Free money for retirement.  Sounds too good to be true, right?  The reality is that it is out there, but some people are not taking advantage of it.  It is like looking at a $20 bill on the sidewalk, but not picking it up.  Who would do that?

We are speaking, of course, about the matching contributions that most major employers offer their employees towards their retirement accounts.  And, lest you think that it is a small amount of money, the National Bureau of Economic Research calculated that one employee missed out on over $7,600 in one year alone!

What’s Going On?  Some companies match by a percentage with a limit during the calendar year.  Others match to a dollar amount.  Whichever it is, in most of these companies, many employees walk away without taking advantage. Up to one worker in FIVE.

But it doesn’t stop with those who do not participate.  Many employees do not take full advantage of the program.  For example, if a given employee contributes $2,000 per year to their plan and the company contributes .50 for each dollar saved by the employee, they could be missing out on more.  If the employee makes, say, $50,000 per year and are just doing the $2,000, they are missing out on an extra $500.

What to Do?  They key is to maximize your accumulations into your account by increasing your own contributions.  Making a commitment to increase your contributions and then following through will go far to helping your account grow significantly.  Here’s three things that you can do right now to make sure you are getting as much as you can by contributing as much as you can:

1.   Determine if you company has a matching plan.  Then, learn as much about it as you can.  There are differing formulas for calculating matching contributions.

2.   Examine your past payroll check stubs in order to see what you are contributing and how much.  Make sure you know what the maximum match is and that you are getting that amount.  For example if your company is matching up to 6% of your annual pay, make sure you are contributing 6%.

3.   If you are not there, then increase your own contributions to get there as soon as possible.  You might consider doing this at a certain amount each year if you need to ‘ramp’ up to that level.

Look Ahead.  Do not stop, however at that matching amount.  Look towards the future and begin to plan to put even more into your account.  Many employers plans recommend putting in 10% of your pay into your retirement account.  But, be sure to take into consideration your income & expenses, your age, the current account balance, and your investment mix.

With a little planning and smart moves, you can amass a nice retirement account that will serve you well into your retirement years quite nicely.  So, do not miss out on ‘free’ money any longer.