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Maximize the match

Not all employers offer to match their workers' 401(k) contributions. But if you're one of the lucky ones with access to this benefit, grab it. Kiernan says any employee not getting the full amount of an employer's 401(k) match is leaving free money on the table.

"Not only that, the beauty of that money -- as it is with the rest of their company retirement plan -- is the tax-deferred compounding that will create the snowball effect," Kiernan says.

The U.S. Bureau of Labor Statistics reported in May 2010 that 41 percent of workers had retirement savings plans in which their employers matched their contributions up to 6 percent of their earnings, while 10 percent had plans that were matched at a higher level. As for the rate, 53 percent of the plans matched contributions at 50 cents or less on the dollar.

So if your employer plan matches 50 cents on up to 6 percent of your earnings, be sure to contribute at least 6 percent of your pay to get the match. This amounts to a 50 percent return on your money.


 

 

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