Suze Orman TwitterSuze Orman FacebookSuze Orman YouTubeSuze Orman LinkedIn
View Blog & News List

The Biggest Retirement Planning Mistake

July 16, 2015 at 12:00 AM

A recent report that studied the 401(k) savings habits of millions of workers found that one in four of you are not contributing enough to your account to qualify for your employer’s maximum match.

The average annual amount of money left on the table is more than $1,300 a year.

That is nuts.

If your employer offered you a bonus you wouldn’t turn it down, right? But that’s pretty much what you’re doing when you don’t take the steps to qualify for the maximum 401(k) match.

In all honesty, you aren’t to blame. An unfortunate quirk in many plans that automatically enroll new employees in the 401(k) is that the plans also automatically set your initial contribution rate at too low a rate for you to be eligible for the maximum match.

For example, many plans set an initial contribution rate of 3% of salary. But to get the maximum match requires contributing 6% of salary. I won’t bore you with why this is happening. What matters most is that you can fix this problem ASAP:

  • Check in with HR or your plan sponsor (the company that runs your 401(k) plan) and ask what you need to contribute to earn the maximum match. 
  • Request to change your contribution rate immediately if you currently aren’t qualifying for the maximum matching contribution. 
  • Adjust your spending if you need to. I know it can be a little bit scary to contemplate contributing more, since that will mean a reduction in your take-home pay. Please, please, please push yourself to try the higher contribution rate for at least three months. I think you will find that it’s not all that hard to adjust your spending. And knowing that you are in fact getting the maximum bonus from your employer will make you feel so great about your future.

