Paycheck Bumps from Tax Reform Present the Perfect Opportunity to Increase Retirement Savings

• March 2, 2018

If you are paying attention to your paystub, you may have noticed an increase in your total take-home pay this past month. This is due to the 2017 tax reform legislation ¹ that became effective in January.

According to a recent survey by LendEDU, Americans’ have seen an average increase of $130 per paycheck. Did you know that if you saved $130 a month for the next 25 years, you could save around $90,089² for your retirement. That equals an additional $4,560² per year or $380² each month during a 25-year retirement to help supplement your defined benefit pension from MOSERS or MPERS and Social Security.

Before you rush off and start spending those extra dollars, you may want to consider saving that money for retirement because retirement is on average the most expensive purchase you will ever make - more expensive than a home or a college education³.

Don’t have an extra $130 a month? What if you increased your retirement savings contribution by $25, $50 or $100 a month? If you increased your contribution by $50 a month, that could mean an extra $34,650 in retirement savings after 25 years. See the following effects of saving an extra $25, $50 or $100 a month (assumes a 6% annual return):

Extra Contribution	10 Years Saved	15 Years Saved	20 Years Saved	25 Years Saved	30 Years Saved
$0	$0	$0	$0	$0	$0
$25	$4,097	$7,270	$11,551	$17,325	$25,113
$50	$8,194	$14,541	$23,10	$34,650	$50,226
$100	$16,388	$29,082	$46,204	$69,299	$100,452

Using this additional take-home pay to boost your retirement savings is a smart way to prepare for your future. In fact, nearly half (47.66%) of the LendEDU survey respondents believe that if this additional income is saved, they will be able to retire sooner as a result from the tax reform.

Increasing your contributions to your MO Deferred Comp account is simple to do and takes only a few minutes of your time. To change your savings amount, simply:

1. Log on to your account through the Employee Self-Service (ESS) Portal or through Account Access.
2. In the menu, click the Access My Accounts option.
3. Choose Contributions in the left-hand menu.
4. Click the Change My Contribution Amount button at the top of the page.
5. Type in your contribution amount.
6. Click the Next button and follow the prompts.

Visit us at www.modeferredcomp.org or call 800-392-0925. You may also contact your local education specialist to schedule a meeting at your convenience.

¹ Tax Cuts and Jobs Act of 2017
² Assumes a 6% return while employed and 4% return and 2% inflation during a 25-year retirement
³ Age Wave/Merrill Lynch