This article is part of a series. Please enjoy reading the other articles in the series: Your Tax-Advantaged Investing Guide: Start here, How HSAs Can Power Financial Independence: Checklist included, Maxing Out Your Roth IRA: Checklist included, Maxing Out Your 401(k) Beyond Your Employer Match: Checklist included, College Savings Plans, 529s, and ESAs: Checklist included.
At Oberdorfer Financial, we believe your money should always be on a mission.
We believe in maximizing every financial advantage available to you. One of the most powerful tools in building wealth and securing your financial future is optimizing your investment returns on your 401(k) by contributing enough to get the employer match, which immediately creates a 100% return.
One of the most impactful financial moves you can make is contributing to your 401(k) up to your employer match. It’s a rare instance of “free money” in personal finance, and yet, many professionals fail to take full advantage of it.
If you’re not contributing at least up to your employer’s match, which means your employer is “paying” you more by matching your 401k contributions, you’re leaving money on the table—money that could be compounding for decades, securing your financial independence sooner.
Let’s break down the power of employer-matched 401(k) contributions, how they accelerate your investment growth, and why this is one of the first financial steps we emphasize at Arena Investor.
What Is a 401(k) and Why Is It So Important?
A 401(k) is an employer-sponsored retirement account that allows you to contribute a portion of your paycheck pre-tax (or post-tax, in the case of a Roth 401k). It’s designed to help employees build long-term wealth while receiving tax advantages along the way.
Many employers sweeten the deal by offering a match—where they contribute a percentage of your salary to your 401(k) based on how much you put in. This means every dollar you contribute (up to the match) gets an immediate 100% return through employer contributions—an unmatched opportunity in personal finance.
For example, if your employer offers a 100% match on the first 5% of your salary, and you earn $100,000 per year, that means:
- If you contribute 5% ($5,000), your employer adds another $5,000, effectively doubling your contribution.
- If you contribute less than 5%, you’re missing out on free money.
This is why Oberdorfer Financial strongly recommends contributing at least up to your employer match before directing funds elsewhere.
The Power of Compounding Growth in a Matched 401(k)
A matched 401(k) isn’t just about getting free money—it’s also about harnessing the power of compounding money to grow your retirement savings exponentially.
Let’s take an example:
- You contribute $5,000 per year (5% of a $100,000 salary).
- Your employer matches that with $5,000 per year.
- Your total annual contribution is $10,000.
- Assume an average annual return of 7%.
After 20 years, your 401(k) balance could grow to approximately $440,000—all from just contributing up to the match.
If you only contributed your own $5,000 without the match, you’d have just $220,000—half as much. That’s the power of taking full advantage of your employer’s contributions.
And if you continue to contribute for 30 years? Your 401(k) could grow to over $1 million—again, just from contributing up to the match.
This is one of the simplest, most effective financial decisions you can make.
401(k): A Powerful Hedge Against Inflation
One of the biggest financial risks over time is inflation, which erodes the purchasing power of your money. Fortunately, a 401(k) invested in stocks is one of the best long-term hedges against inflation. Historically, the stock market has delivered average annual returns of 7-10%, outpacing the average inflation rate of 2-3% per year.
This means that over decades, a well-invested 401(k) not only grows but also protects your wealth from being devalued by rising costs. Unlike cash savings or low-yield bonds, equities tend to rise with inflation, as companies increase prices, profits, and dividends over time. By consistently contributing to your 401(k) and investing in stocks, you create a built-in defense against inflation, ensuring that your retirement savings hold their value—and grow—despite rising living expenses.
At Oberdorfer Financial we like a mostly-stock portfolio when clients are younger, as not just an opportunity for growth but also a hedge against inflation. Then, as the client gets closer to Financial Independence / retirement the ratio of stocks-to-bonds comes down. Understanding which stocks to own, which bonds to own, in what ratios, and how to adjust over time is part of our fee-only, professional, fiduciary investment management.
401(k) vs. Similar Retirement Plans
Not everyone has access to a 401(k). Fortunately, similar employer-sponsored plans exist:
- 403(b) plans – Often offered to public school employees and nonprofit workers.
- 457(b) plans – Typically available to government employees.
- Thrift Savings Plan (TSP) – A retirement plan for federal employees and military personnel.
Each of these plans operates similarly to a 401(k), offering tax advantages and often an employer match. No matter which plan you have, contributing up to the match is one of the smartest financial moves you can make.
Your 401(k) Stays with You—Even If You Change Jobs
One common misconception about 401(k)s is that you lose them when you leave your job. Not true.
If you change employers, you typically have several options:
- Leave your 401(k) with your former employer (if they allow it).
- Roll it over into your new employer’s 401(k) plan.
- Transfer it to a Rollover IRA for more investment flexibility.
- Withdraw the funds (not recommended due to taxes and penalties).
At Oberdorfer Financial, we help clients strategically transfer tax-advantaged retirement funds, ensuring their investments continue compounding efficiently while minimizing tax implications.
Note: if you’d like an Oberdorfer Financial Advisor to complete the transfer process for you, consider our Investment Management offering.
Aligning Your 401(k) with Your Full Financial Picture
Oberdorfer Financial is happy to manage your 401k for you. It can feel like a burden to think about 20-40+ years of managing investments and trying to determine how it integrates into your growing net worth, updated life goals, and market turbulence. At Oberdorfer Financial, we don’t just manage your 401(k) in isolation. We integrate it into your full investment strategy, considering factors such as:
- Your Investor Profile – Your age, goals, and risk tolerance should align with your 401(k) investment strategy. We ensure you’re not taking on too much risk—or too little.
