The last stats I heard about employee participation indicated that over 30% of employees in the US are not enrolled in their company’s retirement plan. So, if you are one of them, this article is for you.
I remember when I first started this site, I was trying to think of the most important (and simple) steps to financial success that I wanted the world to know. One of them was how easy it is for many of us to get an amazing return on our 401k or 403bs.
The reason it is possible for so many of us is because most employers have some sort of matching program with their 401ks or 403bs. For example, my wife’s employer offers a 100% matching of her contributions up to 4% of her salary. So if she puts in $100 each paycheck, they put in $100 each paycheck – not bad! But if she puts $0 in, they put in $0.
Many employers across the nation have similar programs – not all offer 100% matching, but most offer some kind of incentive to contribute.
It is free money – find a way to get it
If your employer has a matching program and you are not contributing, you are passing up free money. While that is enticing, I know what it feels like to just not have the money to be able to contribute – believe me, I remember that feeling well. What I did to remedy that situation, was use my next raise to my advantage. So why not just take your next raise and contribute that amount to my 401k. That way, your take-home pay doesn’t change, but you start funding your retirement account without any pain!
You can get a good return in your 401k – even in a recession!
Over the last year or so my 401k has gone down in value – about 40% to be honest. And my wife’s 403b took a big hit as well. But if I look at how much I actually contributed into the plan, I am still very much in the positive!
For example, say I contributed $100, and my company matched it – now I have $200 in my account. If it goes down 40% (like it has) I still have $120 left – which is still a 20% return on my investment – even in this market! Not too bad at all…
So the point is if your employer has a matching program of any kind, it would be VERY wise to get involved!