Getting the Most out of Your 401(k): Maximize the Plan Match

It’s never too early (or late) to save more for your retirement.

Nov 24, 2014

Getting the Most out of Your 401(k): Maximize the Plan Match

Here is tip three of our seven-part-series to help participants get the most of their 401(k) plans.

We started out the series informing you the best way to start your retirement savings is to start saving. After you take that first step you need to keep your nest egg growing by saving more. Now let’s look into what else you can do.

Does your employer match your savings? If so, try your hardest to save enough to receive the full match being offered. Every dollar your employer contributes to your account is free money… like giving yourself a raise.

Employer Matching Rates

The most common matching formula is a 50% match on the first 6% of employee savings. Taking advantage of the full match is equivalent to a 50% instant return on your money! You can’t duplicate that return in any other investment option.

If you cannot afford to save enough to get the full match, save what you can and have a plan to get there.

Here is something to remember. Most employers apply their matching formula on a payroll by payroll basis. So, you may have decided to save as much as possible early in the year in order to get those dollars invested. Be careful with this strategy as you could leave matching dollars on the table if you reach your savings limit mid-year. To better understand, try a simple internet search of “401(k) match mistakes”.

Ready for the next tip? Here is tip number 4!