If I told you there was a way to get free money, would you do that?

I’m not talking about anything criminal or even a bit sketchy. Imagine there is a completely honest and upstanding way that millions of Americans can get free money.

And I’m not talking about a couple of dollars. For many, this free money they are missing out on totals into the 1,000s of dollars.

For those of you who do not know what I am talking about it’s simple: a company match in your retirement plan. And with studies showing that 82% of employers offer a company match, millions of Americans are affected.

What is a Company Match?

First, a company match works only in a company sponsored retirement plan. For those who have a traditional IRA, or a 401k, or a 403b you may have the opportunity for a company match. A Roth IRA is another great retirement savings option but is not company sponsored.

If these options are available to you, then a company match is simply where your company matches a portion of your retirement investment. A match is typically capped around 5% and will only take effect if you are contributing to the plan. The match does not take away any of your funding, and is simply bonus, free money.

Where are the Millions of Dollars?

The reason you came to this article is because the title spoke about millions of free dollars being lost every year. Those stats are not overblown.

In 2015, Financial Engines conducted a study that concluded that Americans were likely “leaving $24 Billion in unclaimed 401k match contributions”.

A more recent survey conducted in 2021 shows that 17% of Americans who work for employers offering a retirement plan do not contribute at all. Among the workers who do contribute, there are an additional 12% who are not maximizing their free company match. 

Let’s say that those millions of Americans in the above stat are missing out on only 10 dollars in company match. If we have 1 million Americans missing 10 dollars of free money, that equals 10 Million dollars missed!

However, we know that company matches are significantly more than 10 dollars on average. And the number of Americans missing out on it is much larger than just 1 million. Because of these facts, we have millions and millions of dollars missed every year.

Why Are so Many People Not Getting Free Money Through a Match?

In the 2021 survey, there were 6 reasons given to why people were not enrolling.

1. Assumed they could not afford to contribute.
2. Said they already had a retirement savings plan, so they didn’t need to contribute.
3. Kept forgetting to enroll.
4. Wanted to wait till they were older.
5. Didn’t know how their retirement plan worked.
6. Didn’t know how to enroll.

Many of these reasons are simple fixes. The only one that may hold any water is the assumption that you cannot contribute. However, if you really take the time and have a quality budget, the majority of people will find room to make this a priority.

The other five arguments can be pretty easily combatted with some education on compound interest and understanding the role of inflation.

So, the question is raised: are you getting your share of the free money. If not, what are you going to do today to change that?