Definition
When your employer adds money to your 401K based on how much you contribute. It’s essentially free money for your retirement, so try to contribute enough to get the full match.
What to consider
- Always contribute enough to get the full match—it's like free money for your future.
- Understand your employer’s matching formula so you maximize the benefit.
- Keep track of any vesting rules to know when that matched money is truly yours.
Real world scenarios
- Carlos contributes just enough to his 401K to earn the full company match. He effectively doubles that portion of his savings without any extra out-of-pocket cost.
- Zoe receives an annual performance review and decides to boost her 401K contributions to capture a higher match. This move increases her retirement fund significantly over time.
- When the company raises its match percentage, Ethan recalculates his contributions to make the most of the new policy. The extra match strengthens his long-term retirement strategy.
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