Your Goal This Year: Save $8.25 Per Hour

January 14, 2011

$8.25 per hour…

That’s the number I get when I divide $16,500 (the 2011 maximum allowable employee 401(K) contribution) by 2000 hours (40-hour work week, 50 weeks per year).

It seems like a lot. Granted, it does not include the tax savings on contribution. The actual dollar amount would be lower after taxes. Still, the amount is pretty high. That’s why this information should be provided to high school and college students. They need to see this information when deciding what career path to take.

These numbers also do not include the company match, which I think you should look at as icing on the cake and shouldn’t be considered in figuring your contributions.

Next, I’ll look at how much the maximum contribution could grow to over a career. Interesting stuff.

5 responses to Your Goal This Year: Save $8.25 Per Hour

  1. As it doesn’t sound like a lot off the bat, it definitely is a difficult thing to do. I’ll try to make that a goal next year, when I anticipate my financial situation being better than it is.

  2. Wow, crazy to think of it that way.

  3. Last year I maxed out my 403b, 457 and IRA for a total of $38,000. My teaching contract is for 190 days, so 190 x 10 hours per day = 1,900 hours worked per year. Drum roll…$38,000/1,900 = $20 per hour…NOT BAD! My wife did the same and we both plan on doing it all over again in 2011.

  4. Isn’t that still below minimum wage? That’s not quite a realistic number for many people.

  5. There’s only one problem here……what will the tax rate be in the future? It’s not looking good right now. Is it better to get taxed 30% on current earnings or 70% on future earnings? Although I am a faithful 401(k) contributor, I will never feel “financially secure” with an evergrowing greedy government. I’m glad to have found your blog. I see that we share a common interest.