Employer Match

Mastering Contributions

Definition of The Term

Employer cashback matching is a powerful tool in the realm of retirement savings, akin to getting a bonus for your future self. It’s when your employer contributes a certain amount to your retirement account, matching the cashback you receive through various savings platforms, effectively doubling your rewards.

Key Points

In Essence the Match is Free Money, Use This Wisely
Not All Companies are the Same so Ask These Questions Early
Make Sure to consider Vesting Periods to Make Sure You Keep the Match

Additional Resources + Information

Types of Matches

Full Matching

A full match is the most generous form of employer contribution. Here, employers match 100% of the employee's contributions up to a certain percentage of their annual income. This means if an employee contributes 5% of their income to their retirement plan, the employer will also contribute an equivalent amount.

Partial Matching

Partial matching is more common and involves the employer contributing a portion of the amount the employee puts into their retirement savings. For instance, an employer might offer a 50% match. Therefore, if an employee contributes 6% of their salary, the employer would add an additional 3%.

No Matching

Some employers may not offer cashback matching at all. In this scenario, employees are solely responsible for funding their retirement accounts.

Varying Contribution Levels

Employers have the flexibility to set and change the percentage of employee income they are willing to match. This percentage can vary widely from one company to another and may change due to economic factors, company performance, or changes in policy. The average is currently 4.7% with common numbers being 3%, 5%, 6%.