Your 5% Retirement Match Might Be Worth $1,000,000…

How often do you imagine a no strings attached friend with benefits? Sounds great, huh!

Well, not everyone finds themselves in that perfect situation..but many of us find ourselves in a ‘work damn hard for a living’ situation. So, let’s look at some voluptuous benefits that just might be dangling right in front of our face.

PLEASE double check and make sure you’re taking advantage of your workplace benefits (401k match, HSA, insurance, etc.).

Specifically, if you have the opportunity for an employer 401k/retirement match, then make sure you’re taking advantage of this free money. Here is how your 5% company match might really be worth $1,000,000…

Yes, contributing 5% towards retirement is a long journey. If your employer doesn’t offer 5%, then at least contribute enough to receive any match they may provide. If you don’t receive a match, then try your best to save more than 5% and effectively give yourself a match. The table below breaks down your contributions over the course of your career, which assumes the match is 1 for 1 up to a total retirement contribution of 10% annually:

        Salary         Your 5%               Contribution   5% Company           Match    Total Yearly       Investment
Year 1  $       50,000  $           2,500  $        2,500  $      5,000
Year 10  $       59,755  $           2,988  $        2,988  $      5,975
Year 20  $       72,841  $           3,642  $        3,642  $      7,284
Year 30  $       88,792  $           4,440  $        4,440  $      8,879
Year 40  $     108,237  $           5,412  $        5,412  $     10,824

The graph above shows that our 10% total investment has the chance to grow to $1M over the course of your career. It’s pretty clear that your 5% match is a worthwhile choice to make…especially if you consider your spouse’s career (another $1M?!). Not only is your company match free money, but it’s also YOUR money. It’s up to you to make the most of your company match and retirement… because it’s a part of your benefits plan. There are definitely assumptions and nothing can be promised. But, even if we’re half wrong… you may still end up with $500,000 to help you along in retirement.

Why Save More: Inflation. Using 2% inflation in the above assumption makes our $1M retirement worth approximately $500,000 in today’s dollars. To help offset inflation, try saving more than 5% over time by steadily increasing your retirement contributions by 2-3% per year.

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