How to count employer match?

Hi YNABers, I'm a tenured professor, so the overwhelming likelihood is that I'll have my current job until I retire, in 20+ years. I started late to retirement savings, and to catch up, I have been putting 16% of my income into my school's 403b (TIAA-CREF), and plan to up that a couple of percentage points after I pay down some debt and get my next raise. My employer puts in an additional 10% (until recently, it actually used to be 12%).

First question: How do I count my employer's contribution when I calculate how much I will have come retirement? I don't want to rely on their portion too much, since they could shave it down further anytime. But for now, does this mean I'm effectively saving 26% of my income towards retirement? What do I plug into those calculators?

Second question: After I meet my employer match, how do I decide what percentage of my retirement money to send to the 403b, and how much to the new Roth IRA I opened? All things being equal, is one a better vehicle than the other?

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  • Fellow higher ed person here. I would do a conservative estimate of the match, since you know your institution has ratcheted it down once already. So, of course, if you're projecting growth on what you have, count all of it, because you already have it. Then I would calculate the high and the low and the likely in the projection. For instance, I know very few solvent major universities that put in less than 9% or so (mine puts in 9, my previous institution put in 12.5). So that's probably a reasonable floor. 

    Note that odds on that your match has different rules than your contributions if you are at TIAA. If they're matching you into a 401(a), which many do, the restrictions on what you can do with that money are quite large. So you don't want to think of it if you're contemplating retiring early, etc. Make sure you know what the rules are for those funds. My 401(a) at TIAA, which contains only the match from the 2.5 years I was at my old institution, is locked until I'm 59 1/2--I can only move it to another 401(a), and buy appropriate funds within that. If they're matching straight into the 403(b), then great, and you can probably do anything you want with it. Who knows, you might publish something amazing and get poached by another institution--20 years is a long time. 

    As to match/Roth/other, the standard personal finance advice is match first, because it's a 100% return, then Roth, then go back to max retirement. Of course what that means in practice is, each month, you're putting away the amount it will take to do each of those things over the course of the year. So each month, you'll send whatever is necessary to get the match to your 403(b), $500 to your Roth, and whatever else you plan to save that month will also go into your 403(b). 

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  • WordTenor said:
    As to match/Roth/other, the standard personal finance advice is match first, because it's a 100% return, then Roth, then go back to max retirement.

     I so appreciate this helpful response! Great ideas on how to calculate in the future. It's weird how few places really address the question of employer match. Glad to know about that (hopeful) 9% floor. I'm indeed at TIAA, no plans to retire early. Publishing enough that I'm theoretically poachable, but with a tenured spouse WITH A PENSION in the same city, relocating is unlikely. I've got my eye out, though.

    In terms of optimization: I'm wondering if you can point me to articles that lay out this argument (i.e. get 403b match, then Roth, then back to 403b if I have any money left)? I ask because the only other thing I've found online about this (on Investopedia), claims the opposite: "Generally, it can be optimal to max out your 403(b) contributions first, then contribute to your Roth IRA after that."

    I've literally just opened a Roth for the first time, so I'm trying to figure out how best to manage this. If you have sources to point me to, I'd be truly grateful.

      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
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      Slate Blue Lion Investing is easy, and you should look at all your accounts as one portfolio. I would suggest doing some reading at, which is investing based on the advice of John Bogle, who was the founder of Vanguard. It's very simple with something liek the Three Fund Portfolio, or even simpler using balanced or target date funds, but it does depend on what is available in the workplace plan.

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