I just submitted paperwork to increase my 401(k) contribution by 1% next year (effective 1/2/08). This will bring us to a 4% total contribution to my 401(k) plan. This percentage is low because our first priority is to contribute the max to our Roth IRA’s each year ($5,000 each in 2008).
Based on my current income, a 4% contribution represents $2,646 annually. However, my annual review is also in January, and I would guess that my raise will be ~5% this year. If that assumption is true, the total 2008 contribution will be $2,778. In addition to my 401(k) contribution, I also receive company profit sharing into my 401(k) in September, which last year was $3,005.63.
Our plan is to increase my 401(k) contribution 1% each year until we reach the maximum contribution. By timing this increase with my annual raise, we don’t even feel the effects of the extra contribution money missing from my paychecks.