Many married couples across the United States are missing out on hundreds of dollars in free money each year by not fully maximising their 401(k) employer matching contributions. While Americans routinely save for retirement, poor coordination between spouses’ plans means they often fail to take advantage of one of the most generous retirement perks.
How 401(k) Matching Works
Employers often offer full-time staff a 401(k) retirement account and contribute additional funds to match a portion of the employee’s contributions. The structure of these matches varies. Some employers offer dollar-for-dollar matching, where the company contributes $1 for every $1 the employee sets aside. Others provide partial matches, such as $0.50 for every $1 contributed, or tiered matches, combining different rates depending on contribution levels.
Regardless of the method, the extra contribution effectively acts as free money, boosting retirement savings without additional effort from employees. Yet a recent study from the Center for Retirement Research at Boston College found that about one in five married couples fails to maximise these matches, leaving on average $757 unclaimed each year.
The Cost of Missing Out
While $757 may not sound like a huge sum, over time it compounds significantly. Based on average investment returns, couples missing out on this employer match could lose between $60,000 and $100,000 by the time they retire. Experts warn that many couples approach retirement savings too individually rather than considering household-level optimisation.
Jeff Judge, managing partner at Chesapeake Financial Planners, explains: “Most couples aren’t ignoring their 401(k)s. They’re contributing regularly, but they’re not comparing match rates between their two plans, and that comparison is the whole game.” Typically, one spouse’s plan may offer a more generous employer match, yet contributions are not prioritised to take full advantage of it.
Awareness and Coordination Are Key
The study found that couples with joint financial integration, including shared bank accounts, mortgages, or children, were less likely to miss out. “People can’t act if they aren’t aware they are missing out on their full employer match,” says Evan Potash, executive wealth management advisor at TIAA Wealth Management, reports The Sun.
With a record number of Americans now 401(k) millionaires, the research highlights the importance of planning and coordination. Couples can increase household contributions strategically, review fees, and ensure both plans are fully leveraged to maximise retirement wealth.
Failing to do so is effectively leaving free money on the table, potentially undermining long-term financial security. Taking small steps to coordinate contributions could dramatically increase retirement savings over the decades.
