What are you cutting in your budget to absorb the Payroll Tax increase?

Discussion in 'Budget Board' started by ekatiel, Jan 3, 2013.

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  1. Arielle22

    Arielle22 <font color=red>We have had spirits<br><font color

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    eliza if you figure out how to increase 401k participation I would love to know. I am a HR Mgr and we have a dismally low participation rate. We have a good plan and even have a consultant who can give limited advice on what option to pick but I haven't had a new enrollee in several quarters.

    Even more distressing is when people leave and opt to take a payout (with penalty) over rolling the funds into a difference account.
     
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  3. eliza61

    eliza61 http://www.wdwinfo.com/dis-sponsor/images

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    The friends are probably getting SSI benefits. which is funded via other revenue (taxes). In order to receive disability benefits from ss, your parent or spouse must be contributing to the system. Now your aunt would be eligible because she has been paying into via the time she did work. If I became disabled I would get both ssi and ss disability benefits because of my work history and yes you are correct if I began getting them today I would continue to get them until I die, which for the average female would be another 25-30 years.
     
  4. eliza61

    eliza61 http://www.wdwinfo.com/dis-sponsor/images

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    One idea some companies are trying is automatic opt in. The reasoning behind that seems to be is that a lot of new employees will budget down to their check. Sort of the "you can't miss it, if you never have it". A few places found that when they automatically opt their employees in very few take the time to do the paper work to leave the plan.

    Another thing some companies are trying is biweekly statements when you get your paycheck. It seems people are more likely to continue to save when they see the amount actually grow. Along the same line as folks on a diet. when you diet and see that inital 10 pounds drop off you get really psyched to keep going so you tend to continue.

    You're right about the payouts. Washington post just had an article yesterday about people spending their 401K's

    http://www.washingtonpost.com/busin...4a0e90-5e70-11e2-8acb-ab5cb77e95c8_story.html
     
  5. Arielle22

    Arielle22 <font color=red>We have had spirits<br><font color

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    The CFO and I have discussed automatic enrollments but I really think it would cause problems for my company. Employees just don't review their paystubs and I can see the blowups occurring when they realize what happened. While it would be legal I think it would leave a bad feeling with the employees.

    My DD17 had a job with the town and has $25 in their retirement plan. I was explaining how she needs to move it to another instrument and let it keep accumulating interest. Once she gets a full time job, she can add more to it.

    I wish my parents explained it to me when I was younger but dad had a state pension and mom was a stay at home mother so I don't think it crossed their minds.
     
  6. Disneefun

    Disneefun DIS Veteran

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    This article appeared in our local paper this week and I thought it was an interesting take on increasing participation. It's keeping up with the Joneses in saving, not spending. There are a lot of flaws with the idea, as the article notes, but interesting nonetheless.
     
  7. eliza61

    eliza61 http://www.wdwinfo.com/dis-sponsor/images

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    LOL. YOu know Arielle, I think this is the core of the problem. We (country we) as so financial illiterate. I too have big time scientist who have said flat out they don't even look at their paystubs. My company no longer gives paper checks, you must have direct deposit, since we switched to that no one even bothers to look up their electronic paystub.
     
  8. rockawaybeachgirl

    rockawaybeachgirl Mouseketeer

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    Not directly on point to the expiration of the SS tax holiday, but in case anyone is getting motivated to save more for retirement, I wanted to make the case for fully funding an HSA (to the extent it's available to you) before funding a 401k due to the triple tax advantage. After that, I'd fund the 401k up to the company match, and then into a Roth or regular IRA, depending on personal financial circumstances and goals.
     
  9. leahjade

    leahjade DIS Veteran

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    So true! I wish everyone had to write a check each week to the government to pay their taxes - I think it would shock a lot of citizens and make them think twice about how much of their money they are giving up to sometimes wasteful spending. Maybe people would give a second thought to tax increases that people now just seem to take in stride without protest and become more involved with trying to change the system.
     
