Although the 401(k) has been around for nearly four decades, the participation rate is still far lower than it should be. According to the Bureau of Labor Statistics, just over half of eligible workers participate in their 401(k) plans, and a large percentage of those contribute only a small amount.
If you are among the nearly half of American workers who is not currently taking advantage of a 401(k) plan, you might want to take a step back and consider the many advantages of these retirement savings programs. Starting on the next page you will discover 10 reasons why you should be investing in your company’s 401(k) plan.
1. Free money
Many employers offer the ultimate enticement for workers who participate in the company 401(k) plan. Whether they match 50 cents on the dollar or provide a dollar for dollar match, that is free money, and there is no reason to turn it down.
Getting started with investing is hard, but signing up for the 401(k) plan could not be easier. Many employers automatically enroll new hires in the company 401(k) plan, providing the ultimate in simplicity. Even businesses that do not offer auto-enrollment generally make it easy for their employees to get started with their retirement planning.
3. Automatic escalation
When you first start investing, you may only be able to put in 1% or 2% of your paycheck, but automatic escalation gives you a chance to ramp up the savings. You only have to sign up once and the plan administrator takes it from there. Read more reasons on the next page