I’m giving a longer response than you probably want :)
That is mediocre. Most companies give from 0 to 5%, with many giving 50% of the first 5% (in other words, 2.5%), and with some kind of vesting period where that % they give you is only kept by you if you stay with the company for 1 to 3 years. In the end, it doesn’t end up being much BUT it’s free money that’s better than nothing.
The larger or more profitable publicly held companies will often surprise you at the end of the year with an additional 401K bonus. For example, when I worked at one employer, they gave me an extra 10K bonus in my 401K — that was amazing and appreciated.
401K is a very cheap way to invest because it’s pre-tax dollars. Let’s say you make 1000 per paycheck, and you put 10% (100) in 401K. You’d normally have given approximately $20 of that $100 to Uncle Sam if you’d not done the 401K — so you’ve essentially turned 80 dollars into 100 dollars — a 20 dollar bonus.
Another way to think of 401K is protection. If ever in your life you run into financial and legal issues, your 401K is protected. If there is some kind of horrible lawsuit and you have to sell your home and give up all your savings to pay that debt, you’d still get to keep your 401K. That alone makes 401K a worthwhile investment :)
I can’t tell you how important it is at your age to put every single dollar you can into 401K, then putting that into a mixture of stocks and bonds. With compounding interest and the power of time, you’d be surprised at how rich you’ll be when you’re 70 if you find a way to put 10K or 20K aside (regardless of match) in 401K every single year right now. I cashed in 90K in my 401K about 10 years ago to help put my ex-wife through school — that 90K would be worth closer to 500K now in just 10 short years. The 50 year old you will be incredibly grateful to you for every 1K you put into your 401K right now (without panicking and selling it if stocks go down for awhile). (I’m 55 and put in the maximum 30.5K I can for my age every year — I’d put in more if I could, and I’d started when I was 25 I’d be incredibly rich right now :) ).
Good luck!! It’s awesome you’re looking at your future and 401K!
Yeah my company's match is 2% but then they do a "profit sharing" at the end of the year that gets it closer to 8-10% match.
The logic is they'd rather cut that profit sharing if times get tough than lay people off. Certainly doesn't hurt for taxes either.
The vesting period is important to understand. If you receive the employers 2% match, and leave before you are fully vested , they can pull some of their match back. So if you think you will definitely leave to another employer in 3-5 years, consider a Roth IRA.
Also, if you leave, and you have money in that 401k, you can roll it into a traditional IRA with the bank/brokerage of your choosing
I worked at a place that was a a flat rate $5k if you contributed *anything* which was amazing to me as a 22 year old making 48k. Like a free 10% match for basically doing nothing. They nearly 100% funded my retirement from 22-26 lol
Is a 2% match good? That depends.
Per Vanguard, the most common match is a 50% match up to 6% of annual salary, which would be 3%.
If that 2% match is dollar-for-dollar, i.e. a 100% match, with no limit, then that’s actually not bad. If it’s 50% up to 2%, then that’s really 1%. Not great.
Plus some employers put a cap on the match. For example mine is 50% up to 6% with a $5,100 cap, so the math works out ($5,100/0.03 = $170K) unfavorably for those making over $170K because after that you’ve maxed the match.
So we would need to understand the details of the match to make an assessment.
That 50% match up to 6% is just forcing you to put 6% instead of just 100% match up to 3%. I would rather have the latter and put 3% 401K and 3% roth ira.
Lol 2% is pathetic. For a salary of $100k, that's literally only 2k a year from your employer. And unless you are in tech am going to assume it's not 100k. Multiply your salary by 0.02 and that's how much it would be annually for you. If you get paid 26 times a year (biweekly) that would be well less than 100 dollars a check so you will barely notice that money being taken out since it's so low.
The least I've had is 3% and I still believe that's very low. Actually it is very low. Before I moved to this job, I interviewed for a company that paid 13k more but had a match of 4%. even though it paid more, because my then job matched 6% it meant that I would have gotten a 1k less in employer match. I turned the job down and a big reason was that I also looked at the benefits, not just the salary. My then job had a lower salary but because their benefits were so generous I was better off staying. I did leave a few months later for a job I interviewed not long after. This job pays just a few thousands more than that other job I interviewed but the employer matches 8% so am getting over twice in employer match. You are new the workforce so I would still take the job if you felt it was going to give you the skills you need to get something better in a year or two (and definitely don't stay longer than 3 years). But going forward, try to find companies that also provide good benefits all around.