Tag Cloud

real estate mistakespublic service loan forgiveness programCollege of Veterinary MedicineAARP Social security calculatorBeautynegotiate points with bank or sellerloan necessityjuggle multiple financial goals!00% tuition paidkids schedule paymentsgrandchild summer job IRA contributionAshley Springerfour steps to retirement savings adult childrencalculate dependents annual income needsFinancial Gift Cliffstudentco-sign employer funding HSAcommunity bankteenslong term careretirment savingscnbc alarm clockhealthy retirement weighttake actionbetter loan ratesLTCclosing costs 2% of loan3 step financial road mapgay marriage ban end Florida create new truthteens and moneyage appropriate choreFICO ScorePrime Rate Increasestudent loan repaymentbuy home you can affordFICO credit score credit card mortgagelong-term care premiumsdo not pay allowance for good behaviorSelectQuote.comnot gender specific college graduateitemized deductionstay positiveFinancial Power of Attorneyinitial tax break shop online guaranteed level term policySave Us MoneyEmployer Matched ContributionFederal Funds Ratecan you afford itlife insuranceovercome financial fearslousy investmentCredit Card Rate IncreaseNew York Lifeonly offered while employed buy homeplanloan is giftdon't extend mortgage not enough life insuranceconsider roth 401(k)bad decisionsLong Term Care shoppingchildren's bookwomen live longerno sneaking in fees401Kdoctors in networkmax employer matched 401(k) contributionMost Influential Celebrities ListHDHP'scar buying mistakesPost-DivorceRevocable Living Trustcost of capitalization calculatordeath benefit 20 to 25 times annual incomeborrowing plan GraceEric Dodge interest on student loansFinancial Systempay credit debt ASAPback-to-school budgetAdequate Auto and Home InsuranceCredit scoreunder 18 financial giftchildren under 18car leasingis it kind?verify wellness screening and programshome budget after tax costvalentines daymake saving a pleasurecar loanenjoy saving AARPinterest capitalizationSandy Hook Elementary Schoollet them have 50% controlAuto Savings 2016 adjust withholdingdon't derail retirement savingsHoliday Shoppingrefinancedoctor no longer in networkthree year car loanlow down paymentcut monthly cable billSandy Hook Promisemeet monthly provider of financial supportbetter loan dealssmall changes Young Adult home loan credit score below 740 confident of solutionorigination feesautomatic paymentmanage student loansdon't use allowance as bribewives should be involved in retirementis it necessaryJose Rodriguezannual cost of living adjustmentgift not loanbuying car 2016borrow each year, capitalization is going to pile up School of Social Work20% equity40% toward financial goalfinancial independencelower overall drug costsame-sex marriagecollege studentretirementMotherreal estate marketignore 6 month grace period CommencementWashingtonbuy down HSA tax savingsForbes Top 10reduce withholdingbecome member couple finances2017 TaxesBaby Boomersdon't cover cosmetic dentistrybad retirement planningcompare monthly expenses8 RulesSuze Orman's Money Warstax ID theftSatisfyingbill paying prioritiesautomate student loan paymentsno splurge raise deductiblesAlarm ClockCNBCdebtconfidentone annual feeprescription tierallowance taskmarriage inequalitywomen outlive menfile asap19 years cash flow problemNew american Dream switch to roth 401(k)debt freedental savings plandon't defer interest paymentsclosing feeskid borrow firststudent loan repayment plansecured cardcontribution mortgage interest tax deductionStudent Loanhighest possible benefitearn allowancebudgetleave a legacyWall Streetinsurance yearly reviewMarlo ThomasEasy Life Insurance pay off debtLTCi ASAP3 bucket approachCory BookersavingsChanging Livesdepreciating asset short term goal loved ones dependent on incomemoney vowsquick closinglower premiumBill and Pennyonly refinance if it paysritual scheduleFRAhousing marketpercentage of women widowed 75-84incentives for health care wellness screeningmax employee matchbest interest ratesresponsible with moneyhigh FICO scoreHoliday Seasonswitch to spouse coveragecontribute household expenses dream schoolCivil Rights2015 record year car salespaying for collegeFinancial Awarenessidentity fraudemployer offered life insuranceunexpected expensecredit reportwould you decline a bonuscommunity collegeknow before you oweAmy Lacyetinsurancepay high rate off firstreduce interest ratecostly insurance mistakeadvice for college graduatesMortgage Credit Availability Indexpurely financial standpointnear historic lowsadjust allocations Overspending20 year level term HDHP's are good for youStudent Debt Crisissame sex marriage band end Floridaletter to suzeTeachlive below your means4 Must Have Documents school 10 year repayment plan term life insurancederailed planGiftface your financial fearyours, mine & oursMoneyemotional stakeshome buying mistakesworst financial mistakeConventional loan PMIsavings pleasureteach importance of helping othersmaintain standard of livingfederal student loan deferment teach your child good money habitsLong Term Care premiumsretain separate credit cards3% debt transferred open enrollment review emergency fund Free Debt Eliminatorhealthy retirement blood pressurePay Off Debt Before Retirementinsurance mistakefraudulent returnprotect dependent be true to yourselfHoliday8 month emergency fundsave preexisting