According to this issue of the Employee Benefits Research Institute, 69% of eligible workers participate in their 401k plans in 2010. That means almost a third of eligible employees aren’t contributing anything at all.
Even if we take into account that some of these plans do not match contributions, millions of people are passing up free money!
This post is not to tell you the normal rules (don’t take out loans on your 401k, don’t cash your 401k out when you switch jobs, contribute as much of the $16,500 a year as possible, etc).
This post is to yell at everyone who is ignoring free money.
For the sake of all that is sacred to you, contribute the maximum that will be matched by your company. That is free money that is part of your benefit package. Not taking advantage of that is like handing back a paycheck and saying “no thanks”.
Don’t whine that you’ll miss that percentage of your paycheck…you won’t. I never notice the 6% that’s missing from mine. Unless you are truly starving, this is necessary.
I know that my readers probably already do this. I know I’m probably preaching to the choir. For self-employed, the Solo 401k is there for you.
BUT, if you are one of the eligible workers that aren’t snatching up your free money, I triple dog dare you to sign up today. Really, go do it now.
On a separate but related note I started using the cheapest tax software to track stuff life investments and the 401k. If you don’t keep track of this stuff throughout the year in an organized way then it piles up and becomes overwhelming.