One easy way to shape up your savings this year is to take advantage of the Social Security “tax holiday.” A temporary two percentage point cut in the Social Security tax means you may see extra money in your paycheck this year.*


Why not save that 2% for your retirement paycheck? Sock it away in your plan account and see how it may pump up your savings for the future.

If you save an additional 2% of a $40,000 salary Total savings after 5 years Total savings after 15 years Total savings after 25 years
Only $66.66/mo.            $4,800 $21,100 $54,000

This illustration assumes contributions at the end of each month and a 7% annual investment return, compounded monthly, which is reinvested. Amounts are rounded to the nearest $100. It is not meant to represent any specific investment.


Remember, if you make pretax contributions, your taxable income is reduced, which means those extra dollars may not have that big of an impact on your paycheck.

Check out the Contribution calculator to see how your take-home pay may be affected by a pretax contribution increase. Also try experimenting with the Time Value calculator to see the impact that a higher contribution might have on your future account balance. Enter different amounts and returns to personalize it for your situation.


If your plan makes matching contributions, that’s an extra power boost.


To increase your contribution, log on, click on your plan name and then select “Contribution Amount” from the left column.


*The tax cut applies to earnings up to $106,800.

Internal Revenue Service,, “Payroll tax cut to boost take-home pay for most workers,” December 17, 2010.

This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.