Should I Invest in a 401K or Other Retirement Account without my Employer’s Match?

While many employers offer an incentive to their employees in the form of a company match to their 401K or other employer based retirement plans, there are many who do not offer their employees this benefit. If you are one of those employees, you may be unsure whether or not it even makes sense to invest your money in the plan. Having your employer match you, whether it is dollar for dollar up to a limit, or a certain percentage of your contributions, can help boost your retirement account. So having to fund your retirement account on your own, may not appeal to you.

While it is ideal that your employer offers a company match, if they don’t then you should still strongly consider investing in a 401K or other available retirement account. Remember, it is your responsibility to prepare for your retirement and to make decisions that will set you up for a long time. Hence, you owe it to yourself to take available opportunities to grow your money. When it comes to investing, time is your best friend. The earlier or sooner you begin, the more your money will grow.

If your employer has a 401K plan, then research the funds within the plan to see what makes sense for you. Do not invest in anything that you do not understand. Many employers offer Target Date investment funds, which is basically a fund that is diversified (containing different types of investment products) that is based on a year in which you anticipate retiring. The farther out your anticipated retirement date is, then the more stocks or riskier investments your portfolio will contain. Riskier investments are more likely to make more money, but they are also more likely to lose value. As your retirement date approaches, the managers of your Target Date investment fund will move to more safer investments, which does not produce as much growth, but protects your investments. Most people with little investment experience tend to choose Target Date investment funds, because it is diversified and managed by a professional investment account manager who makes day to day decisions. However, it should be noted that with any investment, you may lose what you initially put in.

For those with more investing experience, you may want to choose your own investment funds and make your own decision on how much riskier investments to include in your portfolio and how much safer investments to include. Again, if you are not sure what to choose, do your own research and practice due diligence. Seek professional advice if you need to do so.

So while your employer may not offer a company match, I would recommend that you still consider the 401k plan or other retirement accounts, just because of the potential to grow the money that you have today into a substantial amount that will be needed to live well when you are retired. Some people in their mature years work because they love it, others work out of necessity. If you have the chance today to change the direction of your future, think of ways to boost your retirement portfolio, whether it includes your employer’s match or not.

If you have any questions, suggestions, or feedback, please leave them in the comment section below.

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