It's no secret that most Americans are woefully unprepared for retirement. According to a report from the Economic Policy Institute, the median family between the ages of 32 and 61 has just $5,000 saved in a retirement account, while almost half of workers have no retirement savings whatsoever.

Given the many expenses you'll face as a senior, it pays to get your hands on as much retirement money as possible. So this year, when you think about your 401(k) strategies and goals, don't make the same mistake a good 25% of workers are currently making: passing up an employer match.


How much free money are we giving up?

Employer matches weren't always the norm, but these days, companies seem to be getting more generous. An estimated 92% of companies that offer a 401(k) plan are willing to match employee contributions up to a certain amount. Unfortunately, 25% of workers don't contribute enough to capitalize. The result? We're leaving an astounding $24 billion in unclaimed matching dollars on the table each year.

In fact, the average employee who doesn't receive a full company match passes up $1,336 annually. And not surprisingly, it's lower earners -- those who need that extra money the most -- who are increasingly likely to miss out. Among those earning less than $40,000 a year, 42% don't contribute enough to pocket company matching dollars in their entirety. Higher earners -- those making more than $100,000 a year -- are far more likely to get a full match, though 10% still end up falling short.

Age is a factor here, too. Employees under the age of 30 are about twice as likely to miss out on employer matching dollars than those over the age of 60. And while workers are more likely to claim their full employer match as they get older, this trend is interrupted when they reach their mid-30s and only picks back up in their mid-40s -- presumably because during this time, child care expenses and obligations eat up much of the money they'd otherwise allocate to retirement savings.

But no matter your reason for passing up free money, it's a major mistake, and one that might prove costlier than anticipated in the long run. The thing to remember about passing up a 401(k) match is that you're not just losing out on the base amount you fail to collect; you're also forgoing the opportunity to grow that money into a larger sum.

Let's assume you pass up $1,336 a year for 20 years, during which time your investments could've generated a somewhat-conservative 6% average annual return. First of all, over the course of 20 years, that's $26,720 less in your 401(k) right off the bat. But if you take growth potential into account, you're actually missing out on $49,000 -- almost double.

Now think about what $49,000 might do for your retirement. For one thing, it gives you an extra $200 a month in spending money over a 20-year stretch. Furthermore, it's money that could go a long way toward travel, paying off your mortgage or tackling the mountain of medical bills you're likely to face as you age.

No matter how old you are or how much you earn, here's your takeaway from all of this: Do what it takes to collect that employer match. Otherwise you're putting your retirement at risk.

Finding ways to save

If you're living paycheck to paycheck, contributing to a 401(k) can be easier said than done, so here are a few ways to eke out some additional savings:

  • Bank whatever extra money comes your way. Whether it's a bonus, a tax refund, or an unexpected inheritance, take your found money and put it into your 401(k). If you weren't counting on it to begin with, you should have less of a problem socking it away.
  • Cut back on one major spending category. If you take one large expense and lower it, whether it's housing, transportation, or food, you might feel the effects less so than you would by cutting numerous corners elsewhere. Think about it: You're probably better off living in a smaller apartment and shaving $300 off your rent than slashing your cable package, getting rid of your internet service, and being homebound every Friday and Saturday night to save money on leisure.
  • Consider some part-time work. If your current paycheck is truly maxed out but you have a hobby or talent you can monetize, a little effort might bring in some much-needed cash. It's far better than spending three evenings a week rotting away at a telemarketing center. That said, if your only option is that less appealing job, take it, at least temporarily, if it will give you enough cash to get that full match.

It's not often that free money comes your way, so if you have a chance to get your hands on some extra retirement cash with no strings attached, you'd be crazy not to take advantage. And while it might require some sacrifice now, your 65-year-old self will be unquestionably grateful down the line.