According to a report from the Economic Policy Institute, the median family between the ages of 32 and 61 has just $5,000 saved in a retirement account, while almost half of workers have no retirement savings whatsoever.
Given the many expenses you’ll face as a senior, it pays to get your hands on as much retirement money as possible. So this year, when you think about your 401(k) strategies and goals, don’t make the same mistake a good 25% of workers are currently making: passing up an employer match.
It is important to at least match your employers’ contribution, if you can.
Unfortunately, 25% of workers don’t contribute enough to capitalize. The result? We’re leaving an astounding $24 billion in unclaimed matching dollars on the table each year. Ligh and low earners often do not contribute the most that they can to their 401Ks.
In fact I have a patient who is an accountant by profession, and 40 something years old, who has never contributed to his 401k,. Astonishing, especially since he knows better intellectually! After we discussed this and explored his feelings he is now contributing as much as he can to his 401K!
No matter your reason for passing up free money, it’s a major mistake, and one that might prove costlier than anticipated in the long run. The thing to remember about passing up a 401(k) match is that you’re not just losing out on the base amount you fail to collect; you’re also forgoing the opportunity to grow that money into a larger sum.
Given the many expenses you’ll face as a senior, it pays to get your hands on as much retirement money as possible. So this year, when you think about your 401(k) strategies and goals, don’t make the same mistake a good 25% of workers are currently making: passing up an employer match.
How much free money are we giving up?
An estimated 92% of companies that offer a 401(k) plan are willing to match employee contributions up to a certain amount. Unfortunately, 25% of workers don’t contribute enough to capitalize. The result? We’re leaving an astounding $24 billion in unclaimed matching dollars on the table each year. In fact, the average employee who doesn’t receive a full company match passes up $1,336 annually.
Age is a factor here, too. Employees under the age of 30 are about twice as likely to miss out on employer matching dollars than those over the age of 60.
No matter your reason for passing up free money, it’s a major mistake, and one that might prove costlier than anticipated in the long run. The thing to remember about passing up a 401(k) match is that you’re not just losing out on the base amount you fail to collect; you’re also forgoing the opportunity to grow that money into a larger sum.
No matter how old you are or how much you earn, here’s your takeaway from all of this: Do what it takes to collect that employer match. Otherwise you’re putting your retirement at risk.
