It’s challenging to save for retirement, but it’s worthwhile. Few employees have access to pensions and Social Security while only replacing roughly 40% of your salary. Hence, they are likely to rely on your savings for most of your retirement income. While starting early and regularly investing is the best method to save for retirement, one trick can rapidly double your savings with no effort: earning matching 401(k) contributions. What Do You Mean By Matching Contributions? You may be eligible for matching contributions if you have access to a 401(k) through your employer. Your employer will match every dollar you put into your account (up to a set proportion of your salary). This perk isn’t available in every 401(k), but if yours does, taking full use of it might considerably boost your contributions with little work on your part. According to data from the US Bureau of Labor Statistics, the average match in 401(k) plans that allow matching contributions is 3.5% of a worker’s salary. Furthermore, the median annual wage of people in the United States is roughly $52,000. If you make $52,000 per year and receive a 3.5% match, your employer will pay up to $1,820 to your 401(k) each year. While this may not seem much, it may add more than you think. How Much Can An Employer Match Pay You? Matching contributions are like free money, and they can instantly increase your retirement savings. They can mount up to tens of thousands of dollars over time, if not hundreds of thousands. Let’s say you’re getting $1,820 in matching contributions per year. Assume you’re generating an average annual return of 8% on your investments (slightly lower than the market’s long-term average). Keep in mind that this takes into account the employer match. You’ll have at least twice as much saved once you factor in your personal contributions. Additionally, because your wages are expected to rise as you get older, your employer match may increase. Because your employer’s match is usually a proportion of your pay, the higher your earnings, the more you’ll get from them. Increasing your retirement savings potential Getting started on a retirement savings plan is often the most challenging aspect. Start small if you’re having trouble finding money to save. If you can only afford to pay a few dollars per week to your 401(k), that’s where you should start. You’ll be investing double that amount due to the company match, which is significantly better than saving nothing. You can gradually increase your savings rate and eventually contribute enough to receive the full employer match, ensuring that you get all your entitled free money.
Contact Information:
Email: [email protected]
Phone: 4022508277
Bio:
Carl Wyllie is an advisor focused in areas of Medicare, retirement, estate planning, and crisis planning. Carl works with individuals of all ages in planning for their retirement. He is uniquely effective in building working relationships between their families and elder care law attorneys to assist them in avoiding a healthcare crisis. Carl is particularly sensitive to helping provide the means for his clients to maintain their independence and dignity when a change in their health occurs due to the natural aging process.
