Pete the Planner: Looking for a silver lining? Check your ‘power percentage’

Peter DunnWe all have traditions. Some of mine are weird. I freeze Reese’s Peanut Butter Eggs before I eat them, I put Cheetos inside my peanut butter and jelly sandwiches, and I spend the late afternoon of Dec. 31 combing through the previous year’s financial wins and losses.

Dec. 31 isn’t going to be fun this year.

Typically, when I fire up my statements and spreadsheets, a practice at which I excel, I’m giddy to see how my efforts led to measurable gains in my assets and, in turn, my net worth. For over 10 years, I’ve enjoyed watching my net worth go up every single year. And while I’d love to claim my success as my own, I’ve simply been holding on as the bull market has pulled me along and dragged me toward seemingly perpetual gains.

Unless the last four weeks of 2022 take a sudden and fortuitous turn, the decade-long tradition of presenting myself to my wife as some sort of investing genius as the clock ticks toward midnight is going to come to a very uncomfortable end. As of the penning of this column, the S&P 500 is down roughly 15%, and my two largest holdings have me questioning my entire resume. Sure, the market was down a tad in 2018, but my particular investments were not.

The last time I felt remotely like I’m gonna feel this year was 2008. But life was different then. I had hair then. And now I have children.

Alas, net worth rises for reasons other than just investment gains. So, I will naturally turn my attention to what I actively did to improve my finances in 2022. Because the reality is, there’s only so much I can control. If you find yourself in a similar situation this year, feel free to borrow the litany of questions I always ask myself at year end. In other words, these are the things you can actually control.

Did you max-out your retirement plan contributions? If not, why not? Investing a healthy portion of your income is a good idea in great market years, and it’s an even better idea in bad market years. And don’t forget about all the ways you can store money away in a tax-sensitive way. This includes employer-sponsored retirement plans such as a 401(k) or 403(b) and individual retirement accounts such as traditional IRAs and Roth IRAs. Be sure to account for your spouse’s contribution opportunities, too.

Did you make other contributions that serve both your financial goals and provide you further tax advantage? I’m clearly talking about 529 college savings contributions and health savings account contributions. These are the easiest actions to omit. It’s not easy to fully fund an HSA, and it’s not easy to fully fund a 529 up to the Indiana tax credit amount, but it’s so vitally important to do both.

Did you make substantial progress on debt pay-down, specifically in regard to your mortgage payment? Freeing up cash flow at the right time by eliminating my mortgage payment at the right time is an important aspect of my financial-planning strategy. My annual financial review allows me to measure my progress toward that plan.

Did you personally impact your net worth via investment deposits and debt reduction by a total of 35% of your gross income? This particular question continues to be the truest measure of whether I held up my end of the bargain. This metric is called power percentage. Add up this year’s retirement plan deposits, your employer’s retirement plan deposits on your behalf (this year), this year’s savings and investment deposits, this year’s HSA and college savings deposits, and the amount of debt principle you’ve paid down this year. Then divide that by this year’s pretax income.

If your power percentage is below 10%, that’s bad. If it’s 11% to 20%, that’s OK. If it’s 21% to 34%, that’s good. If your power percentage is above 35%, you’ve had a GREAT year.

The market might have gotten the best of me this year, but frankly I don’t care because my power percentage is where I want it to be, and the market will eventually be fine. That’s also what’s changed since 2008. While the market ended up being fine (the beginning of this bull run), my power percentage was not fine in 2008. Which means I didn’t properly take advantage of the opportunity to “buy low.”

If you’re disturbed by market returns this year, take solace in your power percentage—if you can.•


Dunn is CEO of Your Money Line powered by Pete the Planner, an employee-benefit organization focused on solving employees’ financial challenges. Email your financial questions to

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