The average worker believes they'll need about $1.46 million to retire comfortably, according to a recent Northwestern Mutual survey. But for many people, that may seem unachievable. Even for those with high incomes, it can be a challenge.
Fortunately, many workers can still supercharge their savings by investing wisely and taking advantage of one key perk. Used consistently, it could boost the average worker's 401(k) balance by more than $500,000.
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Don't go it alone when you don't have to
Many employers offer a 401(k) match to help their employees save for retirement. But about 22% of eligible employees leave at least some of this free money on the table, according to Fidelity. Sometimes, this is unavoidable. When money is tight, regular bills take priority over long-term savings.
But those who can spare the cash definitely shouldn't underestimate the value of matching contributions. It might not seem like much at first, but invested for several decades, the value of an employer's matching contributions really start to stack up.
The most common 401(k) plan with a match offers employees up to 4% of their salary in matching contributions, according to Fidelity. For a full-time worker earning $60,000 per year, the median annual salary for Americans according to the latest Bureau of Labor Statistics data, a 4% match would provide an additional $2,400 per year in retirement savings.
That single year of matching contributions could grow to nearly $42,000 after 30 years, assuming it earns a 10% average annual return like the S&P 500. In reality, they would likely have more than that because of the personal contributions necessary to earn the match in the first place.
The value in consistently claiming your 401(k) match
While claiming a 401(k) match or even part of a match for just one year can already be impactful, you'll notice the biggest benefit by taking advantage of it as often as you can. Sticking to the above example of someone with a $60,000 salary who claims their 4% employer match every year and earns 10% annual returns, the matching contributions alone would be worth over $500,000 after 32 years.
Most people's careers are longer than 32 years, so this even allows you some wiggle room if you aren't able to claim your match all the time, or you can only claim part of it in some years. Your annual salary is also likely to rise over time, which would further boost the value of any matching contributions.
Claim whatever you can
Claiming a full 401(k) match every year isn't in the cards for everyone, but with enough time, even partial matches can grow into enough savings to cover significant chunks of your retirement expenses.
It's never too early -- or late -- to take advantage of this valuable part of your compensation, so review your 401(k) contributions annually to make sure you're claiming as much of your match as possible.
