You hear it time and time again: take advantage of your employer's 401(k) match. But what if your company doesn't offer a match—or even a 401(k)?
It turns out those scenarios are becoming more and more common. That's because many employers that suspended their 401(k) matching programs during the Great Recession haven't restarted them, MainStreet reports. Meanwhile, the number of companies that offer any kind of retirement options has been on the decline for nearly 15 years.
Lack of access to a decent company match could mean an opportunity cost to the tune of hundreds of thousands of dollars. But, as of 2011, among employers that offered a 401(k), the average match was just 2.5%, and 5% didn't provide any match. While some employers do offer matches of up to 4% or 5%—on top of end-of-year bonuses—those companies are more likely to be profitable and seeking out the tax benefits of offering a 401(k).
And what about those companies that don't help employees save for their futures at all? Much of the decrease in the number of employers offering retirement plans can be attributed to the effects of the recent economic downturn. In 2000, 60% of private sector workers had access to a retirement plan. Today, that figure is closer to 50%, Patrick Morris of HAGIN Investment Management told Main Street.
For Americans hoping to boost their retirement savings in the wake of the recession, all this data may be disheartening. Even without an employer-sponsored plan or an employer match, though, you can still take advantage of retirement plans like traditional and Roth IRAs. Investing early and consistently helps keep compound growth on your side.
On the other hand, if your employer does match retirement contributions, be sure to clarify details with your plan's administrator—like whether or not you need to contribute monthly or quarterly to be eligible for a match.