Take advantage of 401(k) match

The lifetime pension (a retired employee receives a set amount of money every month for the rest of his or her life) is no longer a benefit for the majority of American workers. Of the five organizations I have worked for since 1985, not one of them offered a company lifetime pension plan. Four out of the five did offer a company sponsored 401(k) plan. Most of the plans included a 401(k) match in which the company matched a portion of my contribution.

It continues to amaze me how many employees do not contribute at all or enough to take full advantage of the 401(k) match. People, this is leaving free money on the table.

Last week, I asked a co-worker, who was complaining about his lack of retirement savings, if he contributed to our 401(k) plan. He did not; our company matches half of our contributions up to a measly 2 percent. He is so angry about such a small match he refuses to contribute to the plan. He learned years ago that he had to take care of himself, nobody else, especially his employer, was going to do it for him. I agree a 1% match isn’t much, but it’s something and it’s free. I suggested in 2007, he take care of himself by taking advantage of our company match.

401(k) contributions are deducted with pretax dollars. This means your contribution reduces taxable income, cuts your tax deduction which makes saving a little easier. For example, let’s say your weekly gross pay is 1,000 and you pay 30% in federal and state taxes. If you put 2% of your pay in a 401(k), you'd contribute $20 a week. But, your net paycheck would be reduced by only $14 a week.

Bottom line: Start taking care of yourself in 2007; make a contribution to your company's 401(k) plan that takes full advantage of your company match.