Get the Match - Taking Advantage of Contribution Matching
What if someone promised to give you $.50 on every $1 that you put into your investment account. What about $1 for every $1. Would you accept their offer or pass?
The answer is obvious
You accept! When it comes to managing money like a boss, you are not going to pass up 💰💸🤑FREE MONEY💰💸🤑. Unfortunately, some people do. While many employers offer retirement plans where employees are able to invest and earn, there are still employees who are not taking advantage of these opportunities. Amounts will vary, however, employers often will match a percentage of the dollars you contribute up to a certain max. No matter the amount, it is often in your best interest to contribute and take advantage of any free money that may be available to you.
Get Started
Better late than never. If your employer has a retirement plan and you qualify, you'll want to participate.
If there is a match, at the very least contribute up to the match. You may be thinking, "I can't afford to contribute", but the truth is, you cannot afford to pass up free money. Start small if you have to. Even if you cannot contribute as much as you would like, something is better than nothing. Maybe you can only contribute 1%; fine, start there. Then increase the percentage by one every four to six months until you reach the max for the match. Keep in mind, making pretax contributions also lowers your taxable income which is an additional benefit.
Your Homework
If you are not currently contributing:
- Find out if your employer offers a retirement plan.
- If they have one, find out if you qualify to participate.
- Gather information, find out if there is a match, what the match is, and what the limits are.
- Find out when your employer's contribution vests (that's when their contribution is yours to keep - is it immediately or after a number of years working for the company?) This is good information to have should you ever leave the company.
- Begin contributing as soon as possible.
- At a minimum, contribute up to the match if you can, if not, contribute what you can at first and then increase it at a later time.
If you are already contributing:
- Great! Keep contributing.
- If you're not contributing up to the match, increase your contribution.
- Find out when your employer's contribution vests.
Your employer doesn't offer a retirement plan or you do not qualify:
Retirement options will vary from company to company, position to position, and part-time and full-time status. If your employer doesn't offer a plan or you do not qualify, all is not lost. Do some research and consider contributing to a Roth IRA. There's no match, but it is still a great investment vehicle to consider. Learn more from one of my previous posts. Even if you're contributing to an employer-offered retirement account, you may still want to consider a Roth IRA.
They say nothing in life is free, but contribution matching is one of those rare opportunities where they're practically handing you money. Managing your money like a boss means you take advantage of financially beneficial opportunities.