So small raises

[sadlebred]

In the interest of those that don't get big raises, tens of thousands in bonuses, and are of moderate income based on H&F standards.

What do you do with that lovely 1.5% or 2.5% raise that you get this year? Leave it as it is since you are spending more on groceries, increased restaurant prices (ya'll know I don't cook very well, and these are under $12 places anyway/fast casual/delis), spending a bit more for some other every day purchases (toiletries, cleaning stuff, TP, etc)? That's what I'm planning to do unless anyone has a better idea.

Assume that:

1. Costs for every day goods are increasing, and you have adjusted your budget upwards for it.

2. You contribute to but don't nearly max out either your 401K (do company match) or your ROTH since you have to pay the mortgage and eat, too. You put in as much as you can afford.

3. SINK. Single Income, no kids. No prospect on the horizon for a Mr. Sadlebred.

4. This is a standard raise you get every year within half a percent. There are other reasons you won't leave your company like amazing health insurance (see: major heart problem that could have you in major debt otherwise) and a pension. These raises won't change, and a "salary correction" aka raise if you ask for one won't happen unless pigs fly.

WWMMD?

[heygrey]

This is basically H and I, though obviously married.

Last fall I was noticing the small uptick from his standard raise. We increased our retirement savings by $100/month. Not huge, but will help in the long term and we never got used to the money.

This spring we increased our giving to our local food bank. We do feel strongly about supporting our community, but it also benefits us because H can donate pretax through work so we get the advantage at tax time.

[mainelyfoolish]

Small annual raises are the best my household gets, as DH and I are both government employees and unlikely to change jobs.

Inflation right now is brutal. It’s entirely reasonable to take that whole 2% raise and use it to afford life. With inflation much higher than your raise, you’re still effectively cutting back on purchases because your money won’t go as far as it used to.

Maxing out retirement isn’t necessary if you are saving what you think you will need for retirement. Especially with a pension and a moderate income, saving the ~$25k per year max between your 401(k) and Roth IRA would be significantly over saving for your future needs. My family contributes enough to get the employer match on retirement savings and some to a Roth IRA for me (I only work part time and took an extended work break for childrearing) and with consistent savings over many years plus pensions, we don’t need to be saving any more for retirement.

If you aren’t saving what you think you need for retirement but you have already stretched your budget as far as it will go, that’s ok too. You can’t get blood from a turnip. If there are times where you get an unexpected windfall (tax refund?) you can add to your savings with that.

[ohgillian]

Like mainelyfoolish, I'm government sector and what you're describing is like as good as it gets for me. If I get a 1% raise, I try really hard to always give my 401k a 1% raise, too.

[chilerellanos]

I don’t get much more than that in raises either, since I’m a nurse.

Last year I made double what I normally do, but that won’t ever happen again (prob. It was special contracts I signed due to staffing because hospitals had Covid money. Now we still have shitty staffing but no more Covid money so I’m still working the same hours but not the contract pay). I did way increase what I contributed to retirement last year.

But this year, idk, I won’t get my raise until October. If it’s in the budget to increase my retirement by 1%, I will. If I need that in my bank account, I won’t. I’m a single mom, and bills need paid.

[Cappy]

Hello from higher ed, the land of the 1.43% bonus. This is us. Normally insurance and parking increases eat the full raise amount. I have my retirement contribution set for a % vs. a dollar amount so it would automatically go up some based on the raise amount. So my $40 or whatever just goes to lifestyle/inflation.

My husband is in a non-profit with a similar salary situation but they do give a bonus equal to about 1% in January. We normally put that in his pretax 401k because his company contribution is a pathetic $300/year and we are so behind in saving on his end. He just got a legit raise (12%) and we can revisit retirement when we see what the after tax amount is but our childcare costs are astronomical now that Covid reduced care options. We are paying more than our mortgage each month for care.

[wildrice]

I've never had more than a 3% or so raise in my whole career. I recently switched jobs and got a bigger bump, but that too is the only time that has happened! In the past, I've always just absorbed the raise into my budget. As you mention, the cost of things goes up yearly and my raises have literally been called cost of living increases so I figured it didn't actually mean I had extra money.

Now, we are finally at a point where we have enough excess in our budget that we shouldn't really need those small raises to maintain our budget. I would like to increase retirement savings in general so I am thinking we'll put raises into retirement.

[Susie]

Oh look, it's the start of your eMTB fund!  

I kid.  MH is in government, so he gets these sorts of very small raises.  I am not systematic about what we do with it.  If circumstances are feeling tight at the time, I don't do anything with it besides consider it some relief.  If things are feeling looser in the moment, I'll change the $ amount of my monthly transfer to savings to increase it by the added amount, or previously (before he worked his way up to maxing) I'd have him increase his 457b contribution by that amount.

[ECB]

I work for the state. We got part 1 of a 2 part COLA/Merit increase that in the end will come to about a 9% increase. This is the first in YEARS. We've gotten a couple small COLAs, but not annually. So - this is pretty big and I appreciate it.

BUT to your point - with all the price increases going on, it's basically keeping us "where we were" before. I'm not looking to save that $$ right now.

[ssmjlm]

I would probably either look to beef up savings slightly and then increase retirement.

