Key Points
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A 401(k) match can help you grow your savings much more quickly than you could on your own.
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Claiming a partial match is better than skipping your match entirely.
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Check with your employer if you’re not sure how it calculates 401(k) matches.
A 401(k) is a must-have for most retirement savers. It makes it easy to defer money from your paychecks, and it offers a variety of funds you can choose from. You don’t even have to know much about investing to use one.
But there are also several ways you can inadvertently cost yourself money with a 401(k) if you’re not careful. One in particular could leave you with tens of thousands of dollars less by the time you’re ready to retire.
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Not all employers offer 401(k) matches, but if yours does, you should make claiming this a priority each year. It’s essentially a bonus, but you only get it if you set aside money for your own retirement. If you skip it, you won’t get another shot to earn that money.
Your match may only be worth a few thousand dollars today, but it can grow to tens of thousands by the time you’re ready to retire. For example, a $1,500 match claimed today could be worth over $26,000 in 30 years if you earn a 10% average annual return. If you consistently claimed a $1,500 match over 30 years, you’d have nearly $247,000 in employer-matched funds. This doesn’t count your personal contributions.
If claiming your full 401(k) match isn’t an option, save as much as you’re able to today. Check with your employer if you’re not sure how its 401(k) matching formula works. Then figure out how much you’d have to contribute from each paycheck to claim the entire match by the end of 2026. Get as close to this number as you can, and then start saving right away in 2027 to ensure you don’t leave any employer-matched funds on the table next year.
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