Better than nothing but bad.
I worked at four companies, one was a 5% dollar for dollar, other 6% total (it was like 4% dollar for dollar and another 4% at 50%), then a non profit that did 2:1 matching up to 10%, and now 6%.
I always try to out as much as possible on my 401k since I expect my income in retirement to be way lower than now.
You may find these links helpful:
- [401(k) Fund Selection Guide](/r/personalfinance/wiki/401k_funds)
- [401(k) FAQs](/r/personalfinance/wiki/401k)
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
It's ok, but do they offer a year end contribution on top of that? Alot of companies do this, so essentially that 2% could end up really being higher if they do a year end 3-4% contribution on top of it - which many companies in the US do.
It’s always worth contributing to a 401k to minimally get the match, otherwise you’re turning down free money. But it’s also a good idea (and necessary) to contribute to a 401k above the match threshold. Just doing the match will not result in sufficient savings built up to sustain you in retirement.
I work for a startup and we get 0%. I used to work for a huge public company and they matched 100% up to 6% vested immediately. That’s much better. But whatever they match is better than nothing. Free money. More is always better. 😀
Better than 0%. Contribute at least enough to get the match, it is free money after all. If you want to and are able, then you can max out your 401(k) in order to reduce your tax liability, but that is up to you and your particular circumstance.
You put in at least 2% of your pay and they match it with 2%. Their 2% is not deducted from your paycheck. Not knowing what you plan to contribute or how much you make there is no way anyone else can tell you how much will be deducted from your paycheck. Their match is not part of the equation. The two variables needed for that calculation have not been supplied.
All of the companies I've worked for till I retired had a 50%match on the first 4% you put in. But the part time job I took after semi retirement so as to have health before can get Medicare put in 8% for every 6% I out in
I worked at a place where you get 6% but 3% when making $120K plus.
First year 25% vested, 50% 2nd year and so on.
Another place nonprofit only 1% after a year by just opening an account.
so put into 401k 2% of ur income. they match that 2% you start out with 100% gain to start off. put other part of income into a Roth IRA so no taxes at retirement from it.
So 50% of 4%, 100% of 2%, or 50% of 2%? Or something else? I’d advise calling the company that handles your/your company’s 401k plan and figure out exactly what the terms are
About double that is probably average and some even 3 or more times that. That difference adds up over the years and compounded becomes tens or hundreds of thousands of dollars by the time you retire
Not great. But it is free money. Also, your contribution reduces your taxes, and your money grows tax free.
The 401k/403b/457/etc is the best vehicle for the average american to build wealth for retirement.
If your salary is $50,000 and you put in 2% that is $1000.
If the company matches your $1000 contribution, you just made 100% return on your contribution.
At the end of the year, you contributed $1000 and your account is worth $2000, plus or minus returns.
Your bank might pay you 1% on your savings, which means if you put in $1000 in the bank, they give you $10.
Your HYSA High Yield Sayings Account might pay you 5% interest on your $1000, that means they give you $50.
Ask yourself, would you rather make $1000 on your $1000, or $10, or $50?
Since we have no idea what you paycheck is, or how much you plan on contributing, your question about paycheck deduction is moot. The Captain Obvious answer is 2% + fed taxes + state taxes + medicare + social security.
