What do you count as your 20% into Retirement?

[SLC OB]

At the end of the year, I am calculating my 20% into retirement. Did I make it or not?
Just thinking... do you all count what your employer contributes to your retirement into that 20% or do you only count what you contribute?
I know it can be done a million different ways... just wondering what you all do.
Do you base the 20% off of Gross or Net?
Do you try to contribute by end of 2020 or by tax time?
Please pick as many answers as you wish.
Happy Sunday Morning!

[IMinMS]

If you’re going to count money your employer contributes, you definitely need to add it to your compensation denominator to be consistent IMO.

[VagabondMD]

Honestly, I have never counted.

[TheDangerZone]

If you’re going to count money your employer contributes, you definitely need to add it to your compensation denominator to be consistent IMO.

Completely agree. You're just cheating yourself if you don't.

[Lordosis]

I see the 20% to retirement rule as a ballpark figure. If you are 18-19% you will likely do just fine. If you are 7% probably not.

Similar to the 4% rule. Nothing magic about that number. But if you are in that vicinity you are ok. If you plan to need 7-10% a year you better hope for some luck.

[Tim]

(EE contributions + ER contribution)/ (Gross comp + ER contributions) = contribution percentage

Peds provided the compensation rules definition. I trust Peds for the math without question. Both numerator and denominator are grossed up.

[Peds]

Similar to the 4% rule. Nothing magic about that number.

What's more magical is how many people don't understand it.

[Tim]

What's more magical is how many people don't understand it.

I prefer 4% of the balance every year. My simple math says that is ultras safe. Always have 96% of the savings invested.

[EntrepreneurMD]

Anyone else here doing the reverse, about 20% spent? I think WBD also mentioned this. I now see buying stuff beyond necessities as buying hassles. Healthy? Unhealthy? Without teens, the numbers would be even worse. I quit wanting much of anything (other than what family wants) and it feels good.

[zlandar]

I set aside a fixed X dollars a month to invest using VG's automated transfer from my checking to brokerage. I keep X dollars in my checking and savings and if it goes above a fuzzy number I'll move the extra to my brokerage account to invest.

[Tim]

I see the 20% to retirement rule as a ballpark figure. If you are 18-19% you will likely do just fine. If you are 7% probably not.

Similar to the 4% rule. Nothing magic about that number. But if you are in that vicinity you are ok. If you plan to need 7-10% a year you better hope for some luck.

I see the taxable retirement account as the true up mechanism. Rebalance at the end of year. Refund or add contribution as needed. Just like taxes, payment due or refund can be left or spent.

[CM]

Everything left after taxes is my denominator. Anything I don't spend is the numerator.

We're going to save over 90% this year, i.e., spend less than 10%.

[burritos]

Anyone else here doing the reverse, about 20% spent? I think WBD also mentioned this. I now see buying stuff beyond necessities as buying hassles. Healthy? Unhealthy? Without teens, the numbers would be even worse. I quit wanting much of anything (other than what family wants) and it feels good.

Buying stuff is just one of the long list of addictions that humanity has.

[wideopenspaces]

I got into a bit of an argument on another financial forum over counting employer contributions in my savings %. I count it because I count their contributions as part of my income (denominator) so I include it as part of the contributions ( numerator) too. They made me feel kinda crazy for doing it like that! But just because my employer gives me a chunk of money that can only be invested for retirement, doesn't make it any less money they are giving me. I think people feel like it's "cheating" or something because it's forced savings. Anyway, I've been doing it this way for too long and I like to compete against myself to increase that savings %, so I'm not changing the way I calculate it now!

I count any money that goes to our retirement accounts/pension plus anything we put to taxable in my calculations. I always do it on NYE to keep it consistent. So I'll know in a few days how we did this year!

[VentAlarm]

I max my 403b, gov457b, bd-Roth x2 and HSA. I also have a required pension. This gets within a shade of +/- 20% of my gross income (not counting employer contributions). Between my employers contribution to my 403b and pension, that’s about 12%. We also put enough extra to make our mortgage paid off in ~15y which amounts to about 5% of our income. We will probably put 5-10% of my gross income into taxable or more principle pay down on our mortgage.

Regardless how you count it, we’ll be fine. I don’t want to let any potential tax break go to waste and I don’t want to have a mortgage when the littles are in college.