 Although many Americans are eligible to participate in employer-sponsored retirement plans, a significant percentage of them fail to seize this opportunity. Often, employers will match employee contributions to the company retirement plan – sometimes in amounts greater than the employee contribution itself. Failing to take advantage of employer matches truly amounts to leaving money on the table.
If your employer sponsors a 401(k) retirement plan and matches employee contributions, you may be sacrificing a 100% return on your retirement savings if you fail to make contributions. If you contribute $5,000, a one-for-one employer match makes a total of $10,000 invested for your retirement.
Even without an employer match, contributing to your retirement plan is advisable. With $5,000 in a currently taxable account that earns 6% and is subject to state and federal income tax, it will grow to just more than $10,000 in 20 years, whereas $5,000 in the retirement plan earning 6% total return each year for the next 20 years will grow to more than $16,000.
Note: Self-employed individuals have multiple options to create their own tax-advantaged retirement savings plans that operate similarly to employer-sponsored plans. Generally, contributions are not included as taxable income and grow tax-deferred.
To learn more about how we can assist you with meeting your philanthropic goals and how you can help sustain the mission of ACM, please contact ACM's VP for Institutional Advancement Dean Carrell at 253.683.3943 or by email.
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