Investments Article | Transamerica

Are You Missing Out On Money for Retirement?

Your retirement savings plan will likely play a large role in your overall income strategy for retirement. Employer matches on retirement savings plans can help boost your savings considerably––so it’s important to take full advantage.

If you have access to one of these plans (such as 401(k) or 403(b) plans), try to contribute at least up to the limit that your employer will match––often up to three or even six percent of your gross salary. Here are some other tips for maximizing this benefit:

  • Find out exactly when you will become eligible to start this program––and then start it as soon as you can. Many employers have a waiting period until the matching program goes into effect, anywhere from one month to six months to one year. 
  • Know your maximum contribution limit. In other words, to get the maximum amount of matching from your employer, how much of your own contribution is expected? With a 401(k) or 403(b), and other retirement fund types, annual contribution limits may be as high as $17,500 a year. If you can’t pay that much into the plan, find out how much you need to contribute to get the highest possible contribution from your employer (i.e., your employer’s contribution is generally capped at a lower rate).
  • Understand the vesting schedule, which specifies when the amount your employer contributed is actually yours (usually after reaching a specific number of years of employment). If you are close to being vested (let’s say you’ve worked four of the five years required), you should carefully consider any job changes since you could lose out on some of those matching contributions if you switch jobs.
  • Employers can make their “matching” contributions in a variety of ways. They can match 50 cents for each dollar you save, up to six percent of pay. They can use a multi-tiered formula where they’ll match 100% up to a certain percentage of pay, then 50 cents on the dollar for the next percentage, etc. Some plans have employer caps. Some employers don’t match at all. So find out the exact formula used.

Effectively planning for your retirement can occur years before you actual do retire. Don’t wait to start saving––take full advantage of employer-provided benefits like retirement savings match programs as soon as they are available. 

Find some time to carefully review your employer’s plan and make any necessary adjustments to your contributions.