Overestimating how well your investments will perform can put your retirement savings in big trouble. If you expect a 20% average annual return over the course of your career and you only get a 10% average annual return, you'll wind up with a lot less money than you thought, even though you still made a strong profit.
That's why it's generally best to plan for a lower rate of return on your savings -- with one exception. For many 401(k) owners, there is one way to get a 100% return on their investment year after year.
Image source: Getty Images.
Don't leave your 401(k) match on the table
When your employer matches 100% of your 401(k) contributions, up to a certain percentage of your income, you instantly double your money. As long as you don't quit before you're fully vested in the plan, you can be assured of at least a 100% return on your 401(k) contributions.
But that's just the start. Your contributions and your employer's match will remain invested for years or even decades. This means you could wind up with a much larger return on that money by retirement.
Of course, not everyone with a 401(k) receives a match, and not everyone eligible for a match can claim the full amount. But it's worth getting what you can each year if you qualify for a match. Even a partial match could be worth thousands of dollars today and possibly tens of thousands of dollars by retirement.
