With only 10 years left until retirement, missing your employer’s 401(k) match can leave a sizable hole in your savings. If your employer offers a 4% match and you fail to claim it, you could give up almost $45,000 by retirement. That amount includes both missed contributions and investment growth that you could have earned, which will be hard to make up in just a decade.
How to Calculate the Cost of Skipping Your Employer Match
As retirement gets closer, you may be tempted to reduce 401(k) contributions in favor of more take home pay. Paying down a mortgage, helping family members or building cash reserves can compete for money during your final working years.
A shorter time horizon does not make an employer match less valuable. If you earn $85,000 and your employer offers a 4% dollar for dollar match, you could receive $3,400 annually by contributing enough to qualify for the full amount. Assuming each annual match is deposited at the beginning of the year and earns an average 6% return, those employer contributions could grow to almost $44,800 over 10 years.
For 2026, the employee contribution limit is $24,500. Workers age 50 and older can contribute another $8,000, while those ages 60 through 63 can make a higher $11,250 catch-up contribution. 1 If you earn $85,000 annually, contributing at least 4% of your pay would qualify you for the full $3,400 employer match in this example:
| Year | Employer Match | Calculation at 6% | Value at Retirement |
|---|---|---|---|
| 1 | $3,400 | $3,400 × 1.06⁹ | $5,744 |
| 2 | $3,400 | $3,400 × 1.06⁸ | $5,419 |
| 3 | $3,400 | $3,400 × 1.06⁷ | $5,112 |
| 4 | $3,400 | $3,400 × 1.06⁶ | $4,823 |
| 5 | $3,400 | $3,400 × 1.06⁵ | $4,550 |
| 6 | $3,400 | $3,400 × 1.06⁴ | $4,292 |
| 7 | $3,400 | $3,400 × 1.06³ | $4,049 |
| 8 | $3,400 | $3,400 × 1.06² | $3,820 |
| 9 | $3,400 | $3,400 × 1.06 | $3,604 |
| 10 | $3,400 | $3,400 | $3,400 |
| Total | $34,000 | $44,815 |
Skipping the full match in this example would mean giving up $34,000 in employer contributions plus roughly $10,800 in potential investment growth. Once a year’s matching opportunity has passed, you generally cannot recover it later.
A financial advisor can help you calculate a contribution rate and set a savings target for the last decade before retirement.
What $45,000 Could Add to Your Nest Egg Over 20 Years
Employer matching contributions can remain invested after you retire and continue earning returns until you withdraw them. Assuming a hypothetical 6% annual return with no withdrawals, $44,815 could grow to the following amounts over the next 20 years.
| Years Into Retirement | Starting Amount | Calculation at 6% | Potential Value |
|---|---|---|---|
| 5 years | $44,815 | $44,815 × 1.06⁵ | $59,973 |
| 10 years | $44,815 | $44,815 × 1.06¹⁰ | $80,257 |
| 15 years | $44,815 | $44,815 × 1.06¹⁵ | $107,402 |
| 20 years | $44,815 | $44,815 × 1.06²⁰ | $143,728 |
After 20 years, that $44,815 could grow to nearly $144,000. Almost $99,000 of that amount would come from potential investment growth after retirement.
This example assumes the money remains invested without withdrawals and earns 6% annually. Actual returns will vary, and taking distributions would reduce the amount left to compound. These projections also depend on employer plan rules and whether the employee remains eligible for the match throughout the period.
How to Capture the Full Match With Just 10 Years Left
A higher 401(k) contribution can be harder to manage when cash flow is tight. Using part of a raise or bonus, or cutting discretionary expenses, can free up money to contribute more without reducing what you need for mortgage payments or family expenses. Gradually raising your contribution rate can also make the increase easier to fit into your budget.
Once you reach the contribution rate needed for the full match, review it after salary increases or changes to your company’s matching formula to make sure you’re still contributing enough. A financial advisor can help calculate the exact rate needed to capture the full match without exceeding what your budget allows.
Photo credit: ©iStock.com/ariya j, ©iStock.com/Dilok Klaisataporn
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