Forfeiting 401(k) match leaves $24B on the table

American workers forfeit an estimated $24 Billion a year by not contributing enough money to their company 401(k) plans to capture their employer's full matching contribution, according to a newly released research project.

For the typical employee, failing to receive the full company 401(k) match leaves $1,336 of potential free money on the table each year, according to Financial Engines, the largest independent financial adviser in the country.  That equates to an extra 2.4% of annual income not received.  Assuming a 4.4% annual return, the forfeited matching funds could amount to nearly $43,000 over 20 years.

Studies examined the saving records of 4.4 million retirement plan participants at 553 companies and found that 25% of employees miss out on receiving the full company 401(k) match by not saving enough.

The 401(k) match is one of the best deals going for employees, providing an immediate guaranteed return per dollar invested.  According to the report, 42% of plan participants earning less than $40,000 per year do not take full advantage of the employer match.  Likewise, employees under 30 are nearly twice as likely to miss out on the full employer match.

While many people might feel like they can't afford to save more we hope this study helps them realize they can't afford not to.

 The report found that employees of all ages and incomes who used advisers captured more of their employer match  compare to those who did not  receive advice by a margin of 26% to 15%.  All financial advisers can play a crucial role in helping their clients improve their chances of attaining a secure retirement.