Percentage of pay or fixed dollar contributions
It’s your choice.
As a City of Philadelphia Deferred Contribution Plan participant, you’re in charge. You decide how you want to save for your retirement readiness through the Plan. One of the choices you have is how to contribute.
Benefits of the percentage of pay option
- Every time you get a raise, so does your contribution amount
- You potentially increase the money you have available at retirement
- Your account could grow faster, potentially allowing you to retire sooner
- There’s no worry about forgetting to increase your contribution regularly
Benefits of the fixed dollar option
- You control the specific amount you defer each payday
- You decide when adjustments should be made
Let's compare the options
| Assumptions |
|
Percentage of pay option |
Fixed dollar* option |
Difference |
| Starting salary |
$30,000 |
Total contributions |
$117,995 |
$82,000 |
$35,995 |
| Annual raise |
3% |
Total investment earnings* |
$259,153 |
$248,095 |
$11,058 |
| Current age |
25 |
Account balance at age 65 |
$377,148 |
$330,095 |
$47,053 |
*This assumes no increases of contribution amount and an annual rate of return on investments of 6%. This chart is a hypothetical example that’s offered to help explain a concept, if taxes and fees were considered, the amounts would be less.
Your contributions and any earnings are continually reinvested. This process, called compounding, uses time to help your money make money for you. While compounding cannot guarantee that you will have enough money through retirement, it can potentially be a powerful engine for money growth, especially through a long-term savings program such as the City of Philadelphia Deferred Compensation Plan.
Benefits of regularly increasing your contribution amount
Simply keeping the contribution amount the same your entire career might not get you close enough to your goal at retirement, and while the percentage of pay option can help you save more, it still might not be enough.
That’s why regularly increasing your contribution amount or percentage — even by a little bit each time — is important.
The Plan offers you tools to help you decide how much to start contributing now.
Our Paycheck Impact Calculator can help you determine how much you can afford to contribute to your retirement account.
My Interactive Retirement PlannerSM uses the information you provide to help build a picture of future success. You can work various scenarios to help you decide how much to contribute each payday. To help you track your progress, log in to your account to use the Planner.
Log in to your account and select “Change Contributions.”