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I keep seeing that you should be putting 15% of your income (link2, link3) into a retirement account. Does that include the employer match? For instance, if my employer has a 4% match, do I still put in 15% or do I drop it down to 11%? What if my employer has a 10% base (not match. If it was a match then of course you put in the full 10%), do I now drop it down to 5%?

If my total contributions is 15%, then I will have the same amount of money in the end no matter what my employer's plan is. If I put in 15% of my earned money, then in scenario 1 I technically have a 19% contribution but in scenario 2 I have a 25% contribution, which are drastically different (and they are a lot more than the flat 15%). So my question is does the rule of thumb of 15% include your employer match?

Note: this is more for educational purposes than it is me searching for advice.

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    Just as a general comment, it seems like any general rule of thumb must be based on the combined employee + employer contribution, since otherwise the effective savings rate would vary based on the employer contribution. The alternative is that the 15% rule assumes some average/standard employer match, and I'm not sure there is really a good average match in my experience. – Patrick87 Jun 24 at 15:07
  • Good question and two good answers from D Stanley and Bobby Scon. Do what you can and don't stress over it. Most of my life I did not put in 15% and I should still be able to retire early in a few years. If health care was a bit different, I could retire earlier. – Pete B. Jun 24 at 18:11
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    I always pretend as if it doesn't. Whatever my employer contributes is a total bonus. – user91988 Jun 25 at 14:43
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    The real question is this: if you aren't saving that part of your income for retirement, were will it go? If you live far within your means, there's nothing wrong with saving more than 15% for retirement. If you're strapped for cash, you might not be able to hit that number. – Andrew Brēza Jun 25 at 15:34

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It depends on who you ask, and how you look at it. In your linked question, one answer says no (the others don't specify). If you ask Dave Ramsey, whose advice shows up a lot on this site, he'd say no. It's more about controlling where your money goes than having a specific figure for retirement. 15% plus a match may not be enough if you're close to retirement, and it may be more than needed if you make, say 500k and already have millions of dollars in assets to "retire" on.

Or you can look at it from a budgeting frame of reference. Meaning, if you can live on 85% of your income, then you don't need as much for retirement than if you live on, say, 95% of your income. Then, any company match is just bonus that helps you reach your retirement goal sooner.

Remember that it's a goal. There's no magic to 15% that makes 14% not enough and 16% too much. To me, it's a reasonable amount of my income to save away for retirement. That's money that isn't going to something discretionary that might delay my retirement. Anything on top of that is gravy, so to speak.

If you can save 5% of your income, get a 10% match and still retire comfortably, then that may be enough for you. But 25% is better than 15% every time (so long as you aren't skimping on necessities, of course).

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    As others have pointed out, JTP has said yes. The 15% rule without saying if it includes employer match seems like a huge oversight, I have a friend who has a match up to 3% of income, but I have another friend with a 50% match of all contributions. So with how wildly different matches can be, the intent should be referenced somewhere. I'm not surprised that Dave says 15% + match, it's the more conservative approach to saving, which is what he is all about. – rhavelka Jun 24 at 16:51
  • @rhavelka correct, and he is approaching it from a budgeting standpoint, not an optimal retirement plan standpoint. You are correct that the end result can be very different based on employer match. Even if you look at it from an optimal total standpoint, 15% may be too much for one person and not enough for another. That's why I say you can look at it either way and not be right in some cases. – D Stanley Jun 24 at 17:04
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    Yes, and on the other hand, if you take Mr Money Mustache's advice you should probably reverse the numbers and put 15% into current living expenses and 85% into retirement! With the benefit of retiring by age 30. – Glen Yates Jun 25 at 17:21
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TL;DR: Yes. Essentially it's "put away $X per year for Y years, and you will have $Z when you retire", where the source of X doesn't matter (your money or your employer's match).


