Funny Math – Calling All Math Whizzes Version ~ 12/21/20

Calling all you brainiacs. Which is better?

1- Match $1 for $1 up to 8 percent

or

2- Match $2 for $1 up to 4 percent

There is a formula in here somewhere but I am no math whiz. Some say that in both cases the match is 8% and the only difference is that the 2 for 1 gets you to the same place faster. Is that so?

I am stuck on putting in 4 percent instead of 8 percent which is 1/2 of what I once contributed but I guess if you do the math, there really is no difference. Still if that is the case, then why change anything? Inquiring minds want to know. There has to be a reason!!

All comments welcome and appreciated.

5 thoughts on “Funny Math – Calling All Math Whizzes Version ~ 12/21/20

  1. The 2-1 is a nice option from the company because it extends the same benefit (on their part) to employees who, for whatever reason, aren’t able to contribute 8% of their salary right now. John is correct, the 1-to-1, if you contribute to the 8% level is better for you in retirement.

    Liked by 1 person

    1. That’s quite of few of the workforce. Last I heard a fair amount like 30-40% don’t participate at all. I’ll never forget coming home that first day and asking my dad what’s this ? He said “a gift horse” and I should sign up quick before my first paycheck so I’d never get used to having the money.

      Liked by 1 person

  2. 401(k) time, huh?

    Let’s say you make $100,000 a year (the math is easier). if you choose the 4% option, you put in $4000 and the company puts in $8000. You’re left with $96000 minus whatever they take out in taxes and you have $12000 in your 401(k). If you choose the 8% option, you put in $8000 and the company puts in $8000. You’re left with $92000 minus taxes and $16,000 in your 401(k).

    Choosing the 8% option will leave you with less cash now but more for later. I guess it depends on when you need the money, before retirement or after.

    Hope that helps…

    Liked by 1 person

    1. Yes! This helps quite a bit. You should write our FAQs. We are not given a choice. For 36 years, I had 1 to 1 match. Come Jan 1 2021 they’re switching 2 to 1.

      Liked by 1 person

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