One of the best inventions to help Americans save for their retirement has been the 401(k) plan.
The plan, which was created using a trick in the tax code, allows the average Joe to save plenty of pre-tax money at their places of employment for their golden years. And thanks to its tax-deferred nature, the 401(k) plan has become the preferred method for many retirement savers.
But 401(k)s have an added bonus that can be used to supercharge savings. I’m talking about the employer match.
And the best part is that the match is coming back in a big way. For retirement savers, this could be the best news since its creation in the first place.
A Big Drop During the Recession
Part of what makes a 401(k) a great savings option for investors is the fact that many companies will match a portion of your savings. For example, if you contribute $1 to the plan, a firm may tack on 50 cents extra. Companies get a nice tax break for their efforts, while you and I get free money to fund our retirements. And that free money is one of the reasons why 401(k)s are one of the best retirement savings vehicles around.