This is probably nit-picky, but I'm not sure how to calculate this...

[msjd123]

My brother and I were talking about job benefits and investing, and we disagreed on how to calculate the following situation:

DH and I are both teachers, so 8% of our salary automatically goes toward the state teachers' retirement system (STRS) -- that's our defined-benefit pension. (We don't pay into and won't be eligible for Social Security; STRS is that entity for us, and mercifully, it's much more reliable.) The district we work for kicks in another 8%.

On our own, DH and I also each contribute 7% total to our respective 403b's and Roth IRA's.

How much would you say we contribute to our retirement? I say it's 15% because 8% (STRS) + 7% (403b/Roth) = 15%. Duh, right?

Well, my brother says we contribute 23%: 8% (our STRS contribution) + 8% (district's STRS contribution on our behalf) + 7% (403b/Roth) = 23%.

Who's right?

[mum4boys]

I would say you are right. Let say you decided to stop contributing to any of your retirement accounts (I know you cannot but lets just say you could). The school district is not going to give you the 8% they were contributing towards your retirement so you would save 15%.

[kirstenb]

I say it just depends on how you are talking about it. If someone asks what percentage of your paycheck goes to retirement, I would say 15%. If someone asks in general how much you are contributing to retirement, I would say 23% (and mention that your employer contributes some).

[rosegirl]

you personally contribute 15%- but the total % of your income contributed is 23. so it depends on how you word it.

[CarrieMF]

As long as you get the 8% the district puts in, 23% is getting invested for your retirement though you are only contributing 15%.

[rebeccalizzie]

If you are vested I'd say 23% since you could collect that entire amount, otherwise I would say 15% since your employer's contribution doesn't belong to you yet. I was in that situation at my last job, I contributed 8% of my gross income and my employer matched it with 12%. But the entire amount was mine as soon as I separated service, so I counted that as 20%. DH isn't vested yet in his pension plan, so we count his contributions as just what he puts in for now, he'll be vested in two years and at that point we'll count his contribution as the entire amount (and that will be an AWESOME feeling)

[mightymoo]

I wouldn't say 'I contribute 23%', since you don't actually contribute the other 8%. We contribute 15% of DH's salary to his 401k and his employer matches 3%, I wouldn't say we contribute 18%. IMO

[llamalluv]

This is what you argue about?

Well....you are correct. YOU contribute 15% to your retirement, but are saving 23%.

The word contribute has a specific definition and the employer match does not meet that definition:

Contribute:

To give or supply in common with others; give to a common fund or for a common purpose.

[msjd123]

Originally Posted by llamalluv

This is what you argue about?

Well....you are correct. YOU contribute 15% to your retirement, but are saving 23%.

The word contribute has a specific definition and the employer match does not meet that definition:

Contribute:

To give or supply in common with others; give to a common fund or for a common purpose.

*snort!* You know, we fought like dogs when were kids, but now... not so much. DH thinks we're utterly boring, sitting around, talking about finances.

I guess I just never think of our pensions as actually having some cash value despite the fact that we are in fact vested. (Excellent point, rebeccalizzie!) In fact, I didn't even know what the cash value was until I just went and looked it up. I think that's because the STRS publications always make a big point of saying that the cash value of your contributions has little bearing on what your actual retirement benefit will be.

Anyways, thanks for the feedback! (off to solve more important problems! : )

[Flor]

You district pays into your retirement? Hmm. Off to find my paycheck because I'm pretty sure mine doesn't. I'm always amazed at how cheap my district is. Sorry I have nothing to contribute to your arguement, except that my brother and I have been fighting since we were kids, too.

[Logan's Mom]

Originally Posted by kirstenb

I say it just depends on how you are talking about it. If someone asks what percentage of your paycheck goes to retirement, I would say 15%. If someone asks in general how much you are contributing to retirement, I would say 23% (and mention that your employer contributes some).