How to Get Free Money in Your Retirement Account – FREE Retirement Income for Age 55 & Up!
Troy: How do you get free money inside your retirement account at work without having to do anything except save for your retirement?
Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, host of The Retirement Income Show, and CERTIFIED FINANCIAL PLANNER™ Professional (CFP®). Most of you watching this video right now have an opportunity to get free money inside your retirement account, and all you have to do is contribute to your own retirement savings. I’m talking about the 401(k) match here, but many people don’t know what the 401(k) match is, where it goes, what to do with it, why you even receive it, or how it can benefit you down the road.
Your employer probably offers a 401(k) match. Typically, this will be 100%, a dollar-for-dollar match of your own contribution into your 401(k) up to maybe the first 3% or 4% of your salary. If you make $50,000, and you put $1,500 into your 401(k), that’s 3%, they will match that $1,500 up to 3% of your salary, and that’s $1,500 free money inside your retirement account.
The reason companies give you this free money is to stay competitive in the marketplace. If you have a choice of two different jobs, and the pay is similar, but one of them is going to give you a 4% match on your 401(k) and the other company doesn’t give you a match on the 401(k), a lot of you are probably going to consider the one that’s going to give you free money. Think of it as additional income that you don’t have to pay tax on if you put it into the tax-deductible side of your 401(k).
Companies offer this benefit simply to be more competitive in the marketplace to attract and retain more talent, and that is an opportunity that you can take advantage of. When it comes to making your 401(k) contributions, you have the choice of putting it into the tax-deductible, traditional side, or what I would recommend you consider is putting it into the tax-free part. If you have a Roth 401(k) option, you can check out the video about Roth 401(k)s on the YouTube channel here, you should consider putting it into the tax-free portion and then that match, the $1,500 match, it will go into the traditional side, but it’s still free money. It’s still going to be there for you.
One of the things you need to make sure you’re doing is putting as much as you can into the 401(k) so you get the full match. Some companies will give 4% or 6%. I’ve seen 9% matches before. If you’re not aware, then you’re missing out on this free money. This free money wins goes in there year after year after year, it’s going to compound on itself and earn interest. What we’re trying to do here is to get the account balances as high as possible. Once you do get to retirement, you have more income that you can take out, and that gives you a bit more security to do the things you want to do later in life.
Talk to your HR, if you’re with one of these big companies, maybe it’s a Fidelity or a Vanguard or a Voya, give them a call or talk to somebody in your company. Say, “Hey, what do I have to do to take full advantage of the company match so I get all of the free money that I can get?”
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