The theme this week on the One Minute Retirement Tip podcast is How to get the most out of your 401k plan. You may be saving and getting the match, but are you fully taking advantage of all the amazing benefits that your 401k has to offer you? 

Today, I’m talking about understanding your employer’s matching contribution, and committing that thing to memory like it’s your grandma's famous chocolate chip cookie recipe. 

One of the mistakes that I see too often is that employees leave money on the table by not contributing at least enough to maximize the match in the plan. But matching formulas are sometimes a little complicated, so it’s important that you know how much you need to contribute from your own paycheck to maximize your employer’s match. Is it 4%, 5%, 8%. 

The most popular matching formula I come across is a 100% match on the 1st 3% of your contributions and a 50% match on the next 2% of your contributions. What this means in plain English is that you need to save a minimum of 5% of your pay in order for you to maximize the match from your employer. 

If you save 5% of your pay into the 401k plan, you’ll get an employer match that equates to 4% of your pay...so 9% of your pay is being deposited each month into your 401k retirement account. Not too shabby. Of course you can and often should contribute more than this to help you live a comfortable retirement, but the starting point is knowing what you need to contribute to maximize your employer’s match. 

Then if you can at least contribute that much to the plan you won’t be turning down free money in the form of a match by contributing less that the max required to receive the full match. 

That’s it for today, but before you go, I just wanted to remind you one last time this week that I’m hosting a virtual education event on Tuesday May 25th, 2021 at 6:30pm (PST) - This event, Investing in Uncertain Times, features Chad Morganlander, senior portfolio manager and co-founder of Washington Crossing Advisors. Chad is a regular on various media outlets, including CNBC, Bloomberg, Fox News, & The Wall Street Journal. 

Investing in uncertain times is certainly a timely topic right now! You’ll hear his perspective on investing and what he’s learned over the years managing nearly $9 billion in assets. 

You can register for the event by going to truenorthra.com/tickets. 

Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance