No, I’m not giving out free money but your employer might be! A new study from Alight Solutions tells us that 1 in 5 employees with access to a retirement plan are not saving enough to take full advantage of their employers matching contributions. That means 20% of employees are leaving free money from their employer on the table. If you are that one person in five, you are choosing to be paid less than your co-workers. Why would you choose to make less than the person working next to you?
On a positive note, the study also shows that 80% of employees are contributing at or above the threshold needed to receive the matching contributions. I would also venture to say that of this 80%, very few would notice much of a difference in their current standard of living if they chose not to save for retirement. They will, without a doubt, experience retirement differently than those not contributing to their retirement savings.
For those of you with access to a retirement plan through your employer, use it! For those of you without access to a retirement plan through your employer, you have options too. You could talk to your employer about setting up a retirement plan. Present your employer some of the many benefits of starting a plan. The business might save on taxes or encourage lower turnover among employees. Your boss may even be reminded of their own retirement and need ways to save. Many employers and business owners don’t want to add more to their to-do list but there are numerous ways to build a plan and keep it simple for everyone. If your employer is not able to implement a retirement plan, there are individual options to consider like Roth IRAs and Traditional IRAs that might work as a savings vehicle for you.
In the end, only you are responsible for your retirement. If you’re offered a matching contribution, never leave it on the table. Once it’s gone, it’s gone forever. Understand all of your options and take advantage of the ones that work best for you. If you can start early and don’t be afraid to ask for help whether you’re late to the game or just getting started.
Written by Alex Vassey, a CERTIFIED FINANCIAL PLANNER™ at Vassey Financial Planning & Investments. With systematic planning and proven strategies, Alex Vassey helps families prepare for all stages of life from college savings accounts, to funding a busy and vital retirement, to handling long term care insurance needs. You can reach Alex via email at Alex@vasseyfpi.com or at his office, located at 140 Bountyland Road, Seneca, SC 29672.