Should I Count Matching Funds In My Retirement Plan?

Money Girl explains how and why an employer matches a portion of your contribution for retirement - and why you may never see that money again.

Laura Adams, MBA
1-minute read

Should I Count Matching Funds In My Retirement Plan?


Q. In Financial Advice That Will Make You Rich, you recommend saving 10% of gross income for retirement. If your employer matches 3% of your contributions, should you still contribute 10% for a total of 13%—or should the combined total just be 10%?

A. Some workplace retirement plans put a vesting schedule on employer matching. That means you have to stay employed for a certain period of time before you own 100% of the company’s matching funds and their earnings. If you leave before you’re fully vested, you forfeit all or a portion of them.

For this reason, I recommend playing it safe and contributing 10% of each paycheck to your retirement plan, regardless of the match you receive. After you’re vested, you can always reevaluate your retirement savings using a Retirement Calculator. That’s the best way to know if you’re setting aside enough each month to achieve your financial goals and enjoy the retirement of your dreams!

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Retirement Ahead photo from Shutterstock

About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.