"Your Employer Wants to Give You Free Money - Are You Taking It?"

What if I told you there was a guaranteed way to double your money? Sound too good to be true? In this case, it’s not. There is a good chance your employer offers to match dollar for dollar what you put into your retirement account. If you aren’t already taking advantage of this benefit, you need to look into it ASAP.

Retirement Matching

Here’s how the process works. The average employer in the US matches up to 4.5% of your salary when you contribute to your 401(k), TSP, 403(b), etc. So, for example, if you make $60,000 per year and you elect to put 4.5% in your 401k, each month you would have $225 deducted from your paycheck and your employer would match that for a total of $450 being deposited each month. With your contribution and your employer’s match, your 401k would have $5,400 put into it each year.

Getting a Raise

Since this is percentage-based, if you get a raise, so does your contribution and match. Let’s say next year you received a 3% raise, bringing your salary to $61,800. If you still keep that same 4.5% deduction, you will now be putting in $231.75, and your employer will match that as well. Now you have a total of $5,562 being deposited.

In the Future

Here’s where things get crazy. Let’s go back to our $60,000 per year salary. If you keep putting in the 4.5% ($225 per month) and your employer keeps matching that same amount, even if you never get a raise, in 30 years you will have over $1,000,000 in your 401k account! (This is assuming the 50-year S&P 500 average return of 10%)

I Don’t Have Any Extra Money

One of the common pushbacks about saving for retirement or being able to max out your employer’s match is “I just don’t have any extra money”. Here are a couple of ideas if this is you:

1. Are you tracking your expenses and sticking to a budget?
2. What can you cut out of your expenses? Subscriptions? Dinners out?
3. Is there a side hustle you could start or something you could do to increase your income?
4. Even just an additional $50 makes a big difference. Remember, with the match, that $50 instantly turns into $100!

Start today

The longer you wait to start, the lower your future balance will be. If you’ve been contributing already, but not maxing out, see if you can bump up your contributions. Every little bit helps! Contact your HR department and ensure you are enrolled to double your money! Your future self will thank you.