Retirement Planning: Don’t Miss Out on This Free Money Opportunity — Even if It Doesn’t Seem Worth It

man setting up automatic conributions

Social Security provides a foundation of retirement protection for nearly all Americans, but you should never depend on Social Security as your only source of income after you retire. In fact, Social Security benefits only replace around 40% of a worker’s past earnings, and the average retirement benefit was about $1,789 per month as of June 2023, according to the Social Security Administration. Luckily, there are several retirement planning options available.

Anyone with an earned income can open and manage their own IRA account. Another option is an employer-sponsored 401(K) plan. According to The Motley Fool, some 401(k) plans come with high fees and limited investment choices, but if your employer matches your contributions, then you shouldn’t miss out on this free money opportunity.

If your employer matches 100% of your contributions up to $5,000, you can get a free $5,000 from your employer if you contribute the same amount into your 401(k) retirement account. Also, you don’t just benefit from the principal contributions. You can invest that money and try to grow it into a larger sum.

For example, The Motley Fool stated that if your company matches your $5,000 contribution at the age of 35 and you don’t retire for another 30 years, you can invest your 401(k) funds so it generates an average annual 8% return to grow that $5,000 into a little over $50,000. This could potentially pay your retirement expenses for an entire year.

Are You Retirement Ready?

But whether or not you get this free money also depends on how long you’ve worked there. Employer contributions to your retirement account come with a vesting schedule, reported CNBC Make It. If you leave the firm before working a certain number of years, you may not be able to take some or all of the company matches with you.

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