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There's a lot to think about when you're considering taking a new job, including the hours, the environment, and whether you would actually enjoy the work. But for many people, compensation will always be the top concern. This starts with your salary, but it also includes all the benefits your employer offers, including any employer 401(k) match.
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A quality match can make it much easier to reach your retirement goals, but it's not always easy to figure out what one looks like. One Reddit user who was recently offered a job took to the social media platform to ask whether the 4% match they were being offered was reasonable.
What's an average 401(k) employer match?
byu/cobigguy inpersonalfinance
The answer isn't as clear-cut as you might imagine. Here are a few things you need to consider when deciding whether a 4% match is competitive enough for your next job.
What's the average 401(k) match?
The company seeking to hire this Reddit user offers a 100% match on the first 3% of compensation contributed to the retirement account and a 50% match on the next 2% of compensation for a total match of 4%. The applicant wanted to know what the average match was. While we may not have data from every employer that offers a 401(k), we still have a rough idea of what's typical.
Every year, Vanguard surveys the companies that partner with it to offer 401(k)s to their employees. Its 2024 report revealed that a 50% match on the first 6% of pay was the most common matching formula, with about 16% of plans adopting this. Tied for second (with about 10% of plans each) were a 100% match on the first 6% of pay and the tiered-match formula the Reddit user was offered -- 100% match on the first 3% and 50% on the next 2%.
The report also identified 4% as the median 401(k) match, though the average was slightly higher at 4.6%. Based on this, a 4% match is normal for companies that offer to make matching contributions.
A lot depends on your industry, though. Some Reddit commenters with experience in higher education responded to the original post saying that they've received matches of 10%, though that generosity on the benefits front is usually paired with a less competitive salary. Companies in other industries routinely don't match employees' 401(k) contributions at all, or offer more limited matches.
If you're not sure whether your 401(k) match is competitive, it can't hurt to reach out to other people in your industry, perhaps on industry-specific forums, to inquire whether the match a potential employer offered you is worth it. If you go that route, though, it would be best to do so promptly after receiving the offer, especially if you're expected to respond to the employer quickly.
Weigh it alongside your salary and other benefits
A high 401(k) match can be a great benefit, especially if you haven't been able to save as much for retirement as you wanted to in years past. But it's only part of what you're getting -- and it's not even guaranteed. Employers can change their 401(k) matching formulas or even stop providing a match at any time.
Consider the 401(k) alongside the other aspects of the job offer -- salary, working conditions, health insurance, and any other benefits available to you. Decide which factors are most important to you and analyze how your prospective employer's benefits stack up to those offered by your current employer or other companies in the industry. If you would have to move for a new job, consider how the cost of living in your new city compares to your current cost of living. If you're moving somewhere more expensive, you'll need a proportional bump in salary just to keep your quality of life the same.
If you think you may only be at your new job for a year or two, you need to understand the company's 401(k) vesting schedule. This determines how much of your employer match you will get to keep if you leave the company prior to various milestones. With some companies, you'll forfeit all of your matching funds if you leave before you've worked there for three years. With others, you gain ownership of your matching funds gradually over time. You might get to keep 20% after the first year, 40% after the second year, and so on.
If you don't think you'll stick around long enough to claim your employer match, you may not need to factor that benefit into your decision-making.
