Preparing For Your Desirement Years

Doubling your 401(K) Contributions

We refer to the years when you are no longer working as the “Desirement Years” instead of retirement years. These years are typically after age 60 or 65 and are characterized by having time to spend on the desires of your heart. Your 401(k) plan should have the tools you need to calculate what these Desirement Years will cost and how these funds will be created so they are available when you want them.

Disseminating this knowledge about how your 401(k) plan works to multiply the contributions made by employees is an important building block to help them imagine how it may actually be possible to save now and create the brighter future they desire.

FirstWave Financial makes these tools available to help employees determine the amount of income they will need per year to experience their “Desirement Wish List” during their Desirement Years. In my book, The Brighter Future 401(k), I show that these tools can also be used to determine what needs to be saved each year, from now until when the Desirement Years start, considering social security and what has been saved already. With knowledge of the contribution multiplying effect, from avoided taxes and employer matching, the challenge of saving for retirement becomes a lot more manageable and even attainable.

I wonder how many employees of companies who make matching contributions into their 401(k) plan know they could immediately double their contribution and savings before it is even invested. Sound too good to be true? It’s not.

Part 4 of the book, titled “Creating Smart Savers,” describes in detail exactly how this occurs. Notice the title of this section is “Creating Smart Savers,” not Creating Smart Investors. Both are important and both are addressed in the book. The amount saved every year can be even more important to your brighter future than how it is invested, especially at the beginning of saving and especially when Uncle Sam and your employer combined can effectively double what you contribute from your paycheck.


Tax rate: 25{099636d13cf70efd8d812c6f6a5a855fb6f8f27f35bea282d2df1d5ae896e2c2}
Employee contribution: $100 (assumed this is less than 6{099636d13cf70efd8d812c6f6a5a855fb6f8f27f35bea282d2df1d5ae896e2c2} of pay)
Employer match: 50{099636d13cf70efd8d812c6f6a5a855fb6f8f27f35bea282d2df1d5ae896e2c2} of employee contribution up to 6{099636d13cf70efd8d812c6f6a5a855fb6f8f27f35bea282d2df1d5ae896e2c2} of pay = 50{099636d13cf70efd8d812c6f6a5a855fb6f8f27f35bea282d2df1d5ae896e2c2} x $100 = $50

If this employee took the $100 home, after taxes, he or she would only have $75 left to spend or save. By putting this money into their 401(k) plan, look what it immediately becomes:
Forgone spending turned into savings: $75
Income taxes avoided, now money saved: $25
Employer match: $50

Total now in the 401(k): $150

The $75 left after tax when the $100 is not contributed to the 401(k) plan is turned into $150 inside the 401(k) plan. The employee immediately doubled their savings without even putting it into any investment. This doubled amount can then grow and compound tax deferred for years to come.

Regular, robust employee education is a key ingredient to getting employees engaged, motivating them to save more on an incremental basis, and keeping them fully engaged in saving and investing. What we find is that when we teach the principles contained in my book, employees get interested and excited. They become ENGAGED. They might increase their savings rate, adjust investment allocations and make progress toward a brighter future.

Download a free digital copy of Rescuing Employees Retirement whitepaper at It contains important information about the tools we use to empower employees to take full responsibility for their retirement and more. Feel free to contact Robert DeVries to schedule your complimentary consultation to explore steps you can take to make these resources available in your 401(k).

Robert DeVries is a WealthCoach and Retirement Plan Specialist at FirstWave Financial. He recently earned his CRPS® designation and is now a Chartered Retirement Plans Specialist.