Employer Match

An employer match is a contribution your company makes to your 401(k) that depends on your own contributions. A common formula is 50 percent of what you put in, up to 6 percent of your salary, which means if you contribute at least 6 percent, the employer adds another 3 percent of your pay on top. Some employers match dollar for dollar; others use different caps.

The match is the highest-return move in most people’s finances, because it is an instant 50 or 100 percent gain on the matched dollars before any investment growth. The standard advice is to contribute at least enough to capture the full match before doing almost anything else, since contributing less leaves guaranteed money on the table. Matched money may vest over time rather than being yours immediately. Our retirement on-track playbook explains how to fold the match into your savings plan.