better than a kick in the teeth. If I can manage to do this consistently through the years it will really start to ad up.

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1 Comment so far

  1. baselle July 21, 2006 9:01 pm

    Its the same principle as picking up change in the street, no matter how small it is. One does it because one doesn’t like seeing perfectly good money go to waste!

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