If you look at JTP's answer to your linkd question, you'll see that the 15% recommended there is "10% saved and 5% matched". Other people who recommend this savings rate may assume a different breakdown, or may assume no match at all. It really depends on the assumptions and calculations used by a particular person to arrive at that recommendation.

That question and its answers highlight that there are a lot of underlying assumptions involved in arriving at the "save 15% for retirement" advice. The question does a good job of enumerating the many variables that are involved in such calculations, but the baseline assumption behind these calculations, and this type of advice in general, is

I am going to work a job for money until I am X years old, and then I will no longer work. The money I save while working should replace Y% of my income until from the time I am X years old until I die.

There are really two high-level steps to calculate this savings rate. The first is "how much money do I need to have saved/invested in order to generate that income?"; this will be an actual number, not a percentage. For example, if you want $50,000 of income in retirement (assuming this is Y% of your current income), you likely want about $1,250,000 saved/invested (or more, or less, depending on the assumptions made about rate of return, withdrawal rate, life expectancy, other income, etc.).

From there, the second step is "how much do I need to add to my savings/investments per year to reach that number when I am X years old?"; this number will also be an actual number. For example, if you are currently X-1 years old with 0 savings, you will need to contribute $1,250,000 per year to reach your goal. If you are X-40 years, with some savings, that number will be considerably less.

The number calculated in the second step may indeed be around 15% of your income. However, it doesn't really matter what the source of the money is, as long as that amount of money gets saved/invested.


This advice generally assumes that a person spends a large portion of their income, and therefore needs to replace most of their work-generated income in retirement. If you instead look at what your expenses are and aim to cover those, rather than replace income (you may get promotions and/or large raises, but this doesn't mean you will need more income in retirement and are suddenly "behind" on saving even though you were "on track" before the promotion), you may find that the savings goal (e.g. $1,250,000) is more than you need. This means you could either set a lower goal and save at a slower rate, reaching your lower goal by age X (although then you may be spending more of your money, making your lower goal inaccurate), or set a lower goal and reach it before age X, allowing you to retire earlier (or continue saving and retire more securely).

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This is a really interesting question. Having stressed over that 15% number, I had never actually considered if the employer match should be part of it. By stressed here I mean "feel like I'm not properly 'Adulting'".

According to daveramsey.com, it should not count. I don't personally subscribe to Ramsey's approaches (neither agreeing nor disagreeing with), but lots of people put stock into feedback from his site. The article suggests that you should put 15% of your income into the account, really just as good practice/discipline.

I want you putting 15% of your income in. What your company matches, what your pension is, what your military retirement is does not enter into that equation.

Ultimately, it's an opinion. 15% is always a rough guideline, but it comes down to retirement planning. If 15% inclusive of your employer's contribution is enough to fund your retirement based on the numbers, then great. If not, then don't include the employer contribution in your figures. Also keep in mind that if you have your budget set to only account for 10% going into retirement and then change jobs and the employer match is less, you would need to increase your personal contribution to account for that.

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  • You say... "By stressed here I mean "feel like I'm not properly 'Adulting'". Please let yourself off the hook, grow up, and be your own boss. Stop looking to people like daveramsey.com to tell you what you want your retirement to look like. For some people $1M per year is not an affluent enough retirement. You are your own boss when it comes to your life. Adults accept and trust themselves. Don't be fooled by Suze Ormand or the Motley Fools. Stop worrying about what other people think is right. Figure out what you want for your life. – Rich Lysakowski PhD Jun 25 at 7:13
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One thing to consider is the vesting schedule of the employer match.

If it takes 5 years to get to the point where if you leave you will get the entire match, then there is a danger if you include the match in evaluating how much you need to contribute and you don't stay long enough to be fully vested.

That 15% rule of thumb is not the only version of this rule of thumb. You can find people that recommend 10%. It was 10% when I was just getting started, but then many people had pensions.

That 10% or 15% rule of thumb is just a guess. You will always have to look at your situation.

