Giving away your free money got your attention? Are you thinking what the hell are you talking about GFW and if I did have free money why would I give it to you? Ok joking on the give it to me part, but I needed to get you fired up. As for what the hell I am talking about it is company matched savings/pension plans. If you are one of the lucky people to be getting this in your workplace then be grateful. As I am sure almost anyone would love to have this option at their workplace.
Surprisingly not everyone that has the option to enroll in this does, and additionally for those that do some don’t max it out even. I admit when I was in my 20’s I didn’t see the value in it either… I mean come on I had stereo equipment to buy, gas to put in my pickup for cruising around, parts and accessories to buy I needed every dollar I could get my hands on for “wants”. However 3 years into my career I started to contribute half the amount and then within the next 3 years after continued upping it to max it out.
So far throughout my career I have experienced company matches from .5 times up to 1.5 times the amount with the max being 10% contribution from me and 15% from the company. To not max this option out you are leaving money on the table and also not getting the max compensation from the company you are working for.
Another way we can look at this to simplify it and break it down is this. Let’s say your work day is a 10 hour day and the max the company will contribute is 10% you are basically letting an hour of your current wage to slip away and might I add you actually would not have had to work an extra hour to get that hour. How does that sit with you now?
On the numbers side we can look at company match programs this way, whatever the percentage amount is that the company will contribute on your behalf should be able to go straight to your saving rate percentage for retirement. The sooner and the highest this rate can be achieved will have a dramatic effect on your long term career goals and/or retirement plans.
So what are you waiting for? If this is an option for you get on the wagon, the wagon to financial freedom and independence as this is one serious tool to use if the option is there.
Until next round take care,
GFW