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Question 2

“Employer matching is one of the simplest ways to boost retirement savings automatically. Many employers offer a match as a percentage of the employee’s contribution up to a limit — for example, ‘50% match up to 6% of pay.’ That means the employer will add 50 cents for every dollar you contribute, but only on the first 6% of your salary. Behavioral research shows people often under-contribute and miss this free money, which is why financial educators frequently emphasize capturing the full match before directing extra savings elsewhere. This short scenario focuses on the mechanical question: given a stated match formula, what percent of your salary must you contribute to fully capture the employer’s match?”

If your employer matches 50% of your contributions up to 6% of salary, what percent must you contribute to receive the full match?

Did You Also Know...

By Wise Wallet

Dollar-cost averaging reduces timing risk by investing fixed amounts regularly, which smooths out purchase prices over time.