Why This Is "Free Money"

Employer matching is literally the best investment return you'll ever get - often 50% to 100% immediate returns! Here's how it works:

Common Matching Formulas

• 50% match up to 6%: For every $1 you contribute (up to 6% of salary), they add 50¢
• 100% match up to 3%: Dollar-for-dollar matching on your first 3% contributed
• Partial formulas: Some companies match 25¢ per $1, or have tiered matching

Your Action Plan

1. Find your formula: Check with HR or your benefits portal
2. Contribute the minimum: Always contribute enough to get the full match
3. Automate it: Set up automatic contributions so you never miss out

Why Starting Young Is Your Superpower

Time is the most powerful wealth-building tool you have. Here's the math that will blow your mind:

The $200/Month Example

The 10-year delay costs you $700,000! That's the power of compound interest.

How Compound Interest Works

1. Year 1: You invest $100, it grows to $108
2. Year 2: You invest another $100 + the $108 grows → $224
3. Year 3: $100 + $224 grows → $350
4. Eventually: Your money makes more money than you contribute!

Roth vs Traditional 401(k)

This decision could save you thousands in taxes! Here's the breakdown:

Why Roth Usually Wins for Young People

• Lower tax bracket now: You're likely earning less than you will in retirement
• Decades of tax-free growth: Your $1M retirement balance grows without taxes
• Tax diversification: Having tax-free money gives you flexibility
• No required withdrawals: More control over your money

The Smart Strategy

Many experts recommend a 50/50 split to hedge your bets against future tax changes!

What About Roth IRAs?

After capturing your employer match, consider maxing a Roth IRA ($7,000/year) before returning to max your 401(k). Roth IRAs give you more investment freedom and can withdraw contributions anytime penalty-free.

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