Take the Full Match

When participating in your employer's retirement plan, you should contribute enough to receive the full company match.

If you are fortunate enough to work for an employer who offers a retirement plan and a company match, you are well-placed to lay the groundwork for a financially secure retirement. Many companies, though not all, encourage their employees to participate in their retirement plan by matching a percentage of each dollar an employee contributes. The match is typically capped at a percentage of the employee's annual compensation.

For example, an employer might offer a 50-cent match for every dollar an employee contributes to the employer-provided retirement plan, up to 6% of the employee's annual wages. Let's say Joe, who earns $60,000 per year, contributes $125 every month from his wages to his employer-provided retirement plan. That means he contributes $1,500 every year (12 X $125) to his retirement plan, and his employer matches $750 (50 cents for every dollar). However, Joe does not contribute enough to take full advantage of the match. With his $60,000 annual salary, he could receive employer-matching contributions of $1,800 (6% of $60,000).

Lisa, on the other hand, also earns $60,000 annually but contributes $300 every month to the plan. So, every year, Lisa contributes $3,600 per year to her retirement plan account. Since the employer matches 50% of every dollar she contributes, her employer match is $1,800. Lisa receives 100% of the available match, since the $3,600 she contributed to the plan equals 6% of her annual salary.

Some employers offer a dollar-for-dollar match, while others offer a partial match — 50% of the first percentage of salary contributed is the most common partial match. Other employers offer a tiered match, which combines different matching rates based on contribution levels. For example, a 100% match on the first 3% of annual salary contributed, then 50% on the next 3%.

If you don't contribute enough to the plan every pay period to get the full employer match, you are essentially leaving free money on the table. This is money that your employer is giving to you with no strings attached. It's money that's added to your plan account. This money, along with your contributions and potential earnings on your plan investments, can help your retirement savings grow over time.

Gradually increasing your contribution to your retirement plan, even beyond the level required to receive the employer match, can have a significant impact on your future financial well-being. Small increments — such as raising your contribution each time you receive a pay raise or bonus — can benefit from the power of compound interest and help you close the gap between what you contribute today and what you will actually need to maintain your lifestyle in retirement. Contributing more not only accelerates the growth of your account but also reduces pressure on other sources of future income, such as Social Security, allowing you to build a more solid, stable foundation for your retirement years.

However, you should aim to contribute more of your salary to your retirement plan beyond the match. The reality is that you may need between 60% to 75% of your preretirement earnings in order to live comfortably in retirement. While helpful, Social Security may not be enough to cover anything other than the most basic living expenses. Consider increasing your contribution percentage a little every time you receive a bonus or a pay raise.

Talk to a financial professional for insights on how you can lay the foundation for a financially secure retirement.

Legal Disclaimers

The information and general descriptions found in this article are designed to help you understand some of the factors you should generally consider when evaluating the appropriateness of any strategy or investment within your retirement plan. Any description included is for informational and educational purposes and for your independent consideration only; it should not be regarded or viewed as advice or as a recommendation to take (or refrain from taking) any particular action. By providing this information, we assume that you can evaluate this information and the general descriptions found here to exercise your independent judgment. Banco Popular de Puerto Rico, its subsidiaries and/or affiliates are not engaged in rendering legal, accounting or tax advice services. If legal, accounting, or tax advice services are required, you should seek the services of a competent professional.

Investment products available in retirement plans are not insured by the FDIC, they are not deposits or obligations of, nor are they guaranteed by Banco Popular de Puerto Rico, its affiliates and/or subsidiaries; involve risks, may lose value, including the possible loss of the principal invested.

Because of the possibility of human or mechanical error by SS&C or its sources, neither SS&C nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall SS&C be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2026 SS&C. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.