  10. kellia

    kellia DIS Veteran

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    My company did the automatic 401k enrollments last year. They sent out letters saying that if you weren't already contributing to your 401k, they were going to enroll you in 3% unless you called to opt out. After that, they'd increase by 1% each year until you hit 6%. I couldn't believe there were that many people not contributing that they'd do that, but I guess there are... It especially shocks me since they match 50% of the first 6% you put in, so you're throwing away an extra 3% of your salary. :confused3
     
  11. Tink-n-MrIncredible

    Tink-n-MrIncredible DIS Veteran

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    Arielle, I am going to put my .02 in on this. When I left my first job, I was in my early 20's (over 20 years ago) I opted for the payout. I never new any different. My parents never did any investing other than savings bonds, cd's, etc. No one at my job tried to explain to me what I was doing by taking my funds. (I know it was not in the job description.) I wish someone in the HR who knew more than I would have offered to explain this to me or put me in the right direction to learn. Maybe some of these people do not understand a roll over account.
     
  12. runwad

    runwad Dis Veteran

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    You know when I got my first full time job in 1990 companies where matching 50% up to 6% saved and ya know what, it's not changed in all these years. Why don't the companies every increase the match? Does anyone get matched above 6%? I bet if they do they are in the minority. I know it won't make anyone save more but it would sure make me happy!!!
     
  13. HeyIt'sMe

    HeyIt'sMe <font color=darkorchid>For Tag Fairy's Use only<br

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    My company suspended the 401(k) match from 2009-2012 but reinstated it this year. We went back to the match we had in 2008 --- 50% of the first $5,000 contributed, so $2,500. Any match is nice but I sure wish ours was higher.
     
  14. chicagodisneyfan

    chicagodisneyfan Peace

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    My husband gets dollar for dollar up to 9% - which adds up quick!
     
  15. runwad

    runwad Dis Veteran

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    Wow see that's NICE!! Since companies have done away with pensions they should have to raise their match every so once in a while. I mean 22 years of the same rate, that stinks. Now it's better than nothing don't get me wrong, but I'd like to see the numbers of how much they're saving doing the match vs the pension.
     
  16. preschoolmom

    preschoolmom DIS Veteran

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    Great little article! :thumbsup2
     
  17. vacationer1954

    vacationer1954 DIS Veteran

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    Neither my spouse or I have seen a company match for over ten years. :(
     
  18. ilovemk76

    ilovemk76 DIS Veteran

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    Dh and I both print out our electronic stub each pay. We check it for accuracy and have a paper trail if we find a problem in the future.
     
  19. eliza61

    eliza61 http://www.wdwinfo.com/dis-sponsor/images

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    :thumbsup2:thumbsup2

    Come back to me in a month, there will be quite a few people around here grumbling because they just got their W-2's and they will literally say "I thought I made more", to which I'm yelling "WHAT THE HECK DO YOU MEAN, YOU THOUGHT" don't you know? I've got guys (it seems to be mainly guys) who say they never look at their paystubs they just hand them over to the wife.

    I don't get it. I'm the gal that checks here bank accounts on line probably every other day to make sure the atm transactions went through correctly.

    I do wish they'd bring back home economic classes (that's what they were called back in the dark ages)
     
  20. ilovemk76

    ilovemk76 DIS Veteran

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    If your income exceeds a certain amount then 85% of your Ss check gets taxed. The number is quite low when this kicks in. Once you hit 70.5 you have to take out a set amount that goes up each ear from your 401K and IRA. This could immediately trigger the 85% tax on SS.

    Many in DC are now talking about means testing for benefits. You say you stay up on Ss and you have not heard this. This would punish the saver.
     
  21. vacationer1954

    vacationer1954 DIS Veteran

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    I think saying it punishes us is wrong. It just lowers how much saving benefits us. If the money was going to pay for some CEO's salary or if it meant we couldn't afford to pay for food then that would be bad but we only pay that higher tax if we have more than enough to pay for food and the money is reducing the difference between spending and revenues and that helps our children.
     
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