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Here's How to Add $335,000 to Your 401(k) With Absolutely No Effort

By Katie Brockman – Updated Oct 6, 2020 at 11:24AM

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It is possible to save hundreds of thousands of dollars for retirement without lifting a finger.

No matter how close or far away retirement is right now, it's crucial to be socking some money away in your retirement fund. The unfortunate truth, though, is that saving is tough, and there are probably dozens of ways you'd rather spend your money.

But the good news is that sometimes it's easier than you may think to save for retirement -- and there's one way to boost your 401(k) savings by hundreds of thousands of dollars with zero effort on your part.

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The power of the 401(k)

If you have access to a 401(k) plan through your employer, it's wise to make the most of this retirement account. One of the biggest perks of saving in a 401(k) is earning matching contributions from your employer -- these contributions can help your savings skyrocket without you lifting a finger. Matching contributions are essentially free money, and if given enough time to grow, they can amount to hundreds of thousands of dollars.

The average employer match is 3.5% of a worker's wages, according to the Bureau of Labor Statistics, and the average salary in the U.S. is around $48,000 per year. If you're earning an average salary and your employer matches 3.5% of that, that amounts to $1,680 per year in matching contributions.

Now let's say you let that money grow for a few decades. If you were to save just $1,680 per year for 40 years earning a modest 7% annual rate of return on your investments, you'd accumulate more than $335,000 in savings.

That's not even including your own contributions either -- only the free money from your employer. Once you factor in your own contributions in addition to the employer match, you could double your total savings. Additionally, your salary will likely increase over the years; if your employer is matching a percentage of your wages, that's more money you'll be earning in matching contributions, too.

An effortless way to save for retirement

When saving for retirement, one of the best things you can do is let your money do most of the work for you. By starting as early as possible and taking full advantage of employer matching contributions, you can minimize your own contributions while maximizing your total savings.

Compound interest allows your savings to snowball the longer they're able to grow in your retirement account, so the sooner you start contributing to your 401(k), the less you'll need to save each month to accumulate a significant amount of money.

In addition, earning the full employer match for as many years as possible will also help maximize your savings. When you start saving early and save at least enough to earn the full match, you can save hundreds of thousands of dollars with next to no effort.

Of course, this isn't to say you can't save a significant amount of money if you're off to a late start. It's never too late to start saving, and even if you don't have several decades left to save, you can still build a robust retirement fund by starting now. And by maxing out your employer match, you may be able to save much more than you think.

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