1Your paycheck increase
Not sure of your numbers? The paycheck calculator shows both.
Find my net pay increase Opens the Employee Paycheck Calculator in a new tab. Copy your monthly net pay increase and pre-tax amount back here.2Invest part of it
3Retirement and Social Security
Up to 85% of Social Security can be taxed, depending on your other retirement income. Withdrawals from a Roth don’t count toward that, which is one more reason Roth comes out ahead.
Your account vs. the Social Security you give up
The line shows your investment account. In retirement, it pays you exactly what Social Security would have after tax, plus any tax on your own withdrawals. Everything is in today’s dollars.
Is Social Security a good investment?
Set aside the plan for a moment. Here’s what a lifetime of Social Security retirement tax on your salary buys, compared with investing the same dollars. We count only the 10.6% of pay (yours plus your employer’s) that funds retirement and survivor benefits. The other 1.8% buys disability insurance.
Annual retirement income, after tax
From a full career of retirement tax at your salary
What Social Security replaces, by earnings
SSA estimates for workers retiring at full retirement age
| Career earnings | Scheduled | After 2032 cut |
|---|---|---|
| $18,006 Very low | 75.5% | 58.9% |
| $32,412 Low | 55.0% | 42.9% |
| $72,026 Medium | 41.0% | 32.0% |
| $115,241 High | 33.7% | 26.3% |
| $177,894 Steady maximum | 26.9% | 21.0% |
The more you earn, the smaller the share Social Security gives back.
Why we point you to a Roth first
Your raise is already after-tax money, which is exactly what a Roth takes. It grows and comes out tax-free, it doesn’t make your Social Security more taxable, and you can take your Roth IRA contributions back out anytime. A Roth IRA has annual limits and income limits; a Roth 401(k) works if your employer’s plan offers it. A regular investment account has no limits and full flexibility, with modest capital gains tax.
What Social Security still does well
It pays for life, rises with inflation, and includes disability and survivor protection that a 401(k) doesn’t. The plan doesn’t take that away. It trims your future benefit slightly, and investing part of the raise is how you come out ahead.
Covered by a public pension?
Pensions generally count your gross pay before Section 125 pre-tax deductions, so the plan typically doesn’t reduce your pension benefit. Rules vary by plan, so confirm with your state or local retirement system.