This may not be a newsflash to some of you, but I have plans to retire someday. For that, I need to grow my money and investments to a number that will supply me with the life that I want in retirement. A 401K is a good option for that.

Unfortunately, I didn’t start investing right away. I started working at Panera Bread when I was 18 years old and quickly became a manager there. While they didn’t have a 401K plan (that I remember), they did have a stock options program.

I had the opportunity to buy a stock at a discounted rate, ensuring that I would get at least some sort of return. Did I take advantage of that?

Nope! (Facepalm)

Instead, I waited until a half month before my 32nd birthday to start investing. That’s right…I wasted almost 14 years of compound interest.

What’s even worse is that I had been at my job for well over a year before I started investing in my 401K. Worse yet? I was automatically enrolled in 401K. I had to elect to not be enrolled (even harder facepalm). Learn from my mistakes!

If you’re in the same boat as me, it’s important to grow your money as fast as possible, especially if you have aspirations to retire early. You have to take advantage of whatever you can to grow your money.

My 80% Return on My 401K

Yes, my return really was over 80% in 2021. And that’s not counting the tax savings from having the money taken directly out of my check. So how did I get an out-of-this-world return on my investment? Simple.

Company match.

That’s it.

There is no secret formula, no secret time of day to trade stocks, and no certain stocks to buy over others.

I put in 5% of my pay, my company matches 4%. 80% return the same day I get paid.

What’s even better is that during downturns in the market like the one we’ve been in this year, that company match helps cushion the blow. For example, if 5% of my income was $100, a 4$ company match would be an additional $80 for a total of $180

If the market tanked 20%, my $100 would still be worth $144 thanks to the company match ($180 minus 20%) rather than $80 (my original $100 minus 20%).

Why is this important?

First, there are a lot of people that don’t take advantage of their company’s match (think me for over a year after I got hired).

The Bureau of Labor Statistics used the Survey of Income and Program Participation from the U.S Census Bureau for a report published in May of 2015. In it, they found that “59 percent of eligible workers in the bottom income tercile participate in a DC plan, compared with 85 percent of those in the top tercile who do.” DC stands for “Defined Contribution.”

So 41% of lower-income workers and 15% of higher-income workers don’t take advantage of a defined contribution plan. Since this is part of the Census, that means there are quite a lot of people that are not taking advantage of their employer’s defined contribution plan.

Second, there are a ton of people that are not investing enough to take full advantage of their company’s match! The same study found that only 30% of those that are signed up for a defined contribution plan are electing to defer enough income to get to the maximum employer match.

Say what?! That doesn’t make any sense to me.

You can view the entire (lengthy) article here if you’re interested.

Leaving Money on the Table

If your employer offers a 401K match and you’re not taking advantage of the full match (or any match at all!), then you are quite literally leaving money on the table.

Think about it this way.

When you apply for a job, get it and head into the meeting to formally be extended an offer, they usually include the salary at that point. You sit down and they extend you an offer with a salary of $35,000 a year.

Your reaction is “Great! I’ll take it but I’ll only accept $32,000 a year.”

This is pretty much what I was doing for over a year after getting hired. This is what you’re doing if you are not taking FULL advantage of your company’s match.

Your 401K match is considered part of your compensation package. It is your money if you elect to defer some of your income to retirement.

Let’s look at some quick numbers. Let’s say you are making $35,000 a year, get paid 26 times a year, and have a company match similar to mine—a 4% match if I defer 5%. Your 5% per paycheck amounts to $67.31. The company matching 4% would put in an additional $53.84. Keep in mind this is pretax money.

You could invest an extra $1,400 a year directly into your 401K! If you invest, your salary is essentially $36,400.

It’s even better if your company matches exactly what you are deferring. That’s a 100% rate of return!

It is a no-brainer to take advantage of it.

Take Action

If you are working at a company that provides a match for your 401K contributions, it’s time to take advantage of it to its fullest. Sure, you may have to bump up your contribution percentage, but it’s worth it to find a way. Your check may not be as high as it usually is, but it will do wonders for growing your retirement income.

Think about that 80% return. You are getting a guaranteed rate of return on your money. That’s unheard of in the stock market. Cut out an expense or two. Eat out one less time a month. Do whatever it takes to find a way to make it happen. You won’t be disappointed.

This content was originally published here.

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