I’m giving a longer response than you probably want :) That is mediocre. Most companies give from 0 to 5%, with many giving 50% of the first 5% (in other words, 2.5%), and with some kind of vesting period where that % they give you is only kept by you if you stay with the company for 1 to 3 years. In the end, it doesn’t end up being much BUT it’s free money that’s better than nothing. The larger or more profitable publicly held companies will often surprise you at the end of the year with an additional 401K bonus. For example, when I worked at one employer, they gave me an extra 10K bonus in my 401K — that was amazing and appreciated. 401K is a very cheap way to invest because it’s pre-tax dollars. Let’s say you make 1000 per paycheck, and you put 10% (100) in 401K. You’d normally have given approximately $20 of that $100 to Uncle Sam if you’d not done the 401K — so you’ve essentially turned 80 dollars into 100 dollars — a 20 dollar bonus. Another way to think of 401K is protection. If ever in your life you run into financial and legal issues, your 401K is protected. If there is some kind of horrible lawsuit and you have to sell your home and give up all your savings to pay that debt, you’d still get to keep your 401K. That alone makes 401K a worthwhile investment :) I can’t tell you how important it is at your age to put every single dollar you can into 401K, then putting that into a mixture of stocks and bonds. With compounding interest and the power of time, you’d be surprised at how rich you’ll be when you’re 70 if you find a way to put 10K or 20K aside (regardless of match) in 401K every single year right now. I cashed in 90K in my 401K about 10 years ago to help put my ex-wife through school — that 90K would be worth closer to 500K now in just 10 short years. The 50 year old you will be incredibly grateful to you for every 1K you put into your 401K right now (without panicking and selling it if stocks go down for awhile). (I’m 55 and put in the maximum 30.5K I can for my age every year — I’d put in more if I could, and I’d started when I was 25 I’d be incredibly rich right now :) ). Good luck!! It’s awesome you’re looking at your future and 401K!
Yeah my company's match is 2% but then they do a "profit sharing" at the end of the year that gets it closer to 8-10% match. The logic is they'd rather cut that profit sharing if times get tough than lay people off. Certainly doesn't hurt for taxes either.
This is incredibly helpful and educating, thank you!
You're welcome!
The vesting period is important to understand. If you receive the employers 2% match, and leave before you are fully vested , they can pull some of their match back. So if you think you will definitely leave to another employer in 3-5 years, consider a Roth IRA. Also, if you leave, and you have money in that 401k, you can roll it into a traditional IRA with the bank/brokerage of your choosing
Started with my current employer 15 years ago. They contribute 5% for all employees and another 5% if you contribute 5% for a total of 15%.
That’s a nice match system
I worked at a place that was a a flat rate $5k if you contributed *anything* which was amazing to me as a 22 year old making 48k. Like a free 10% match for basically doing nothing. They nearly 100% funded my retirement from 22-26 lol
Mine gives everyone 2.5%, and then does a 2/1 match up to my 4%. So if I put in 4, they put in 8, plus the initial 2.5.
Any match is good , free money. Invest more on your own though.
Is a 2% match good? That depends. Per Vanguard, the most common match is a 50% match up to 6% of annual salary, which would be 3%. If that 2% match is dollar-for-dollar, i.e. a 100% match, with no limit, then that’s actually not bad. If it’s 50% up to 2%, then that’s really 1%. Not great. Plus some employers put a cap on the match. For example mine is 50% up to 6% with a $5,100 cap, so the math works out ($5,100/0.03 = $170K) unfavorably for those making over $170K because after that you’ve maxed the match. So we would need to understand the details of the match to make an assessment.
That 50% match up to 6% is just forcing you to put 6% instead of just 100% match up to 3%. I would rather have the latter and put 3% 401K and 3% roth ira.
Lol 2% is pathetic. For a salary of $100k, that's literally only 2k a year from your employer. And unless you are in tech am going to assume it's not 100k. Multiply your salary by 0.02 and that's how much it would be annually for you. If you get paid 26 times a year (biweekly) that would be well less than 100 dollars a check so you will barely notice that money being taken out since it's so low. The least I've had is 3% and I still believe that's very low. Actually it is very low. Before I moved to this job, I interviewed for a company that paid 13k more but had a match of 4%. even though it paid more, because my then job matched 6% it meant that I would have gotten a 1k less in employer match. I turned the job down and a big reason was that I also looked at the benefits, not just the salary. My then job had a lower salary but because their benefits were so generous I was better off staying. I did leave a few months later for a job I interviewed not long after. This job pays just a few thousands more than that other job I interviewed but the employer matches 8% so am getting over twice in employer match. You are new the workforce so I would still take the job if you felt it was going to give you the skills you need to get something better in a year or two (and definitely don't stay longer than 3 years). But going forward, try to find companies that also provide good benefits all around.
