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The City of Portland, Oregon

Office of Management & Finance

Bureau of Human Resources

Knowledgeable | Helpful | Responsive

Phone: 503-823-3572

Benefits Line: 503-823-6031

1120 SW 5th Ave, Room 987, Portland, OR 97204

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Every Little Bit Helps

Every little bit helps!

Understanding the effects of a small contribution increase

Saving for your future is like daily exercise; it’s a good habit to get into. The more disciplined you are today, the better you will feel tomorrow. Retirement savings is similar—contribute more today, feel more secure in the future. Have you thought about increasing your Deferred Compensation contribution lately? Now is a great time to go through the exercise. 
Do you know how much you’re contributing to your Deferred Compensation Plan Account  today? $10 a month? $50? $100? Have you tried to figure out how much that might actually net you at retirement? Is it enough? Have you considered the impact of contributing a little bit more each month?
Take a look at how a small increase to your contribution might add up over time. A small increase may potentially impact your long-term savings. 

Assumes a hypothetical 6 percent rate of return compounded monthly and contributions made at the end of each month. This illustration is hypothetical, is not guaranteed, and it is not intended to reflect the performance of any specific investment. There is no assurance that increasing contributions will generate investment success. In addition, these figures do not reflect taxes or any fees or charges that may be assessed by the investments. The tax-deferred investment will be subject to taxes on withdrawal. Systematic investing does not ensure a profit nor guarantee against loss. Investors should consider their financial ability to continue consistently in up as well as down markets

Pay yourself to save
By increasing your pre-tax contribution amount, not only will you be saving more toward retirement, you may also be reducing taxable income. This means more of your money is working for you! 

Every year, the IRS announces the latest contribution limits for retirement savings accounts. In 2019, the 457(b) Deferred Compensation plan allowable limits are:
• 457 Plan Annual Limit: $19,000 
• Age 50+ catch-up: Additional $6,000*
• 457 Special Election catch-up: Up to an additional $19,000*
*Both catch-up provisions cannot be used during the same calendar year. IRS rules allow you to use the greater catch-up available in that year. Every plan is different and may have different catch-up options and limits. You may wish to consider your current financial situation carefully before using catch-up contributions.
Pension and Social Security aren’t what they used to be 
In recent years, Social Security, the traditional source of retirement income, has become a smaller part of the equation. Consider that for the average worker, Social Security replaces only about 40% of pre-retirement income. For the next generation of retirees, these percentages may be even lower. Your Deferred Compensation Plan may provide an additional source of income.
Prepare today, plan for tomorrow
Increasing your contribution amount, even by a small amount, may have a positive impact on your retirement savings potential. The more you save now, the easier it will be to reach your biggest financial goals—including saving the money you need to retire when you want.
Similar to how a little more exercise may produce a lot more energy—a little more savings may produce a lot more peace of mind.