Is Your 401(k) Match Worth Maxing? An Example Over 35 Years

Many employers add money to your 401(k) when you contribute. A common formula is a 50% match up to 6% of salary: put in 6% and your employer adds 3%. Contributing beyond the cap adds your own money but no further match.

A worked example

A hypothetical 30-year-old earns $70,000, has $10,000 saved, and expects 3% annual raises and a 7% annual return until age 65. The employer matches 50% up to 6% of salary.

Contribution	Your contributions	Employer match	Balance at 65
3% of salary	$126,970	$63,485	$783,693
6% of salary	$253,941	$126,970	$1,452,325

Moving from 3% to 6% captures the full match: about $63,500 more in employer money over the career, plus decades of growth on both your extra contributions and theirs.

Project your own balance with the retirement calculator.

Why the match comes first

An employer match works like an immediate return on the money you put in: 50% here, before any market growth. Very few uses of a spare dollar compete with that, which is why capturing the full match is often suggested before extra saving elsewhere. High-interest debt and a basic emergency fund are common exceptions worth weighing.

Check your plan's details

• Vesting. Employer money may only become fully yours after a set number of years.
• Contribution limits. The IRS sets annual limits that change; check the current figures.
• Returns are not guaranteed. A steady 7% is a simplification. Real markets vary year to year, and these figures are in future dollars, not adjusted for inflation.

Source: IRS: 401(k) plans.