Kevin’s Journey To 10 Times Pay
Kevin is 22 years old and just starting out in the working world. His annual compensation is currently $30,000. His employer offers a 401(k) plan with a 50% match on the first 6% of compensation. Kevin decides to start saving 6% of pay, then increases by 1% a year until he reaches 12% of pay. He continues this plan until age 67.
Under this plan Kevin will reach the goal of 1 times pay at age 29, 2 times pay at age 34, and so on……finally reaching his 10 times pay goal around age 64.
*Example above assumes a 5% annual rate of return on investment, and an annual increase in compensation of 3%. This example is provided for informational purposes only, and does not guarantee any specific rate of return or account balance. Furthermore, this example should not be construed as investment or financial planning advice, and makes no implied or express recommendations concerning the manner in which any eligible plan or plan participant should invest.
Sally’s Journey To 10 Times Pay
Sally is a 27 year old employee who just finished her MBA and is being paid $60,000 per year. Her employer offers a 403(b) program with a 100% match on the first 4% of contributions. Since she has student loan debt to repay, Sally decides to contribute 6% for the next four years, then increase her deferral to 12% of compensation until she reaches the “10 times pay” goal.
Under this plan, Sally will reach the goal of 1 times pay at age 33, 2 times pay at age 38, and so on… finally reaching her 10 times pay goal around age 67.
*Example above assumes a 5% annual rate of return on investment, and an annual increase in compensation of 3%. This example is provided for informational purposes only, and does not guarantee any specific rate of return or account balance. Furthermore, this example should not be construed as investment or financial planning advice, and makes no implied or express recommendations concerning the manner in which any eligible plan or plan participant should invest.
Michelle’s Journey To 10 Times Pay
Michelle is a new Vice President at her company, earning $80,000 a year. At age 34, she already has a 401(k) balance of $85,000, but realizes she has a long way to go in reaching her goal. Her employer offers a 401(k) Plan that matches 100% on the first 3% of compensation, and 50% on the next 2% of compensation (Safe Harbor Match). Michelle is devising a three year plan where she will climb from 8% to 10% to 12% in contribution rate, then keep going until she reaches age 67.
Under this plan Michelle will reach the goal of 2 times pay at age 38, 4 times pay at age 47, and so on… finally reaching her 10 times pay goal around age 67.
*Example above assumes a 5% annual rate of return on investment, and an annual increase in compensation of 3%. This example is provided for informational purposes only, and does not guarantee any specific rate of return or account balance. Furthermore, this example should not be construed as investment or financial planning advice, and makes no implied or express recommendations concerning the manner in which any eligible plan or plan participant should invest.