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Investing 15% of your income into retirement is simply a rule of thumb, and the exact implementation of that is a matter of opinion. It does make sense that if your employer is contributing to your retirement, that fact should be considered in your planning.

However, not all employer retirement contributions are the same. Here are some reasons that you might not want to count on them:

  • If your employer retirement is a pension, it can fail if the company has financial trouble in the future.

  • Sometimes the employer match has a vesting period, where if you leave the company before a certain amount of time, you forfeit the match. (I have lost employer match funds for this reason.)

  • Sometimes the employer match is restricted as to what it can be invested in. For example, one place where I worked invested all employer matched funds in company stock. This is not necessarily a good or safe investment.

In the end, you’ll have to be the judge of how much you can count on your employer-funded retirement to be there when you need it. If you decide not to count on it in your planning and end up having too much money at retirement, you probably won’t be sorry.

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I do retirement education on the East Coast for a large bank and we always teach that your employer's matching contribution be included in your contribution amount. So to OP's original question if you contribute 11% and the company kicks you 4% in a match, you are contributing 15% towards retirement.

Another good rule of thumb we teach is to increase your 401(k)/retirement account contribution by 1% a year up to a ceiling of "x"% (15-20% is a commonly accepted range).

Your plan might have an "auto-escalation" feature that you can automatically setup to increase your contribution % by"x%" automatically at a specific time (usually annually). If your plan does not have this option, I would just put a reminder on your calendar (January or after a raise/bonus) to manually increase it each year.

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I think it should be based strictly on your income. The 15% recommendation is a good one size fits all approach, and if you are using the one size approach, you probably shouldn't mess with the numbers. It's a general pattern for financial wellness and discipline. Having financial discipline is more likely to lead to financial wellness, which is more likely to lead to long term financial security.

If you are willing to do hard math, can speculate somewhat accurately, consider all of the relevant factors and determine how different contribution amounts will impact retirement, you will probably come up with a different number. But if you only take your employers match into consideration, then I don't think changing your contribution makes sense. You would need to consider your current age, retirement age, income, inflation, market factors, life expectancy, retirement lifestyle/plans, other assets, dependents and probably quite a few other factors into account before adjusting the numbers.

For example, if you have a child with a disability and you will be caring for them during retirement, you may want to consider saving more. If you plan to travel extensively, same thing. If you own 2 homes outright and plan to sell one when you retire, you can probably save less. And the list goes on.

You can spend a lot of time trying to figure it all out, pay someone to help you figure it all out, or just take the general one size approach and probably be OK.

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If you have 40 years until retirement you need to save (a total of) 15% of your income if you don't want to cut down on expenses when you retire. That's with average market returns and inflation. That's why that's the rule of thumb.

If you only have 30 years until retirement you need to save about double that. So if you're 30 and you plan to retire at 60 you need to save 30% of your income.

If you only have 20 years until retirement you need to double that again and you're now saving 60% of your income.

Obviously this gets very difficult if you don't have savings for retirement and you plan to retire in 10 years because you need to save about 120% of your income.

To sum it up: It's the rule of thumb because that's what you need to do for your whole career. If you start late you're going to have a bad time. On the other hand you would hope that your income continuously increases and so you can make up some of the difference.

Still, I don't believe in rules of thumb and I think everyone should do the math themselves and see what they need and how much they should be saving.

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If you include the match in the numerator of the 15%, then you should also include it as part of the denominator. If you contribute 4% of your base income, and it's matched with another 4% of your base income, then the 15% should be of 104% of your base income, for a total of 15.6% of your base income. With 8% total of your base income being put in your 401(k), that leaves 7.6% more to be saved.

The justification for giving a percentage of income, rather than a fixed amount, is that if you're having trouble living on your income now, you'll have trouble when you're retired, too (and if you're not having a problem living on your income, you wouldn't need Dave Ramsey type people to tell you how much to save in the first place).

