05/29/2024
The 401(k) is now the most popular type of retirement plan, with many employers providing a company match when workers sock away money in their accounts. But these matches — often shorthanded as "free money" from your company— may exacerbate inequality in retirement, new research finds.
About 44% of employer matches are directed toward the top 20% of earners, according to a May study from researchers at Vanguard, Yale University and the Massachusetts Institute of Technology. By contrast, the bottom 20% of workers receive just 6% of their employers' matching contributions, the analysis found.
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Most employers give a company match for people who sock money into their 401(k)s. But that "free money" may be doled out unfairly.
