RealSmartica

Educate parents and young adults in practical money matters

Facebook
LinkedIn
Twitter
  • Home
  • Contact
  • A Resource for Schools
  • College Planning
  • Financial Housekeeping
  • Money Lessons for Kids
  • Women and Money

Attention, Shoppers!

April 20, 2017 By admin 1 Comment

SALE sign printable instant download by BloomWhereverYouAre:

It’s a great paradox of life that people will clip coupons, or drive out of their way to save $5 at a sale and yet, when it comes to their personal finances, they ignore the chance to save thousands of dollars.  This opportunity is real: it is the employer-sponsored retirement plan.

Participating in – or increasing contributions to – a 401(k), 403(b), 457(b), Simple IRA, SARSEP, or a Single K reduces taxable income.  To quantify the value of this on a federal and state tax level let’s look at a NY resident earning $50,000.

After-tax income on this salary would be $38,856.  Now, if a 10% contribution is made into the retirement account (or $5,000) the federal and NY tax savings would amount to $1,560, making the real cost of the contribution just $3,440.

In other words:  $5,000 of investments would actually cost just $3,440.

Assuming a 24-paycheck year, this contribution would only cost $143 per check.

I am not even factoring in the value of the account compounding without the effect of taxes until retirement, or the added benefit some people get in the way of an employer match.

My last two blog posts, A Plan to Overcome Panic Paralysis and Destination Unknown? highlight the importance of defining your goals and making a financial plan to get there.  Contributing as much as you can to your retirement is a critical first step.

If you are suffering from a tax-day hangover, take special note. Making a large contribution to your employer-sponsored retirement account can be particularly beneficial to you.  Remember: income, not wealth, is taxed.

Even if your tax bracket isn’t a main concern, the truth is paying less for something worth considerably more (and that can appreciate in value) is a bargain too good to pass on.

Filed Under: Blog, Saving for Retirement

Trackbacks

  1. Bargain Hunter’s Delight says:
    April 20, 2017 at 8:45 pm

    […] This opportunity is real: it is the employer-sponsored retirement plan.  Click here to read more. […]

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Dina Isola

Since 2002, Dina Isola has worked closely with investors, hearing their concerns. Drawing on her experiences and challenges, Real$martica was born, which focuses on making personal finance issues relatable to women, children and families and educating investors to make informed decisions. A contributor to A Teachable Moment, she is a client relations specialist at Ritholtz Wealth Management. She also serves on Stony Brook Children’s Hospital Task Force.

Recent Articles

  • Your Creative Solution
  • Relentless Optimism
  • Calling All Ladies
  • Resolve to Beat the Odds
  • From Disinterested to Fully Engaged
  • Introducing On Her Mind Podcast
  • How an English Major Became an Advisor
  • The Kids Will Be Alright
  • Planning for the “Big” Day
  • Simple Does It

In the news..

Mortgage Stories
Bankrate.com
Retirement Stories
Bankrate.com
Read current mortgage rates and home loan stories.
Read the latest retirement planning topics and trends.

RSS College Tuition News

  • KitchenAid’s Key Ingredient: Investing in Workers. ‘It’s Not a Dead-End Job Anymore.’ - The Wall Street Journal
  • Utah House passes bill that would cover college tuition and fees for needy Utah students - KSL.com
  • Bill offering DACA recipients lower college tuition passes Arizona Senate - KTAR.com

RSS Personal Budget News

  • Should You Use a Personal Loan to Fund Your Business? - U.S News & World Report Money
  • Mayor reprimands councillors for 'appalling behaviour' as budget is passed - Grimsby Live
  • What to do if you can't pay your credit card bill on time - NBC News

© Copyright 2016 Real$martica · All Rights Reserved · Powered by WordPress ·