Here’s how much money you’re losing if you don’t grab your employer’s match

ABC News Chief Business, Technology and Economics correspondent Rebecca Jarvis breaks down everything you need to know about putting money in your 401(k).
4:32 | 09/07/20

Coming up in the next {{countdown}} {{countdownlbl}}

Coming up next:



Skip to this video now

Now Playing:


Related Extras
Related Videos
Video Transcript
Transcript for Here’s how much money you’re losing if you don’t grab your employer’s match
Do you want to raise right now if your employer offers a 401K match and you're not taking advantage you're missing out. The typical employee who's not taking full advantage of the 401K match is leaving upwards of thirteen hundred dollars on the table. That's an estimated 24 billion dollars a year in unclaimed 401K match money. A 401K it's one of the best ways that you can see for retirement Izzy retirement savings plan. Offered by your employer. Where money automatically comes out of your paycheck and then six and weeps for you to retire here. You think putting money into apart when Kate as early as possible. And here's why the longer your money sits there and has time to grow the bigger it can be com. A 41 K matches like free money from your company you put money into your 401K and they match it sometimes they'll match 15% sometimes 100%. Sometimes it's in cash and other times it might even be in your company's stock the important thing is. You want to maximize this match because if you're not putting. As much money and as your company will match it means you're leaving money on the table it's like if your company said. We're gonna pay you and you only take 90%. Of what your company is willing to pay you in your content. To encourage employee loyalty companies. Often require you to follow vesting schedule and what that means is that money that they're putting into your 40 when K. Is it immediately available to you until you stuck around for a long enough time. That doesn't mean that you're not eligible to you. Take the money you yourself have contributed to your 401K it's all about what that company is putting end. But the whole idea is that companies would use these vesting schedules to keep their employees to stick around. What are the biggest misconceptions about setting up a 401K. Is that you should only be putting in the amount of the employer match. While it's great to get that match you should be trying to put about 10% of your income every month into that 401K. Obviously this is going to be it different amount depending on where you are in your career where you are in your life in your expenses. But the best thing you can do is start socking money away early. Not to think of your 401K as something to see for vacations. Or even paying your expenses are buying a new home. Instead think of it as the money you will be using in retirement. And in and I feel world you'll have about six months worth of savings sitting on the side. Not near 401K and not in the stock market that you can drawn in a financial emergency. A lot of companies aren't doing the match right now. The bottom line is whether the company that you work for is or is not doing the match if they offer a 401K. You want to put your money into that because you have time it. On your side to grow that money and the more time you give yourself the better off that money wheel dale. But if you're feeling too overwhelmed to even think about we are the money goes once it's in your 401K. Just get in the habit of putting it there he can sit in a money market fund that's basically the same thing as cash. And you're better off doing that and having your company match it especially if your company is doing a match than doing nothing at all. Some of the biggest misconceptions about a 401K and a time like this where there's great market volatility. Is that you should stop investing in your for a went Kate because the market is down. In fact when the market is down you have the greatest opportunity. To make money in the long run. The important thing to know is that over time on average the market tends to return 7% to 8% inning giving here. Meaning the longer you're in the market the more time you have on your side to take advantage of backtracked under that cares acting do have. An additional option with your 401K and that is that you can take up 20100000. Dollar distribution. From the account. Without paying that 10% penalty. You'll still have to pay taxes on that money but the penalty goes away. If you're dealing with a family emergency if you're dealing with a major health concern right now. That might sound like a good idea and it might be your last resort but that's exactly how you should be thinking about this. Is your last resort to take money out of your 401K currently.

This transcript has been automatically generated and may not be 100% accurate.

{"duration":"4:32","description":"ABC News Chief Business, Technology and Economics correspondent Rebecca Jarvis breaks down everything you need to know about putting money in your 401(k).","mediaType":"default","section":"ABCNews/GMA","id":"72830520","title":"Here’s how much money you’re losing if you don’t grab your employer’s match","url":"/GMA/Living/video/heres-money-youre-losing-dont-grab-employers-match-72830520"}