This move could potentially double your 401(k) contributions for the year.
Retirement savings might not be top of mind for you right now with the holidays just weeks away. But if you have a little cash to spare, it’s worth reviewing your retirement savings plan for 2025 to see whether you ought to make any last-minute changes.
Things like upping your contributions or doing a Roth IRA conversion before the end of the year can make your life in retirement much more comfortable. But there’s one step you should prioritize above all others if you haven’t already checked it off for 2025.
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The time to claim your 2025 401(k) match is running out
You’re only allowed to make 2025 401(k) contributions until Dec. 31. That’s also the deadline for claiming your 2025 401(k) match, if you’re eligible for one. You may have already done this, but if not, there are still a few weeks left to try to get at least some of your match.
It might not seem that important to you when you have a bunch of big expenses coming up, but if you skip your match, you’re giving up more than its current face value. You’re also forfeiting all the earnings you could’ve had on that matching contribution.
Say you earn $60,000 per year and you qualify for a 4% dollar-for-dollar 401(k) match. So if you save $2,400, your employer will also add $2,400 for a total of $4,800. If that one match earned a 10% average annual return for 20 years, it would be worth more than $32,000.
If you consistently claimed a $2,400 match every year, you’d have more than $137,000 in matching contributions alone after 20 years, again assuming a 10% average annual return. You’d actually have close to $275,000 saved when you count your personal contributions too.
This likely wouldn’t be enough for you to retire on alone. But it demonstrates how important your match can be for helping you reach your retirement savings goals.
If you haven’t already claimed your full match, take advantage of these last few weeks of the year to get what you can. Subtract your year-to-date contributions from the percentage of your salary that you must contribute to get your full match. Talk to your HR department if you don’t know what this is. Then, divide the amount you have yet to save by the number of pay periods in the year.
In our previous example, if you needed to set aside $2,400 to claim your full match, but you’ve only saved $2,000 in your 401(k) so far, you’d divide the remaining $400 by the number of pay periods left to figure out how much you must transfer from each paycheck.
When you might want to skip your 401(k) match
There are a few situations where claiming your 401(k) match might not be your wisest move right now. The first is if you’re a relatively new employee who’s not fully vested in your 401(k) and you’re thinking about leaving the company soon.
A vesting schedule determines how long you must work for a company before you’re allowed to keep your 401(k) match if you quit. Some companies have cliff vesting schedules where if you leave before you’ve worked there for a certain number of years, you forfeit all of your employer match. Others have a graded vesting schedule where you gain ownership over a portion of your 401(k) match each year. Check with your employer if you’re not sure about the vesting schedule.
If you don’t believe you’d get to keep your 401(k) match because you’re planning to leave the company, you might be better off stashing any extra savings you have in an IRA. IRAs give you greater freedom to invest your money how you’d like. This can also help you pay less in fees than you would with a 401(k).
The other reason you may want to skip 401(k) contributions is if you can’t afford to make them without taking on debt. This is a common issue, especially around the holiday season when people are already facing extra expenses.
You may want to claim as much of your match as you can, even if it’s not the whole thing. Or if you don’t think you can spare anything, look ahead to 2026. Figure out how much you’ll need to save per pay period to claim your full match before the end of next year and then start right away in January.