The Biggest Mistake Highly-Paid Workers Make in their 401(k)s

If you’re maxing out your 401(k) before the end of the year, you’re leaving free money on the table.

Let’s say your employer matches 4% of your salary into your 401(k).

If you decided to save $5,000/month into your 401(k) until it’s maxed out, you'd reach that point by mid-May (the current max is $20,500 in 2022).

Do you know why this is a mistake?

Your employer only has to match your 401(k) savings on each paycheck if you're also putting money into it.

So in this case, you just let your employer off the hook from having to put any money into your 401(k) from mid-May through December.

In the case of an employee earning a $200,000 salary, they would have walked away from ~$4,500 in “free money” from their employer’s match in mid-May through December.