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.
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.