Just about every personal finance guru has an opinion on how much you should contribute to retirement. Their suggestions usually falls between 10% and 20% of your gross income. For as long as I’ve been at this personal finance thing (since 2007), I’ve decided 15% is my lucky number.
Here’s what my retirement contributions looked like for 2009…
401K: 5% of gross income
Roth IRA: $5,000 (which was 10% of gross income).
Boom. Done. It really was that easy. Between a 5% 401K contribution and maxing out my Roth IRA, I met my 15% goal. There’s something missing though, I also get up to 5% of my 401K contributions matched. So what that really means was I had a total of 20% of my gross income invested for retirement in 2009.
Do you see the issue? Did I unintentionally invest more than I wanted? It’s definitely possible, so I need your help. How do you answer the following question…
Do you count your employer match as part of your total investment contribution?
What satisfies the 15% goal? Is it simply what I contribute, or should I be considering the match as well? When you look at my 2009 contributions above, do you consider that a 15% or a 20% investment?
When I asked this question on twitter, I got a 50/50 split. Half said they count the match towards their goal, while the other half said they pretend like the match doesn’t exist.