17.5 million Individuals depart ‘free’ retirement plan cash on the desk, survey finds

Office retirement plans are top-of-the-line offers round.

Contributions to a 401(okay) plan are pre-tax, so, the extra you set in, the decrease your taxable revenue (and, subsequently, how a lot you pay in taxes). Additional, corporations typically supply an employer match, which is actually free cash towards your retirement financial savings targets.

But, 17% of staff with entry to an employer-sponsored plan do not presently contribute. And amongst those that do, 12%, or 17.5 million folks, depart firm matching funds on the desk, in response to a current survey by MagnifyMoney.

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Most individuals mentioned it was as a result of they could not afford to contribute extra to their plan, MagnifyMoney discovered. The private finance web site polled greater than 1,200 staff in August.

“When you do not contribute sufficient cash to get your employer match, you’re actually leaving free cash on the desk — cash that belongs to you and is a part of your compensation,” mentioned MagnifyMoney’s senior content material director Ismat Mangla.

Total, retirement account balances, which took a pointy nosedive in 2020 when the Covid outbreak brought on financial shock waves, are actually at new highs, in response to information from Constancy Investments, the nation’s largest supplier of 401(okay) financial savings plans.

To offer your retirement financial savings a lift, Jessica Macdonald, a vice chairman at Constancy, recommends opting into an auto-escalation characteristic, in case your employer affords it. This characteristic will routinely increase your financial savings fee by 1% or 2% annually.

And all the time contribute sufficient to get the total employer match, she mentioned. “That manner, you will not depart cash on the desk.”

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