"If you're working at a company that has a generous 401(k) match option, you should probably take it as you would "extra gravy" on your biscuit, as long as it fits within your personal budget. In a recent episode of The Dave Ramsey Show, famed personal finance guru Dave Ramsey recently referred to company contributions to a 401(k) as "gravy on the biscuit," an analogy I agree wholeheartedly with."
"Indeed, I've heard employer matches being referred to as "free money." And in many ways, it is, provided you can put up a sum of your own to stash away in your 401(k). Many savers have the option of adjusting the percentage they contribute. Oftentimes, it makes the most sense to put up the maximum amount that your employer will match."
"A caller named Joel had the opportunity to ask famed personal finance guru Dave Ramsey an intriguing question on his show relating to retirement contributions. He's currently contributing 15% of his paycheck - that's Dave Ramsey's Baby Step #4 - to a traditional 401(k), which is on the high end of his firm's 10-15% profit-sharing contribution. Joel asked Ramsey if he should change the contribution amount and whether he should consider the Roth 401(k)."
Employer 401(k) matches function as additional contributions that boost retirement savings without extra employee cost. Employer matches are often described as 'free money' or 'gravy' and typically justify increasing personal contributions to capture the full match. Many plans allow adjustable contribution percentages, and contributing up to the employer match often maximizes available benefits. Prioritizing retirement contributions can be challenging, but generous matches create a strong incentive to pay yourself first. Contributing around 15% of pay to a traditional 401(k) can be appropriate when employer profit-sharing reaches 10–15%. Evaluating traditional versus Roth 401(k) options depends on tax considerations and personal circumstances.
Read at 24/7 Wall St.
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