Here's How Much a $2,400 401(k) Match Could Be Worth by Retirement
Written by Kailey Hagen for The Motley Fool -> A single $2,400 match could be worth more than $52,000 by retirement. Consistently claiming your 401(k) match could go a long way toward a comfortable retirement. Claim as much of your match as you can each year, even if you have
A single $2,400 match could be worth more than $52,000 by retirement.
Consistently claiming your 401(k) match could go a long way toward a comfortable retirement.
Claim as much of your match as you can each year, even if you have to leave some on the table.
You make $60,000 per year, and your employer offers a 100% 401(k) match on up to 4% of your salary. Simply put, you contribute $2,400 to your 401(k), and your employer will double it.
It's a nice offer, but if you're struggling to keep up with your other financial expenses, you might wonder whether it's worth locking up thousands of dollars today. That's ultimately a personal decision, but it could pay off in a big way if you can spare the cash.
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How much a $2,400 401(k) match will be worth by retirement depends on how long the money remains invested and what kind of return you get over that time. You can't control your returns, though you have some say in how long that money remains in your account.
Let's say you're 35 and you plan to retire at 65. You expect an average annual return of 8% during that time. A single $2,400 match would be worth more than $24,000 by the end of that period. A 25-year-old planning to retire at 65 would see that match grow to more than $52,000. And realistically, you'd have more than this because you'd also be contributing money of your own.
