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Dear Dave,

Do employer contributions count toward the 15 percent you recommend putting into retirement?

Brian


Dear Brian,

Employer contributions do not count toward the 15 percent I recommend setting aside for retirement. It’s nice if you work for a company that offers perks like that, but I want you putting 15 percent of your money into retirement.

Baby Step 4 of my plan says to put 15 percent of your income into retirement accounts. The first thing you should put money into is a matching retirement account. If you’ve got a 401(k), a Roth 401(k) or a 403(b) and your employer offers a match, you should do that up to the match before anything else.

Let’s say your employer will match 3 percent. Since the goal is 15 percent, you’ve still got some work to do. You’ve got 3 percent of your own money already tied up for retirement, so then you could look at a Roth IRA. If the Roth plus what you invested previously to get the match doesn’t equal 15 percent, you could then look at a 403(b) or go back to your 401(k) to hit the 15 percent mark.

Whatever your company matches, whatever its pension may be or even military retirement does not enter into the equation. I want your money in your name. If your company goes broke and you have a company pension, you get nothing. But if you have a 401(k) and your company dies, it’s in your name and you don’t lose it. You put it there, you own it. And that includes the match.

Are you getting the picture, Brian? I want you to control your destiny!

Dave


Teaching teens about giving

Dear Dave,

What are some good ways to teach a 13-year-old kid about giving versus getting during the holiday season?

Phillip


Dear Phillip,

One of the best things you can do is simply talk about it – a lot. Kids are bombarded with messages about how important they are, and how they should always have what they want. It’s OK to have some stuff, but advertising and other marketing messages in today’s culture can make them think it’s all about them. It can lead kids to believe the axis of the world runs through the tops of their little heads.

Think about this. In 1971, the average person saw 564 advertising impressions a day. Now, that number is about 4,000. The purpose of advertising is to disturb and influence you to the point that you’ll buy something. Advertisers want you to believe that you’re not complete without their product, or that you’ll be a happier, cooler, better person with their product. And in most cases, advertising and marketing people are more aggressive in their teaching than parents are in theirs.

My suggestion is to find some giving exercises in which you can all participate. You could adopt a single mom at your church. Make it a family outing, and go buy groceries, gifts for her kids or even a Christmas tree. Make sure your kids are involved physically, mentally and emotionally in the entire giving process. Let them experience the grateful, and sometimes ungrateful, responses that go along with giving. And make sure you do some things that don’t involve money. You could take the entire family to help cook and serve dinner at a homeless shelter.

One of the best things we ever did as parents with our teenagers was to send them on mission trips. It truly changed their lives. When you see real poverty close up, when you live and walk and sleep in it day after day – I’m talking about death-and-disease poverty, not the American version – it changes your heart. And when you’re 13, it will change your life forever.

Dave

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