- Your Other Investments – Do you own real estate? Have business assets? Crypto? We make sure your total financial picture is balanced for optimal risk and return.
- Financial Independence Goals – If you’re on a path to early retirement, we optimize your 401(k) to support that goal, along with other tax-advantaged moves.
- Market Volatility & Life Changes – Markets shift, life happens, and financial plans evolve. We have the professional, fiduciary investment management experience to know when to adjust your portfolios – and when to hold steady.
Many investors aren’t sure if their 401(k) aligns with their broader financial strategy—that’s where we come in. We can meld together the full financial picture and guide you along the way.
Unlike many advisors who charge high all-in fees (1.65% is what investors tend to pay, not 1% like they think, per Kitces), Oberdorfer Financial offers investment management with clear, straightforward pricing—no hidden fees, no conflicts of interest, just sound investment strategy. We are a fee-only advisory. No commissions, no [fill-in-the-blank] fees.
401(k) Up to the Match Checklist: From Setup to Ongoing Success
Setting up and contributing to your 401(k) is one of the best financial moves you can make, and getting started is easier than you might think. Follow this step-by-step checklist to ensure you enroll, contribute, and maximize your retirement savings efficiently.
Step 1: Confirm Eligibility and Enroll
___ Check eligibility requirements – Some employers have a waiting period before you can enroll. Verify when you can start contributing.
___ Get the plan details – Request a summary of your employer’s 401(k) plan, including investment options, employer match, vesting schedule, and fees.
___ Check if Roth 401(k) is an option – Some plans offer a Roth 401(k), where contributions are after-tax but grow tax-free. Consider your current and future tax situation when choosing between traditional and Roth.
___ Sign up through HR or your employer’s 401(k) provider – Your HR department will guide you through the process of setting up your account.
Step 2: Decide How Much to Contribute
___ Contribute at least enough to get the full employer match – If your employer offers a match (e.g., “100% of the first 5% you contribute”), take full advantage of this free money.
___ Aim for higher contributions over time – Details about investing in your 401(k) beyond the match can be found here.
___ Consider IRS contribution limits – For 2025, you can contribute up to $23,000 (or $30,500 if you’re 50+).
Step 3: Select Your Investments
___ Review investment options* – Your 401(k) will offer a selection of mutual funds, index funds, and possibly target-date funds.
___ Align your portfolio with your Investor Profile* – Choose investments based on your Investor Profile – key factors such as age, risk tolerance, long-term goals, and your overall financial picture. Arena Investor can help align your 401(k) with your broader financial plan, including real estate and other investments.
*Oberdorfer Financial’s Investment Management offering can professionally manage your 401(k)s for you so you don’t need to make the investment decisions, especially the selection of portfolio holdings, weighting adjustments over time as you grow closer to your goals, and the market ups and downs that challenge one’s decision-making.
*We also offer Portfolio Checkups that are a one-time look at how well your Investor Profile and your actual Investment Portfolio aligns – we then make specific recommendations for which stocks, bonds, funds, etc to buy, sell, or trim to realign a misaligned portfolio.
___ Opt for automatic rebalancing (if available) – This helps maintain your preferred stock/bond mix without manual adjustments.
Step 4: Set Up Payroll Contributions
___ Decide on your contribution percentage – Contributions come directly from your paycheck. Start with what you can afford and increase over time.
Step 5: Monitor and Adjust Over Time
___ Increase contributions with raises – Set a reminder to boost contributions whenever you get a salary increase or bonus.
___ Review your account at least once a year – Ensure your investments align with your risk tolerance and adjust if necessary.
___ Consider rolling over old 401(k)s – If you change jobs, you can roll over your 401(k) into your new employer’s plan or an IRA to maintain tax benefits and better control your investments.
Step 6: Maximize Tax and Retirement Benefits
___ Take advantage of tax benefits – Traditional 401(k) contributions lower your taxable income today, while Roth 401(k) withdrawals are tax-free in retirement.
___ Plan for early retirement options – If you leave your job at age 55 or older, you may be able to withdraw from your 401(k) penalty-free.
___ Work with a financial advisor* – Oberdorfer Financial provides Financial Planning, Investment Management, and integrated Real Estate services to comprehensively understand your entire financial picture and cohesively manage your journey to Financial Independence.
By following this checklist, you’ll set yourself up for a secure financial future, take full advantage of employer contributions, and ensure your 401(k) works as a powerful retirement vehicle. Need help optimizing your plan? Reach out to Oberdorfer Financial for expert investment management tailored to your goals.
Make the Smart Move—Don’t Leave Money on the Table
Contributing to your 401(k) at least up to the employer match is one of the easiest and most rewarding financial moves you can make. It’s an instant 100% return, a powerful tool for long-term wealth, tax-advantaged, and a key component of achieving Financial Independence.
At Oberdorfer Financial, we help professionals and business owners strategize and optimize their investment choices, ensuring they make the smartest decisions for long-term success.
Thank you for your continued trust in Oberdorfer Financial.
Truly,
The Oberdorfer Financial Team
At Oberdorfer Financial, we help The Ones in The Arena — hardworking men, women, and owners of America. Together, we’ll keep your Money on a Mission.
Schedule a Discovery Meeting here to learn more.
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