Sure, we got your attention with that headline. But here’s the thing: You really could be and it’s important to find out.
The free money we’re talking about has to do with retirement contributions. Many employers will match a portion of the money their employees contribute to their employer-sponsored retirement account. According to our friends at Investopedia, the most common match is 50 cents on the dollar: About 40% of companies will chip in 50 cents for every dollar an employee puts into retirement savings up to 6% of their pay; another 38% match dollar for dollar, but typically up to 3% of income.1
Do you qualify for free money from your employer? Find out! Call the human resources department or look at your employer’s website for benefit information. Companies have different formulas for how they match employee contributions and you might have to contribute a certain percentage before the match kicks in. Also, be aware that some companies won’t let you access the money they contribute until you’ve worked at the company for a certain amount of time (this is known as vesting and you should keep it in mind if you’re considering a job move).
How much money could you earn with a match? Say your annual salary is $50,000 and you put 6% of your income into retirement annually. If your employer provided a 50% match, you’d have an additional $1,500 to invest in your retirement account each year.
Work for 40 years and that would mean an extra 40 x $1,500 or $60,000 over your career. And that’s without factoring in the interest you’ll likely earn or the fact that you might have a higher salary at some point (which would bump up your match amount).
Meet the match if you get one—but contribute to your retirement, even if you don’t. If you’re struggling to meet your monthly bills, it might seem like you can’t afford to save for retirement. We think you can’t afford not to — and it’s absolutely critical to set some money aside each paycheck. You’ll get into the habit of saving and you’ll also get to take advantage of compound interest for the decades you’re in the workforce. This means you’ll earn interest on your interest — how great is that? Check out the benefits of compounding interest with your own calculations.
Count on Summit’s Financial Advisors.2 Putting the money aside is a critical Step 1. Then you have to figure out how to invest it. Our team of retirement-savvy advisors is here to help — and you can reach them at 800-236-5560 ext.4012 or online.
Your best retirement is up to you. Own it with a little help from Summit.
1 https://www.investopedia.com/articles/personal-finance/120315/what-good-401k-match.asp
2 Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. FR-2247860.1-0918-1020
