Kerra Bolton

Sun, May 25, 2025, 8:02 AM4 min read

Millions of Americans have access to a 401(k), but many are leaving money on the table.

According to Vanguard’s annual retirement savings report, nearly one in five workers isn’t taking full advantage of an essential retirement benefit.

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So, what’s the smartest move an employee can make with their 401(k)? According to financial experts, the overwhelming answer is clear.

When it comes to 401(k) plans, the single most important move an employee can make is to contribute enough to receive the full employer match. It’s one of the few instances in personal finance where the reward is both guaranteed and immediate.

A 401(k) employer match is a contribution made by an employer based on the employee’s retirement plan contributions. For example, if an employer matches 100% of contributions up to 5% of salary, an employee earning $60,000 per year could receive an additional $3,000 annually, just by contributing $3,000 themselves.

“If you’re not taking advantage of the full benefit, it’s like leaving free money on the table,” said Katharina Reekmans, a financial expert at TurboTax. “The contributions from your employer are an immediate return on your investment and with no risk.”

However, Reekmans said contributing to a 401(k) is a great way to save for the future, even without an employer match. For example, in 2025, 401(k) contribution limits rise to $23,500, with extra room for older workers through catch-up contributions.

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Despite the clear benefits, millions of eligible workers still don’t take full advantage of their 401(k) plans, especially the employer match.

According to Vanguard’s “How America Saves 2024” report, about 18% of eligible workers are not participating in their 401(k) plans at all. Among those who do contribute, many aren’t saving enough to qualify for the full match.

For some, it’s a matter of financial strain. Contributing to a retirement account can feel like a luxury when budgets are tight, especially for Gen X who are juggling caregiving for parents and children and rising living costs.

Gen X generally contributes the least to 401(k)s, often falling behind younger generations like millennials and Gen Z in terms of savings and participation rates. According to an annual Fidelity retirement planning survey, several factors contribute to this, including delayed savings initiation, lack of awareness about 401 (k) plans in their early years, and financial burdens related to family and career transitions.