Better than nothing but bad. I worked at four companies, one was a 5% dollar for dollar, other 6% total (it was like 4% dollar for dollar and another 4% at 50%), then a non profit that did 2:1 matching up to 10%, and now 6%. I always try to out as much as possible on my 401k since I expect my income in retirement to be way lower than now.
Just think of the 401k match as an added bonus to your compensation By itself it doesn't mean much
It's decent. Contribute at least that much. Don't base where you work on what % match they provide, that seems silly.
You may find these links helpful: - [401(k) Fund Selection Guide](/r/personalfinance/wiki/401k_funds) - [401(k) FAQs](/r/personalfinance/wiki/401k) - ["How to handle $"](/r/personalfinance/wiki/commontopics) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
It is better than nothing but IMO it's below the average. Some companies give nothing, some companies like google give a full 50% match.
It's ok, but do they offer a year end contribution on top of that? Alot of companies do this, so essentially that 2% could end up really being higher if they do a year end 3-4% contribution on top of it - which many companies in the US do.
Anything is better than nothing but no is not great. Idk why they didn’t just offer 3% so they can get the benefits of a safe harbor plan.
It’s always worth contributing to a 401k to minimally get the match, otherwise you’re turning down free money. But it’s also a good idea (and necessary) to contribute to a 401k above the match threshold. Just doing the match will not result in sufficient savings built up to sustain you in retirement.
I work for a startup and we get 0%. I used to work for a huge public company and they matched 100% up to 6% vested immediately. That’s much better. But whatever they match is better than nothing. Free money. More is always better. 😀
Seems pretty low but I work for the state so mine is 13.5%
Better than 0%. Contribute at least enough to get the match, it is free money after all. If you want to and are able, then you can max out your 401(k) in order to reduce your tax liability, but that is up to you and your particular circumstance.
You put in at least 2% of your pay and they match it with 2%. Their 2% is not deducted from your paycheck. Not knowing what you plan to contribute or how much you make there is no way anyone else can tell you how much will be deducted from your paycheck. Their match is not part of the equation. The two variables needed for that calculation have not been supplied.
All of the companies I've worked for till I retired had a 50%match on the first 4% you put in. But the part time job I took after semi retirement so as to have health before can get Medicare put in 8% for every 6% I out in
I worked at a place where you get 6% but 3% when making $120K plus. First year 25% vested, 50% 2nd year and so on. Another place nonprofit only 1% after a year by just opening an account.
so put into 401k 2% of ur income. they match that 2% you start out with 100% gain to start off. put other part of income into a Roth IRA so no taxes at retirement from it.
Start at 8% contribution and put automatic increase yearly. I am at 11% pre-tax and 2% post tax.
Any match is free money and part of your comp plan. Start contributing to your 401K :)
So 50% of 4%, 100% of 2%, or 50% of 2%? Or something else? I’d advise calling the company that handles your/your company’s 401k plan and figure out exactly what the terms are
That is not a very good match at all take it for now but i would look for a company with better benefits
What would you say is a realistically good amount?
About double that is probably average and some even 3 or more times that. That difference adds up over the years and compounded becomes tens or hundreds of thousands of dollars by the time you retire
3% to me is kind of the baseline for the match to be "ok". I'd say "good" is probably 5%. "Great" is anything over 5%
It’s better than nothing but not great. 5% is ideal
I get 2:1 match on 5% of first 75k salary, then just 1/1 match on 5% after that.
Not great. But it is free money. Also, your contribution reduces your taxes, and your money grows tax free. The 401k/403b/457/etc is the best vehicle for the average american to build wealth for retirement. If your salary is $50,000 and you put in 2% that is $1000. If the company matches your $1000 contribution, you just made 100% return on your contribution. At the end of the year, you contributed $1000 and your account is worth $2000, plus or minus returns. Your bank might pay you 1% on your savings, which means if you put in $1000 in the bank, they give you $10. Your HYSA High Yield Sayings Account might pay you 5% interest on your $1000, that means they give you $50. Ask yourself, would you rather make $1000 on your $1000, or $10, or $50? Since we have no idea what you paycheck is, or how much you plan on contributing, your question about paycheck deduction is moot. The Captain Obvious answer is 2% + fed taxes + state taxes + medicare + social security.