Should You Join Just Because Your Employer Matches Your 401(k)?

Should you join just because your employer matches your 401(k)?


There seems to be an agreement in the financial planning community that the only litmus test for determining whether or not you should join your employer’s 401(k) plan depends on whether or not your employer matches your contributions. If they do, then you must jump on board to claim the free money.

Obviously, I like the idea of free money, too. But I don’t think it should be the litmus test for signing up for a 401(k). From the way I look at things, judging the validity of a plan for something as vital as retirement solely on an employer’s matching dollars is a horrible mistake.


For one thing, what if that matching stops? Does this great plan all of a sudden become bad? Or, what if the choice of available fund options within that employer-matched plan is lousy? Should you still go for it because of the matching? What if such a plan has completely outrageous fees that might end up hurting you more than helping you? Should you hop aboard anyway?


Sometimes I really wonder what ever happened to good old common sense, because we desperately need some today! The thing is, an “employer’s matching contribution” may simply beg the real question, which happens to be: Is this the plan that will give me the retirement I’m looking forward to?


I happen to believe there are many much more critical variables than matching contributions that must come into play when making such a vital decision, because retirement is not as simple as jut saving money. And all plans are not the same, are they?


Of course, we will always have to make a few assumptions. However, in order to give yourself the best shot at a truly comfortable retirement, you must make sure that your assumptions are not dubious or unrealistic.


Just something else to think about...
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Contact a financial professional at Laser Financial Group to schedule your complimentary session. Investigate whether your employer's matching fund is the best choice for you, or whether something else might work better! LaserFG.com or 301.949.4449.