TAKE THE ONE PERCENT CHALLENGE

This fall, most state employees will enjoy both a pay raise and the end of Banked Leave Time (see related article). These two actions combine to increase paychecks by about 6%, making this the perfect time to review your contributions to the 401(k) Plan or the 457 Plan.

A small increase in contributions now can make a big difference at retirement. In the illustration below, 1% more contributed now means $10,000 more in 20 years!

In this example, the employee has an annual salary of $25,000 and currently defers 4% into the 401(k) Plan. This example assumes salary increases of about 3% each year and a 4% annual return on investment.

In addition to contributing more money for your future, the dollars you contribute to your 401(k)/457 Plans are tax-deferred. This means a lower tax bill for you now.

Can you afford to pass on this opportunity?

Before that increase hits your paycheck, talk with your family about both today's budget and your budget in retirement. Maximize your contributions and gain the peace of mind that comes from securing your financial future.

Note: This article prepared by the Office of Retirement Services, Department of Management and Budget.