How much of $24 billion dollars have you missed out on? Are you one of the many participants who is not taking full advantage of your 401(k) plan? On average, one out of every four participants loses about $1,336 (per Financial Engines, 2015) of FREE money from their employer every year. How does this happen? They lose out by not participating in their 401(k) plan, or not participating to the full employer match level. Let me explain.
For starters, you lose out on free money now (via the employer match), and all future growth of that money, by not taking full advantage of your employer’s matching opportunity via your 401(k) plan. The average employer generally matches up to about 6% of your salary. You should at least be contributing a percentage equal to the match offered by your employer. Much worse, those who do not participate at all in their company’s 401(k) plan are missing out on even more free money. Many workers erroneously believe they cannot afford to participate. The reality is, you can’t afford not to participate. Ask your financial planner to help you calculate the effect on your paycheck for participating.
Let’s take the average amount of $1,336 left on the table by many participants. Miss this amount annually, with an average growth rate of 5% over 20 years, and you are giving up on about an extra $48,000 (setting aside inflation). That’s a lot of money you could have just for participating in your 401(k) plan at full match during your career. In addition to lowering your annual taxable income by saving for retirement, you are giving up valuable future spending power.
If you are not sure what the match percentage is and how it works, grab your plan document and give me a call. As an independent Certified Financial Planner™, I can help you. Contact me and we can review your plan document to make sure you are maximizing your benefit in the best possible way and getting your share of the estimated $24 BILLION up for grabs! #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #401k #plan #CFPPro #retirement