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Southern Workers More Likely to Miss Match

Roughly one-in-four workers are missing out on at least some of their employer match — but those south of the Mason-Dixon Line were more likely to than most, according to a new report.

The share of employees who contributed below the employer match level was highest in the South, where 27% of employees did not take advantage of their full employer match, according to Financial Engines, which analyzed data on 4.4 million plan participants in 553 plans (most of whom work for large companies). In contrast, the West had the lowest percentage of employees who missed out on their employer match (21%), with the Midwest and Northeast close behind at 22.5% and 22.2%, respectively.

The higher proportion of employees maximizing their employer match in the West may be in part due to the fact that the west had the highest median income of any region ($78,000). On the other hand, Midwestern employees, who had the lowest median income (60,800), did not have the worst performance. The employees in the Midwest were less likely to miss out on at least part of their employer match level compared to those in the South — 22.5% versus 27%, respectively — though the median income in the South was slightly higher than in the Midwest.

In aggregate, the average matching contribution missed was $1,336 per employee, which equates to an extra 2.4% of pay, according to Financial Engines — or $42,855 per plan participant over 20 years.

Among employees who missed their full employer match, the total amount of match contributions left on the table ($1.4 billion) was greater than the amount received ($1.0 billion). Financial Engines estimates that this adds up to an estimated $24 billion a year that American workers are leaving on the table by not saving enough to receive their full employer 401(k) match.

Not surprisingly, lower-income and younger employees were much more likely than others to miss out on at least part of their employer matching contribution.

The employees in this study had an average age of 45, and median income of $63,200, making them slightly older and more highly compensated than the typical American worker, according to Financial Engines.

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