Are You Getting the Full Match?
Start by making sure you are taking advantage of the full match your employer offers. It’s free money — as long as you take the initiative to ask for it.
The rules differ for every employer, but the bottom line is to take what’s offered. If your company offers 100% on the first 3% of your pay you contribute, set aside 3%. If your company offers a 50% match on the first 6%, take all 6%.
You might be reluctant to “reduce your salary,” but this is the wrong way of thinking. In truth, you actually are giving yourself a raise. Yes, if you make $50,000 annually, a 6% contribution moves $3,000 of spending money each year into your 401k. But don’t forget that your employer will be giving you an extra $1,500 above your salary with that aforementioned 50% match.
You have to save for retirement anyway, so why say no to an extra $1,500?