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How to get Contributions amounts to increase

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Last Post by Steve Laufer 3 years ago

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Steve Laufer

(@slaufer)

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Joined: 5 years ago

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Topic starter July 2, 2023 3:50 pm

How do I get Pralana to increase the HSA, 401K and Company Matching amounts annually, similar to Social Security?

I was able to get my non-COLAed Pension to decrease using the inflation entry in the Pension section (is this the correct way to do it?), but this is not possible on the Contributions.

Thx

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Bill Hines, Advice-Only Flat-F...

(@hines202)

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July 6, 2023 7:33 am

@slaufer You could get away with using the other two employment income streams if you aren't already using them. But that only buys you two years worth. You could maybe jigger something with the additional income streams, or just consider it gravy and a buffer on your results (not a huge difference if you're closer to retirement).

Ultimately you will update your plan each January when a new version of PRC comes out and you have new start-of-year account balances and maybe tweaks to your desired path forward, so you would make the changes then as well.

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Steve Laufer

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Topic starter July 6, 2023 9:58 am

@hines202 Thank you for your thoughts. For now I leave it flat and look at it as a conservative approach, and yes, will do annual revisions.

Ideally I was hoping that it used inflation as a metric for COLA calculation and would allow me to adjust it - similar to health care etc.

When one looks at the numbers, you have employee and employer contributions for 401K, HSA, IRA, and the potential Roth component; I could also see an automatic employee contribution entry of 'same', 'inflation' or 'max', implying the employee contribution is constant, or increases with inflation or is the maximum employee.

The employer contribution could have similar options - 'same' or 'inflation', as there is no real max.

This would be beneficial to both long term planners and near retirees.

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Richard Eaton

(@ricke)

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July 7, 2023 6:34 pm

This sounds like something that should be on the feature request list or bug fix list. While it's possible someone wouldn't want to increase those things for inflation, it sounds much less likely than having them indexed for inflation. It never occurred to me to even check that the program was indexing these for inflation, I just assumed it would.

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Stuart Matthews

(@smatthews51)

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July 8, 2023 6:48 am

@slaufer These amounts are adjusted annually at the same rate as the associated income stream. For example, if you're using Employment Income Stream #1 and specify that the rate of increase is 3% annually, all of these amounts will be increased at 3% per year. If inflation is also 3% and you're looking at the tabular projections in terms of today's dollars, all of these amounts will appear to be constant, meaning that they are exactly keeping up with inflation. What's making you think these amounts aren't being adjusted annually?

Stuart

This post was modified 3 years ago by Stuart Matthews

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Stuart Matthews

(@smatthews51)

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July 8, 2023 6:51 am

@ricke These amounts are being adjusted annually at the same rate as the associated income stream; however, that may or may not be equal to the inflation rate.

Stuart

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Steve Laufer

(@slaufer)

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Topic starter July 8, 2023 9:14 am

@smatthews51 Stuart, thank you for the details. In my case, I keep the income stream flat (salary etc.) as there is no guaranteed COLA, thus I do not see them increasing.

As the 401K and HSA allowances are set by the government, I would have thought they would have their own COLA and would thus increase accordingly. I would then increase my contribution amount, and my company matching.

In my case, if I set up an income stream #2, and had $0 or $1 in income, could I still add the HSA and 401K contributions - or do you check to see that the income stream is >0 or at least covers the amounts contributed - if so, this may be a good work-around.

Thx.

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Stuart Matthews

(@smatthews51)

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July 8, 2023 3:10 pm

@slaufer Thanks for clarifying. You can indeed use income stream #2 to specify HSA and 401K contributions separately from the actual employment income and, thus, specify a different rate of increase. With that said, I don't follow you on those rates being set by the government; the government adjusts the max amounts but they don't force any annual increases. Am I missing something?

Stuart

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Steve Laufer

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Topic starter July 9, 2023 5:40 pm

@smatthews51 My comment on the government setting the allowances, implied the government set the COLA increase (or decrease) amount, for various programs, e.g., HSA, 401K and Social Security.

The government does not set how much each of us choose to contribute - we usually choose, the max, zero or at least enough to get the match (if applicable). In the absence of a unique inflation rate for each of these amounts, I will use a second employment setting.

Another item, if you are contributing to an HSA, using the family rate, when the first spouse passes the amount needs to drop from family to single (about in half).

Thx.

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