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How We Help - Power Percentage™ and Financial Stability

Your Money Line's dashboard for employees is filled with powerful financial tools to help stabilize their financial futures. One of those tools is our Power Percentage™ calculator. It measures what you’re doing now to improve your financial life, and how close you are to creating financial independence. Power Percentage™ also happens to sniff-out lifestyle creep, evaluate your mortgage strategy, and recognizes debt elimination.

Read on below to see how the Power Percentage™ calculator can help out our sample employee, Maurice, who has reached out to our Financial Guide team!

Hi Team, 

I’m in my late 30s and want to make sure I’m on track for retirement. I’m saving and investing but want to understand better how I’m doing. What am I supposed to have saved up so far?  Am I on track for retirement? What can I do to improve my finances?


Hello Maurice! 

Those are all great questions! With retirement being such a vast topic and getting one opportunity to get it right, no wonder it can be a daunting task. No pressure! Undoubtedly, investing for our retirement will be one of the most significant decisions we make in our financial lives, and the only real test we get is when we finally retire. 

There are several factors to consider when planning for our retirement: our expenses, current retirement balances, time until retirement, existing debt, our contributions, and our desired retirement lifestyle, among other factors. What will our expenses be? What do we want our retirement to look like? How much time do we have until retirement? How much do we have for retirement? How much are we contributing to our retirement? This is not an exhaustive list, and determining our retirement goal number is no easy task. Still, we can figure it out with some additional work.  

Generally speaking, we recommend contributing between 12 - 14% of your income to retirement. Ideally, that contribution would be closer to 15 - 20% of your income. It depends on when you started making your contributions. Yup, it depends on your expenses and what you want to do during your retirement. 

Although having a benchmark amount of money for retirement by a certain age can give you a general idea of where you are on your road to retirement, it doesn’t give you your whole financial picture. You can be saving and investing while continuing to take on more debt and increasing your expenses. If you retire with a mortgage or other significant costs and have high spending habits, you will go through your retirement funds much quicker than if you had no mortgage or large expenses to worry about and a monthly budget to keep track of your spending.

If not, "have X times your salary saved by age YY," how do I know I’m progressing and on track for retirement? Great question! Let me introduce you to a concept called Power Percentage™.  Power Percentage™ considers several factors in your financial life, such as savings and debt reduction, and encourages good financial behavior.  If you can consistently increase your Power Percentage each year before retirement, you'll be setting yourself up for long-term success. The Power Percentage helps you understand how well you are doing financially now, and this allows you to practice habits that will make retirement that much easier. 

To figure out what your Power Percentage™ is, add up the amounts for the following items: retirement plan contributions, employer match, college fund deposits, non-qualified investment contributions, HSA contributions (if you’re not planning to use them soon), principal mortgage payment only, medical debt payments, credit card payments (that you are not currently using), student loan payments (don’t include interest-only payments) and other debt payments (not car payments). 

Your next step is to take the total you just added and divide that amount by your gross monthly income; that’s the amount before taxes. If you added all these amounts together, your total is $1,500, and your gross monthly income is $5,000, then your Power Percentage™ would be 30% (1500/5000=.30). What does this mean? 

The Power Percentage™ scale is as follows: 

  • 10% or below - You’re in trouble and too dependent on your income
  • 11-20% - You’re doing ok
  • 21-34% - You’re living a healthy financial lifestyle
  • 35% +   - You’re mastering your financial life.

Our example shows that this person is living a healthy financial lifestyle. Power Percentage™ gives us a better understanding of how we are currently doing financially. It considers the amounts we are putting towards getting out of debt and savings every month, not just the money we have saved. 

If you have any questions regarding what I've shared with you or would like help calculating your Power Percentage, please contact me. I’d be happy to work through these calculations with you. 

Maybe your employees are in a similar situation as Maurice; they’ve been saving and investing and just want to know they're going in the right direction. If you want your employees to retire on-time, then reach out to our team to request a demo of our services