Saving 15% of your income doesn't just mean that you're putting 15% of your income in savings; it also means that you're establishing that you can live on 85% of your income (taxes complicates things quite a bit, but let's ignore that for the purpose of this question). With the percentage-based rule, someone with twice the income will have twice in the retirement savings, but will also have gotten used to living on twice the amount of money, and so will need twice the money to maintain their lifestyle.

If you're saving 11% of your base income and letting your employer contribute the 4%, that means that you're getting used to living on 89% of your base income. When you retire, you'll have the same amount of money as someone who didn't have the match and was living on 85% of their income, but they'll be used to living on less money. You'll have to fight the money habits that you've established over decades. Will you be able to live on this reduced amount of money? If you will be able to do so later, why not do so now, and put the money in savings?

Some might say you should not include the match at all, increasing the amount you're saving. While it'a better to save too much than too little, there is some optimal amount, and if that amount is 15% for people with no match, then it's also 15% of the total income when you do have a match. If your utility is a sublinear function of your spending, then maximum utility is obtained when your spending is the same before and after retirement, and living a life of asceticism so you can end up with more money than you can reasonably spend is irrational.

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  • IDK why this got down votes, because this was also my reasoning. Even if employer match isn't an income source for taxation purposes, it is one for "money I have to spend on stuff" purposes. If you want to be more conservative and save more you won't find me arguing, but purely in terms of adjusting the basic recommendation this is correct. – user3067860 Jun 26 at 19:50
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The simple answer is "No, do NOT include your employer's match." You cannot count on that forever, from every employer you choose. So don't count on it. Period. Always put at least 15% of your own money away every year. If an employer contributes or matches, then that's gravy, not your principal, and not THE principle. The principle is saving and investing (at least) 15% of your own money every year, no matter what (for starters).

Why are you concerned about just 15% ? It should be 25 or 50% if you can do it. If you slave for an employer, then it is less than the $68,000 allowed for a small business owner. It is only $26,500 for a person 50+ now in 2019 or 2020.

You should be putting in your maximum amount allowed by law regardless of what your employer matches. And adapt to living off your remaining earnings now. Whatever your employer matches is gravy. If there is tax-deferred excess, make sure you have already max'd out your after-tax Roth contributions. Get all the money you can out of the government's greedy and ignorant hands. Save as much as possible now.

Forget about what DaveRamsey.com and other supposed "gurus" tell you. Become an expert on how to maximize your retirement income, both taxable and tax-free income.

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    How is anyone supposed to become an expert if they don't look at what others have done to solve a problem and seen what works? – rhavelka Jun 25 at 13:44
  • Read what the experts say and file it away. After reading a few and managing your own decisions, you will find out that what works in theory for the masses doesn't work for the individual with specific goals to retire young. – Rich Lysakowski PhD Jul 2 at 23:31
  • Well I was reading what experts say and everyone talks about 15%, but I needed clarity on what they meant by 15%. – rhavelka Jul 13 at 14:11
  • As someone said above, the 15% recommendation is a good "one size fits all" approach, but that's all it is. You are unique. If you want a one-size-fits-all life, go ahead. If you want to retire early, save 25% or 40%, or as much as you can afford. If you save 10% that means that in 8 years (with 8% return) you'll have enough savings to live for 2 years. If you save 20% you have enough for 4 years, and so on (approximately). How soon do you want to retire from the rat race and do what you really want with you life? That is what should determine your percentage. Not external advisors. – Rich Lysakowski PhD Jul 14 at 1:45
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    Thanks for the pep talk, but look at my note at the end of my question, I said this is for educational purposes. This was never a "help! how do I retire with enough money!" it was a "I've seen this generic rule and it's unclear what they mean". Also if you're such an advocate of everyone becoming masters of their own wealth, why do you keep telling me what to do with my money when you don't know my financial situation or my time horizon? – rhavelka Jul 14 at 13:15

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