See How Your Company's 401(k) Match Compares to the Average

Many companies offer 401(k) matching programs these days, and if you're not enrolled, it's definitely worth considering. Employer contributions increase the amount invested and can help you fast-track to a stable retirement.

New data shows just how much companies contributed in 2023, and it may be more than you think. See how your employer compares to the average and if you should take advantage of this common perk.

According to new data from Fidelity, on average, employers matched their employee contributions up to $4,600 in 2023. When invested and allowed to grow, this employer contribution has the potential to earn far beyond its initial investment.

For instance, if the annual return is 8%, then in 40 years, a contribution of $4,600 could grow to as much as $100,000.

Employers have the option to contribute and match a portion of your 401(k) as part of your employment benefits. Not all employers offer a match even if they offer a 401(k) program, so check with your HR department to be sure.

If employers do offer a 401(k) match, they will match either a dollar-for-dollar amount or a percentage of your salary up to an annual limit.

For instance, they can match 100% of your contributions up to 3% of your annual income. The amount of money the company chooses to contribute is up to the employer, and the cap can vary from place to place.

To fully take advantage of the benefit, you will also need to contribute as much as you can. The IRS limit for 401(k) contributions in 2024 for those under 50 is $23,000, and those 50 and up can contribute $30,500.

Employer contributions can really have a big impact on your bottom line in retirement. If employees don't take advantage of this benefit, then they are leaving money on the table that could grow at no additional cost to them.

Plus, the extra contributions will help to save for retirement much more quickly than if you were only contributing by yourself.

If you invest in your 401(k), you won't be able to fully utilize this money until retirement.

When contributing, however, you're able to set yourself up for better financial success down the line and take advantage of "free money" offered by employers in a 401(k).