The other day I was at happy hour with a group of coworkers and the topic of 401k savings came up. One of my coworkers passively said she didn’t really understand anything about the plan but that she was contributing a few percent and hoped that it would take care of itself.
I get it, for a lot of people a 401k is an intimidating thing. It just sounds so… awful. The last thing I want to do after finishing college is think about how many decades I need to work before I can retire, and I definitely am not trying to spend my free time looking at these boring papers the hiring manager gave me on my first day. I just want my paycheck so I can ball out like T-Pain!
But for a lot of employees, your 401k is a way for you to get free money from your employer, and it could literally amount to thousands of dollars per year. This comes in the form of your employer matching your contributions to your 401k.
What does that even mean? Surely they’re not going to just put a bunch of money into my retirement account, right?
Wrong. And don’t call me Shirley.
Let’s say your employer matches your contributions up to 5%. This means if you contribute 5% of your own money to the plan, your employer will contribute another 5%. If you were not contributing to the plan before or if you were contributing less than the full match amount, there is money sitting out on the table waiting for you to take it! If you could give yourself a raise today wouldn’t you do it? It’s as simple as reaching out and taking it, it’s free money!
In fact, meeting your full employer match is one of the best investments you can make today. Where else can you make a guaranteed, immediate 100% return on your money?
Your homework assignment this week is to dig up those 401k papers you received at hiring and find out what your employer match is. If you’re not receiving the full match, bump up your contributions to meet the full match. Boom, you just made yourself richer. Thank me later.
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