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ConstantinoSchillebeeckx / financial-health-check

Content for the meepmoop financial health check roadmap
http://meepmoop.com/financial-health-check/
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401k slide wording #5

Closed ConstantinoSchillebeeckx closed 8 years ago

ConstantinoSchillebeeckx commented 8 years ago

If your employer provides a 401(k) retirement plan with matched contributions, what percent of your income would you need to contribute to maximize the employer match?

Do we want to word this another way? I had to read it a few times to fully understand it, at which time it was obvious. What if we asked If your employer provides a 401(k) retirement plan with matched contributions, what percent do they match? (Typical match percentages can be in the 5-10% range)

charbo25 commented 8 years ago

Yeah, this one is a little bit complicated because some plans do a 50% match up to X% of your salary, which is why I worded it the way I did (although I completely agree that it is confusing). Some people might slip through the cracks on a technicality, but overall I think your proposed wording is better.

Just to be clear on what I mean though, consider a case where they match 50% up to 6% of your salary. You'd have to contribute 12% to get that, but if you answered 6%, we'd be issuing a suboptimal recommendation. Can we explain it better in the more info?

charbo25 commented 8 years ago

Proposed rewording:

Main Question: If your employer provides a 401(k) retirement plan with matched contributions, what percent do they match? (Typical match percentages can be in the 5-10% range)

More info bubble: A 401(k) is a tax-advantaged retirement account, and employers often ‘match’ employee contributions up to a specified percentage of income. An employer match is a guaranteed return on investment, so this is a very high financial priority!

For this question, if your employer matches your contributions up to 6% of your income, you should enter 6 in the box. If your employer does not match 401(k) contributions, enter 0.

Some employers will match a portion of your contributions. For example, an employer might match 50% of your contributions up to 5% of your salary. In that case, you would need to contribute 5% of your salary to get the full benefit of the match (even though the match equals 2.5% of your salary), and you should still enter 5 in this box.

ConstantinoSchillebeeckx commented 8 years ago

What if we get directly to the point and ask, up to how much will your employer match your contributions in total currency?

Really, in the end it's about a dollar amount that gets contributed, no matter how it's calculated ultimately that's the number we're after.

charbo25 commented 8 years ago

I liked your first suggestion better, to be honest. I think that detail can be explained away in the 'more info'.