Employer Contribution - Where does it fit in?

[TravisRADMD]

Sorry for the spam. This question was part of my earlier post labeled "Asset allocation and location" but I thought it deserved it's own post.

How should 401K employer contribution be handled in an investment plan?

My employer contributes 36K annually.

Is it income? if so, should my savings rate be based on my baseline income+contribution?

Is it direct "savings"? If so, should my savings rate be based on my baseline salary and just SUBTRACT the contribution? Maintain 20% savings rate?

Should I treat it as a side bonus? If so, should by savings rate be based on my baseline salary and just ADD the contribution? Maintain 30% savings rate?

[CordMcNally]

I would put it in the numerator and denominator. For example: Total Savings/Total Compensation. Your actual savings rate doesn't really matter as long as you are saving enough to meet your long term goals.

[TravisRADMD]

I would put it in the numerator and denominator. For example: Total Savings/Total Compensation. Your actual savings rate doesn't really matter as long as you are saving enough to meet your long term goals.

So if its the numerator and denominator then I'm essentially ignoring it completely? Correct?

[CordMcNally]

So if its the numerator and denominator then I'm essentially ignoring it completely? Correct?

No. As an example, let's say your total comp is $250k and you save $50k. That would be a savings rate of $50k/$250k = 20%. If you use your $36k employer contribution then that gives you a savings rate of $86k/$286k = 30%. But, again, your savings rate is irrelevant as long as you're saving enough to meet your retirement goals.

[TravisRADMD]

Understood. Thank you.