Saving a flat dollar amount is better than saving with a percentage of your pay. We all are entitled to our own opinions but you can't argue facts and the fact is saving with a dollar amount isn't better than saving with a percent contribution. Actually, in most cases, saving with a percent of pay can help you save more throughout your career. Let me show you how. If you contributed a flat $50 twice a month to your deferred comp account, after 25 years and assuming the below assumptions your balance at retirement would be $69,300 dollars. Now if you simply turned that $50 into a percent, which is 4%, you would have a balance of $79,652 dollars after a 25-year career. Even though your initial contribution was the same throughout your career your contributions continue to grow alongside your pay increases. Myth debunked, but if you want more proof head to modeferredcomp.org and use our Grow Your Retirement Savings calculator to run your own calculations.