As a fed, my only increases are through promotion, which isn't on the horizon right now. So any COLAs goes toward retirement by 1% increase or I up our savings slightly.

[plutosmoon]

Higher Ed here too. I usually get a 2-3% raise each year in July, last December my college gave everyone a mid year inflation bump of 3%, this has never happened before and will likely never happen again. I spent my December raise on luxuries such as heat, food, and health insurance all of which were up significantly over last year. Anything extra is going into my downpayment fund at the moment so I can make a competitive offer once houses are actually available. My goal is to increase retirement percentage and general emergency savings, I'm fortunate to have a generous employer contribution, so I'm at 12% of salary going to retirement, but only 3% is my own money. The college does try to give us a raise that is slightly higher than inflation, so we may get a bigger raise this summer.

I found out my ex is leaving the country as soon as his other passport comes in (he holds dual citizenship) and planning to stop child support, I knew it was going to happen, just didn't know when. So my July raise will just go towards absorbing lost child support, since trying to enforce an international child support order seems like a costly prospect that won't be worth the $300/month I get. Maybe next year I can finally do the retirement bump.

[gottadobe]

I increase my TSP since I am so far behind in retirement savings.

[quesyrah]

So, I know that I just posted about my husband’s big raise. But that’s the first raise he’s ever gotten like that! Typically it’s 1.5% except for last year which was 2.5%

We always just increased his 401K. It wasn’t enough to impact our monthly budget or make a significant savings goal.

I will say though, even though it feels insignificant, those tiny increases do add up!

[gt7301b]

Honestly, those raises get eaten up by consumption. If you only got a 2% raise this year it is probably mostly going towards inflation.

[pumpkin]

May 5, 2022 11:22:22 GMT -5 gottadobe said:

I increase my TSP since I am so far behind in retirement savings.

This is me too.

[chpmnk1015]

Yea, I'm guessing I'll get 1 or 2 pct next year... none ty because I've only been here 6 months.. my old company I'd get thr same... and yes, I would basically just use it to keep up with the cost of living

[ellipses84]

I usually contribute more to retirement if possible, but that doesn’t even I fed the cost of living increases of the past few years so I think it’s reasonable to use it as part of your budget. Maybe save up for something you will need in the future like a new car or unexpected repairs.

[dochas]

That's us. Those healthcare heroes are never worth more than 1 or 2%! Since I don't know if we can afford to increase retirement contributions I put that amount aside in a savings account. If we don't have to tap it before year end I make an IRA contribution with it. (we qualify for tax deductible IRA contributions outside of husband's 403b)

[dochas]

plutosmoon, that is an incredibly shitty thing for your ex to do. I'm sorry.

[plutosmoon]

May 6, 2022 14:36:08 GMT -5 dochas said:

plutosmoon , that is an incredibly shitty thing for your ex to do. I'm sorry.

Yeah, he's a shitty person, but I everyday remind myself he's the one losing out on the incredible person that DD is. I've been broke for so long, I'm used to living on next to nothing, I'll be ok without his small contribution. He's mentally ill and untreated, maybe someday he'll get the help he needs. I may try to enforce it without a lawyer, just on principle, he's going to Canada, so he can't exactly disappear. I just don't know the legal system there for family law and don't want to spend a bunch of money to try and enforce something that isn't going to break my budget. That money goes right to savings most months. 

[niq]

msniq is a non-academic public university employee. When we were kid-free, half the time her raise went to general lifestyle inflation, and the other half it went to increasing retirement contributions.

A couple of times she has gotten 5% raises, I think once she got a big retention bump. We adjusted our budget when those happened.

[dochas]

May 6, 2022 16:05:45 GMT -5 plutosmoon said:

May 6, 2022 14:36:08 GMT -5 dochas said:

plutosmoon , that is an incredibly shitty thing for your ex to do. I'm sorry.

Yeah, he's a shitty person, but I everyday remind myself he's the one losing out on the incredible person that DD is. I've been broke for so long, I'm used to living on next to nothing, I'll be ok without his small contribution. He's mentally ill and untreated, maybe someday he'll get the help he needs. I may try to enforce it without a lawyer, just on principle, he's going to Canada, so he can't exactly disappear. I just don't know the legal system there for family law and don't want to spend a bunch of money to try and enforce something that isn't going to break my budget. That money goes right to savings most months. 

This was exactly my sister's situation with her 2 boys after her divorce. Abandoned financially and untreated mental illness, not the leaving the country. They are grown now. Strong, loving men who adore their mother and know what it means to be loving and strong. And doung really well financially. ❤️

[Mushe]

plutosmoon, I’m so sorry! This is right in my wheelhouse, if you want to talk through options. I’m here if you want to PM.

[Roc A Bee]

With my small raises 1-3%, I try to up my retirement savings. This year since everything is so expensive, I’ll prob just use the money to live. I know the preliminary budget had a 5% COLA, so we will see what we get.

[mlkgls]

My normal is the standard annual 3%, although I must say I got a little spoiled to the 4% of the last two years. In a typical year, I have my retirement contribution set to automatically increase 1%, however I have a large home expense soon and disabled this year’s adjustment.

[jg183]

I try to up our retirement in pretax vehicles so that it shelters it and makes it more invested if you haven't maxed those out yet. For me thats 403b, for H its 401k