The One 401(k) Mistake That Could Leave You Short in Retirement

By Maurie Backman – Mar 8, 2026 at 10:02PM ESTKey PointsIt's common for employers to match 401(k) contributions.Giving up that match for even a single year could have major long-term consequences.One of the best retirement savings tools available to workers today is none other than the 401(k). The nice thing about these accounts is that they come with generous contribution limits and make funding a nest egg seamless. With a 401(k), you simply tell your employer what you want to contribute toward retirement each year, and that money gets pulled from your paycheck before you even get a chance to miss it. It's that simple. Image source: Getty Images. Another huge perk of having a 401(k) plan is getting access to an employer match. But if you leave that match on the table, you might sorely regret it down the line. Don't pass up free money -- ever There's a reason many employers offer a matching 401(k) contribution as part of their benefits package. That free money for retirement can be a huge incentive to stick with the company, as opposed to job-hopping often. Now, there's no single formula for calculating a workplace match. Some companies offer their matches as a percentage of salary. Others offer a flat dollar amount. No matter what your 401(k) match looks like, it's important to try to claim it in full. That's because giving up that money for even a single year could leave you short on retirement savings down the line. Let's say you're 27 years old and are eligible for a $4,000 match in your 401(k). If money is tight, you may be inclined to skip retirement plan contributions that year and catch up the year after. That may not seem like an unreasonable thing to do. But giving up a free $4,000 could hurt you more than expected. Remember, the money in your 401(k) doesn't just sit in cash -- or at least it shouldn't. You can invest it and hopefully generate strong returns. But if you give up a $4,000 match, you also lose out on prospective growth. That loss could be huge if retirement is many years away. If you're 40 years from retirement and your 401(k) generates a yearly 8% return, which is a bit below the stock market's average, giving up $4,000 today means losing out on close to $87,000 in total when you factor in lost growth on that sum. That's huge. Ways to snag your match every year It's in your best interest to claim your full 401(k) match each year. To do that, first, make sure you know what your employer's matching formula looks like. Next, take a close look at your budget and see where there may be room to cut spending. If you're eligible for a $2,000 match, you need to contribute about $167 a month to your 401(k) to get it. You may be able to find that money by strategically reducing expenses. If that doesn't work, a side hustle could be your ticket to snagging your 401(k) match. The extra money could also make it possible to fund your 401(k) beyond your match, allowing you to save even more for your senior years. There are plenty of people who don't have access to a 401(k) or a 401(k) with a matching incentive. If that benefit is available to you, don't give it up -- even if it means having to work harder and alter your spending to make the most of it.Read NextMar 8, 2026 •By Marc GubertiRetirement in the West Doesn't Have to Be Expensive -- These Places Prove ItMar 8, 2026 •By Kailey Hagen, CFPHere's How Much the Wealthiest Americans Have Saved for RetirementMar 8, 2026 •By Maurie BackmanHere's the Average 2026 Tax Refund.

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