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: