If you’re like most people around the age of 30, you don’t think about retirement planning too often. You probably decided upon an amount to contribute to your employer sponsored retirement account, and those contributions have been deducted from your paychecks ever since. You’ve taken a responsible and effective step toward preparing for your retirement… But what if you’re missing out on free money that would actually help you build an even more secure future?
Most people don’t know this, but there are billions of dollars in free retirement funds going unclaimed each year. The source of this money is matching funds from employers, which are often “left on the table” by workers.
Let’s take a look at a fictional example (based on common scenarios) and you’ll see what we mean: Perhaps your employer offers matching contributions to your retirement fund, up to a limit of 3 percent of your annual salary. If you make $60,000 per year, this would be $1,800 of free money each year.
You set up your retirement fund contributions a while back, and maybe you’re contributing $1,000 each year. You also receive a $1,000 match from your employer… not bad. However, you’re leaving $800 on the table every year. Perhaps even more if you get pay raises periodically.
At your current rate of saving ($2,000 annually), you would amass $70,000 after 35 years. Of course that’s before adding the compound interest that accrues significantly, but for the sake of making our point we’re just talking about the principal saved.
If you saved an extra $800 per year, and claimed the rest of your employer match, that would be an additional $1,600 saved each year… And now, after 35 years, you’ve added an additional $56,000 to your savings (again, this is before compounding interest performs its magic).
That’s a significant amount of money to leave unclaimed, and as you can see, it makes a big difference in the long run. Are there ways to cut your budget by a small degree, so that you could at least reach your full employer match each year?
Take the time to investigate your company’s matching funds offerings. Call your human resources department to find out if you’re contributing the full match amount. If not, it only takes a few minutes to fill out the form to increase your contributions a bit. In just ten minutes or so, you could make an important decision that will greatly impact your future.
If you have any questions about matching funds or retirement in general, please give us a call. We can help you figure out how much you need to contribute in order to reach your savings goal, no matter how old you might currently be.