Free money?  It sounds too good to be true.  But it is true…and many people are passing it up.  A recent investor alert from FINRA (Financial Industry Regulatory Authority) pointed out that roughly 30% of American workers are passing up free money.  How?  By not contributing enough to their company’s 401(k) plan to receive the full employer match.  The alert from FINRA urges those workers to step up their contributions.

One of the most common arrangements in a 401(k) plan is when your employer matches your contribution dollar-for-dollar, up to 3% of your salary.  So, if you are not contributing at least 3%, you are passing up free money.  And, what may be even worse, you are putting your financial security in jeopardy because you are simply not saving enough. 

A rule of thumb in the financial world is that you should save 10% of your income for your future needs.  Some will need to save more, some less.  But even in the tough economic times we have been experiencing, everyone needs to take responsibility for their future by preparing for their retirement.  By not taking full advantage of a company’s match, you are passing up on a no-cost way to boost your savings.  Free money!

And it seems that those who need it the most are passing on the opportunity.  FINRA says that “millions of workers, especially younger and lower income workers… are leaving money—free money—on the table.”  They estimate that 43% of workers age 20-29 are not contributing enough to their plans to get the full match.  An earlier study showed that 40% of employees making less than $40,000/year are leaving some of that free money behind by not contributing enough to get the match.

I know that it can seem hard to put money away for the future when you are struggling to make it day to day.  But, if you don’t take care of your future financial security, who will?  A good rule to follow is that you should pay yourself first.  And, if you are lucky enough to work for a company that is offering free money via a match in your 401(k) plan, there’s not a better way to do that.  The money comes out pre-tax, saving you on your income tax, and it comes out before it hits your paycheck, so it’s effortless.  And, once it is setup, it will be on cruise control.  You’ll get accustomed to living on your net paycheck and will be more confident in your financial future knowing you are picking up free money every time you get paid.

So, are you leaving money on the table?