Author Topic: Really simple question about living off of half of my income  (Read 2132 times)

EconDiva

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Really simple question about living off of half of my income
« on: November 26, 2013, 08:40:34 AM »
Let's say my current goal is to live off of half of my income.  And for simplicity sake let's say I net $4k/month after taxes, insurance and savings. 

That means I need to be living off of $2k/month and investing another $2k/month towards retirement. Let's say I'm already putting away $1500/month on my own.  But my employer is contributing $500 month through 401k matching.  Do I count the $500 towards my $2k/month retirement goal?  Or is it only what I contribute as an individual?

Cromacster

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Re: Really simple question about living off of half of my income
« Reply #1 on: November 26, 2013, 09:00:44 AM »
Does it really matter?

If you do, that means you are living off of 2500 and saving 1500, if you don't you are at the 2000/2000.

So, I would say no.  I don't count employer contributions to my savings rate, because in reality, I'm not saving it.

You say you net 4k after taxes, insurance, and savings.  <---Is that savings your 401(k) contributions?

EconDiva

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Re: Really simple question about living off of half of my income
« Reply #2 on: November 26, 2013, 09:11:47 AM »
Does it really matter?

If you do, that means you are living off of 2500 and saving 1500, if you don't you are at the 2000/2000.

So, I would say no.  I don't count employer contributions to my savings rate, because in reality, I'm not saving it.

You say you net 4k after taxes, insurance, and savings.  <---Is that savings your 401(k) contributions?


Well, I was thinking it does matter because we are talking about a savings rate of 37.5% versus 50%, depending on how I define it. 

I was just using the numbers above as an example, but yes, the savings part is 401k and ROTH IRA contributions.

SwordGuy

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Re: Really simple question about living off of half of my income
« Reply #3 on: November 26, 2013, 09:51:22 AM »
Yes, you count employer 401k contributions as both income and as savings. 

(Unless you aren't vested in those contributions, because they can disappear at any time until you are.)


NumberCruncher

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Re: Really simple question about living off of half of my income
« Reply #4 on: November 26, 2013, 09:52:49 AM »
Does it really matter?

If you do, that means you are living off of 2500 and saving 1500, if you don't you are at the 2000/2000.

So, I would say no.  I don't count employer contributions to my savings rate, because in reality, I'm not saving it.

You say you net 4k after taxes, insurance, and savings.  <---Is that savings your 401(k) contributions?


Well, I was thinking it does matter because we are talking about a savings rate of 37.5% versus 50%, depending on how I define it. 

I was just using the numbers above as an example, but yes, the savings part is 401k and ROTH IRA contributions.

A savings rate only really affects your FI or FIRE date if you use the simplest calculation a la http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Any good retirement calculator will ask for spending needed in retirement and annual savings. In these, you would count employer contributions towards the savings.