A higher percentage of women and of those earning less than $35,000 annually fail to take full advantage of matching funds in employer-sponsored retirement plans.
According to a new survey by TIAA-CREF, while 78 percent of Americans contributing to such a plan receive matching funds, and 77 percent of those who have matching funds manage to put away enough to benefit from the full employer match, that's not the case for either women or low earners.
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Instead, while 82 percent of men get the full match, only 72 percent of women do. And among those who make less than $35,000 a year, only 64 percent manage to save enough to get that full match.
"These survey results show that some groups of people in particular aren't maximizing the full value of their retirement plan," said Teresa Hassara, executive vice president of TIAA-CREF's Institutional Business, in a statement. "When employees don't get the full match that their employers offer, they are essentially walking away from free money."
Employees would be happy to get more information from employers on how to get the most advantage out of matching funds, according to the survey. In addition, 40 percent of those who aren't putting in enough to get the full amount say that they get reminders from their employer to qualify for the match, and they're pleased to get them. While another 32 percent of that group don't get those reminders, they want them.
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The survey also showed that many people underestimate the value of the employer match. Respondents were asked to estimate the value of a 3 percent match; in the example they were given, the value would be worth $72,518 by the time they were 65. However, 32 percent of respondents thought it would be worth less than $50,000. Women, Gen Y respondents and those who make less than $35,000 were more likely to underestimate the value of the match.
More information could help, particularly for women. Among the women who weren't getting the full match, 17 percent said that more information about how it works would cause them to think about raising their plan contributions. Only 10 percent of men in the same situation said they'd consider upping their contributions.
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