condition not coveredmax benefit coveredis it necessary?University of Illinoisone credit cardETF'sCredit Card Interest Rate2016 adjust estimated taxUS Tax Codecommitsummer job match income Personal FinanceCommunication Skills HDHP's are not badsocial workholiday spendingstudent loan repayment estimatorsecure creditHDHP special saving accountsave moneysuccessrepay student loans401(k) ContributionsheartacheIRA contribution gifted moneycredit unionwomen long term carefocus on needsuniversal college accessInfluentialsStock InvestmentsRichpaid vacationincrease retirement contribution rateHeartSuze is my biggest mentorcredit managementdon't charge a pennyfinancial fearsloan big picture Financial Awareness Video Festivalcut monthly cellular billpay down student loan debtRetirement Savingsbe good exampleemergency fund savingsdebit cardwaive home inspection bidbreakdown projected monthly housing costFHA loan feeshome insuranceprotect your familypoint cost offset by savingsget credit cardFinancial Solutions For Youdental discount planLifestyleRetirement Incomespeak new goalCOLAapproved medical 100% tax-freeoverspend on dining outrequired disclosureget over life insurance phobiaEmergency SavingsLTC shoppingdon't spend Money-SavingAmericans don't use all paid vacation timeRoth 401(k)Fiscal Responsibilityget the most out of social security back door Roth IRAlife insurance name trust as beneficiarystandard rateHow To Build CreditUrbana-Champaignfinancial concernis it true? lower mortgage interestbuying a carExhibitionhome buying budgetlow-cost index mutual fundpay 100% cashSuze approvedpay down car loanpush yourself to save more for retirementalternative FICO scorebe kind to yourselftraditional vs roth 401(k)percentage men widowed 75-84keep a scheduleMoney Marketdeath benefit needs for familyLong Term Care Insurance Giftswomen longer life spansocial security never insolventunsubsidized Stafford loanadd teenSuze Orman Scholarshippaid in fullHDHP/HSABankautomatic withdraw to savings sidelinedtelevision hostlow credit scoreWarner Bros Television Groupdear suzeNewtowndon't buy wantsproperty taxavoid burn outlower ratemoney-aware childroth iraincrease retirement savingsallowance6 month waiting periodgraduationrollovertitle insurancemonthly benefit The Suze Orman Showpermanent life insurancesetup automatic savings withdrawstretch out haircut appointmentslearn good financial choicesverify retirement plan with HR or plan sponsorhigh deductible health care plandon't blow tax refundStaffords this year have a fixed 6.8% interest ratetaxescomparison shoppingpowerfulhigh premiumsprotect loved ones no fee transferfinancial goal phrasemarriage financial responsibilitySuze Ormanpremiumstandard deduction focus on new truth best loan deal retirement accountsFinancial Advicedo you need life insurancebalance transfer FICO at least 720Bankruptcyat worst still pay 75% benefitstudent loan debtlowest cost fund optionrising home pricesrent vs buypay more than minimumdangerous retirement planescrowFundsOne Wallet At A Time10% donate to charitymobile app15-year refinance deal50 over 50no waiting periodCiti Simplicity Card SpendingDurable Power of Attorney for Health Carefinancing car charges on credit cardlong term goalno negativityloan no longer than 36monthsgift up to 14,000Financial EducatorPrime Rate Rise 2015Lovereferrals no interestmental healthmortgage disclosure3 savings buckets Gay RightsGay CouplesAccuQuote.comSuze changed my lifelong-term care higher insurance deductiblestore credit cardshome ownershipwrite new goal20% down paymentsocial security not going brokepositiveraise insurance deductible20% down payment avoid feesInfluential Celebrityphysical health8 month safety netInterestterm insurancefinancial argumentsgrandparent IRA contribution identity theftno life insurance financially irresponsiblegift grandchild IRA contributionincrease emergency savingsclosing disclosureiffy incomeanticipated salaryzero rate transfer dealsForbesoverspend on giftsCPI-WStudent Debtmultiple lenderssocial securityMass MutualTelepicturesnew carhealthy aging Financialretirement planpresident Obamadangerous money seasonjanuary billsprotect and provide for minor child get health insurance2015 financial roadmappay interest while in schoolno late fee monthly dental insurance premiumbig results don't ignore open enrollmentresponsibleage appropriate goalsvalue moneymortgage brokerUniversity of Floridarefundno retirement funds for down paymentultimate compounding giftoverspend on nights outdon't do five year car loantax refund fraudpublic service career student loan repayment ForeclosureFinal GoodbyeFinancial Cliffbetter termsfull retirement agereplace permanent life insurance with termalways use all paid time offPBS SpecialmortgageGoodbyeno tax on withdrawlsdental insurance no private loanInvest for savings growthfile taxes quicklySuze Orman spouse Kathy TravisVeterinary SchoolPhyllis Shelton expert long-term carefamily save at least $100 monthlyexercise reguarlyreduce monthly paymentrequire chore in exchange for allowancehome related tax break bonus credit card

View Blog & News List
People First. Then Money. Then Things.
Connect with me on Facebook Connect with me on YouTube Connect with me on Twitter
© 2017 Suze Orman Media Inc. All rights reserved.
 |  Search  |  Sitemap  |  Privacy  |  Terms
Sign Up For E-mail Offers
Open Panel
Close Panel