Finance Experts Say A Quarter Of Married Couples Are Foregoing Vital 401(K) Savings

Finance experts say one-fourth of married couples are forgoing vital 401(K) retirement savings including employee matching

Niv Persaud, a certified financial planner in Atlanta, is using her own experience to make sure others make the most of the 401(K) financial plans offered by their employers, regardless of their relationship status.

Persaud told the Daily Mail individuals should sign up for their employer’s 401(K) plans, especially if they match funds.

“It truly is free money,” Persaud told the Daily Mail.

A 401(K) match is when an employer matches some or all of an employee’s contributions into their retirement account. Retirement match formulas vary by employer. Some match a percentage of employer contributions, while others match contributions up to a certain dollar amount regardless of employee compensation.

Persaud learned this lesson the hard way, according to the outlet. During her marriage, she focused on bills and expenses while her husband invested in his employer’s 401(K) plan. Her employer offered a 401(K) plan with a match, but she did not sign up for it.

After her marriage ended, Persaud realized she had missed out on thousands of dollars in 401(K) retirement sayings.

“One of the benefits of my own mistake is that when clients come to me, I don’t judge because I’ve been there, and I know it just happens,” Persaud said.

According to the National Bureau of Economic Research (NBER), one in four married couples lose more than $700 a year on average by not prioritizing the more generous 401(K) matching plan offered by their employers.

Researchers at NBER also found that in many couples, only one person contributes to a retirement plan, while the other ignores a plan with a more generous matching plan. Additionally, other married couples split their retirement savings evenly when they should shift their money into the account with the larger match.

Today, Americans can contribute up to $22,500 into their retirement accounts, with the amount expected to increase in 2024, the outlet reports.

The rise in inflation in recent years has forced many retirees to return to the workforce, making it even more paramount that employees sign up for their employer’s 401(K) as soon as possible.