Work overtime if possible, and is it worth it to max 401k

As I was examining my most recent paycheck, I noticed a peculiar thing. I currently have 10% of my pay taken out pre-tax for my 401k at work. I am lucky enough to get a dollar for dollar match up to 4% from my employer, for which I am most gracious for. :-)

The difference of this paycheck and my previous ones had an 8 hours of overtime. While that may not seem like much, I also noticed that a portion of the overtime was taken out of my pay for the 401k. The surprising thing was when I glanced at the employer match, which also went up by the same 10% that my own contribution went up. After all, I worked an additional 10% hours (8 hrs / 80 hrs = 10%).

I did a quick calculation to see how many paychecks it would take to max out my 401k using overtime to hit the maximum allowed like I was talking about in this article, instead of trying to increase my 401k withholdings. I came up with the number 26.65 paychecks, which means that I could almost literally increase my 401k to the max by working an extra 10% every week on average since I already get paid 26 times a year.

So if they offered the overtime for an entire year would you accept it, if for no other reason than you could hit the 401k maximum withholdings (not to mention a decent amount of after tax pay)?

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4 Responses to Work overtime if possible, and is it worth it to max 401k

  1. Thoughts on raising your 401K contribution by 1% a month until it hurts and maxing it out?

    • Would adding the HSA to our retirement contributions count?
      We did add that, and kept my 401k at 10%. However, the HSA dropped my paycheck by about 4.4% to fund it completely (after employer contribution).
      Effectively that’s another $6,250/yr for this year being put away for our retirement years. The employer may drop the extra $500 funding next year for the HSA, but we shall see.

      PS: I had responded previously, but it didn’t look like it was a response to your post. Thanks for stopping by Sam!

    • Well Sam, I’ve bumped it up again to 11% since they announced salary increases (small but very appreciated). So now saving about 15.4% of my paycheck via HSA and 401k. Add to that bumping up wife’s IRA and we’re up to 15.8% toward retirement timeframe.

    • Here’s another update: I just bumped it up to 12%, not counting the 4.4% for the HSA!

      Ouch, ouch, ouch!
      Especially since I did only get a 1.7% bump in pay at the beginning of this year.

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