Employer Match

Employer matching is literally free money—one of the best benefits available. When you contribute to your 401(k), your employer contributes too, up to a certain percentage of your salary. This is essentially a guaranteed 100% return on your investment.

How Employer Matching Works:

• You contribute: 6% of salary to 401(k)
• Employer matches: 50% of your contributions up to 6%
• Result: You get 9% total (6% + 3% match)
• Cost to you: Only 6% of salary
• Free money: 3% of salary from employer

Common Match Formulas:

50% Match up to 6%:

• You contribute 6% → Employer adds 3% → Total 9%
• You contribute 3% → Employer adds 1.5% → Total 4.5%
• You contribute 10% → Employer adds 3% → Total 13% (capped at 6% of salary)

100% Match up to 3%:

• You contribute 3% → Employer adds 3% → Total 6%
• You contribute 6% → Employer adds 3% → Total 9%
• You contribute 1% → Employer adds 1% → Total 2%

Dollar-for-Dollar up to 4%:

• You contribute 4% → Employer adds 4% → Total 8%
• You contribute 8% → Employer adds 4% → Total 12%

The Math is Compelling: Example: $60,000 salary, 50% match up to 6%

• You contribute 6% = $3,600
• Employer matches 3% = $1,800
• Total contribution: $5,400
• Your cost: $3,600
• Free money: $1,800

Over 30 years at 7% return:

• Your $3,600 → $274,000
• Employer's $1,800 → $137,000
• Total: $411,000
• You only paid: $3,600

Why People Don't Max the Match: ❌ "I can't afford it"

• You're literally turning down free money ❌ "I'll start later"
• Every year you wait costs thousands ❌ "I need the cash now"
• The match is worth more than most raises ❌ "I don't understand it"
• It's simple: contribute enough to get the full match

How to Calculate Your Match:

1. Find your employer's formula (ask HR or check your 401(k) website)
2. Calculate the percentage you need to contribute
3. Set up automatic contributions to that percentage
4. Never drop below the match threshold

Pro Tips:

• Contribute at least enough to get the full match (it's free money!)
• Front-load contributions if you can (contribute more early in the year)
• Don't leave money on the table
• not getting the full match is like taking a pay cut
• The match vests over time
• you keep more of it the longer you stay

The Bottom Line: Employer matching is the closest thing to free money in personal finance. If your employer offers a match, contribute enough to get the full amount. Not doing so is like refusing a raise—you're literally leaving money on the table.