The prospect of getting free money is usually pretty exciting. After all, the past stimulus checks that Congress gave out during the early days of the pandemic were very popular, and almost 3 million people have signed a petition asking for more.
So why are 10 percent of people missing out on the thousands of dollars or more in free money that is available and will continue to be available for some time?
While some people do not know of these programs or do not think they can make use of them, both issues are easily fixed. Here’s how to get what you are owed.
Millions do not max their 401(k)
A 401(k) match from your job is the best thing you can always get that is like free cash.
This perk is part of your compensation when you get hired, so if you do not take complete advantage, it is like you are not taking part of your regular salary.
Say you bring in $60,000 per year, and your employer gives a dollar-for-dollar match of 6% of your salary. That means your maximum is $3,600 per year.
But if you just put $2,000 into your 401(k), your job will only put in $2,000 — and you are leaving $1,600 for someone else to take.
The biggest reason why people don’t take complete advantage is affordability; over one third of people say they just cannot save as much as they want to. That makes a lot of sense, especially during a time when many families’ budgets are getting stretched to the breaking point.
How to start taking complete advantage
If you have enough money to save, your first goal should be creating automatic withdrawals from your weekly salary. A “forget-it” approach that will guarantee you get the highest match.
Remember you can always put more money in than what your employer will match. And because these automatic withdrawals usually come from pre-tax dollars, you will not have to pay taxes on your contributions.
However, if you struggle to find the cash needed to make your complete contributions, a new company was created last year to help with this issue.
The company will send you the money to get the full match, without a credit check or upfront fee. Then, after your job matches your contributions, you will withdraw from your 401(k) to pay this company back, plus a small piece of the money you got from this match. The company’s name is LendTable.
Author: Steven Sinclaire