It is no secret that when Millennials retire social security is either going to be entirely gone, or drastically different than it is today. This means individual retirement planning is more important than it has been for previous generations. Most companies offer a 401k as one of their benefits. In essence, a 401k plan is a retirement contribution plan where employees can make take a portion from their paycheck and put it in a retirement account on a pre-tax basis. I’m always surprised when I talk to people about their retirement plan, and they don’t understand some of the basic features of their 401k or 403b.
The biggest mistake millennials make when contributing to their 401k plan is NOT TAKING ADVANTAGE OF THEIR EMPLOYEE MATCH PROGRAM. The overwhelming majority of companies offer to match a certain percentage of what you put in. As of 2013, the most common matching program was 100% match for the first 6% you contribute. Meaning if you opt to have 6% of your pay into your 401k plan, the company will match that and add an additional 6% to your plan. Even if the company you work for is not as generous in this realm, another common standard is 50% match for the first 6% you contribute. Continue reading The WORST 401k mistake Millennials make