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Employer matching in retirement plans (e.g., a 50% match on the first 6% you contribute) is often described as “free money,” and for good reason: an employer contribution effectively boosts your return immediately on the portion they match. For example, if your employer matches dollar-for-dollar up to 3% of your salary, your first 3% saved gets an immediate 100% return in matched contributions — a benefit few other investments can match. Capturing the full employer match is typically recommended as one of the first steps in retirement saving because it’s an immediate and risk-free gain relative to contributing outside the plan. Missing the match is like leaving part of your compensation on the table.

Practical caveats exist (vesting schedules, eligible compensation rules, employer plan investment choices), but capturing the match generally remains high priority. If you have limited funds, aim to contribute at least enough to get the full match before allocating additional savings elsewhere. After securing the match, evaluate other goals and account types (e.g., IRAs, taxable investing) based on fees, tax treatment, and investment options. Also note that certain employer matches are subject to vesting — that means the matched funds become fully yours only after meeting service requirements. Even with vesting rules, maximizing match-eligible contributions while understanding plan rules is usually the best near-term financial move for most workers.

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