Texa$aver contributions: Percentage or dollar amount?

2-minute read

State of Texas employees are fortunate to have access to the Texa$aver^SM 401(k) / 457 Program in addition to their state pension plan for retirement. As our careers progress, our salaries tend to progress with them. People usually make more as their skills and experience evolve. But in some cases, the amount people contribute to their personal retirement savings, like a Texa$aver account, doesn’t increase as their salary increases. Why? They contribute a fixed dollar amount to their account from each paycheck rather than a percentage of their income. And unless those people remember to update their contribution amount, that means their retirement saving strategy stays stuck in the past.

Switching to a percentage contribution amount

If you’re contributing a fixed dollar amount to your retirement account each paycheck, you may want to consider switching to a percentage contribution instead. That way, when your salary goes up, your contribution to your retirement account will also go up automatically.

Setting up automatic increases

Another thing to consider is whether you’re contributing enough to reach your future retirement income goals—especially if you haven’t increased your contribution amount since you first enrolled in your plan. Even if you’re already contributing a percentage of your paycheck, regularly increasing the percentage you contribute to your account is a smart way to help build up the nest egg you’ll rely on in retirement.

If your plan allows, you can schedule an automatic contribution increase to take effect each year. A common increase amount is 1% or 2% each year. And don’t worry, if you decide to activate an automatic contribution increase, you’ll receive a confirmation notice at least 30 days prior to the increase so there aren’t any surprises.

Remember, even a small increase in how much you save can have a big impact on your future retirement income. Thanks to the power of compound growth potential, any earnings from your contributions get reinvested and can generate additional earnings. So, if you haven’t recently reviewed your Texa$aver contribution, there’s no time like the present.

To set up a percentage contribution and/or annual contribution increase, log in to your Texa$aver account today at Texasaver.com.