Always Get the Full Match
The employer match is the single best investment move available to most Americans. Here is why it always comes before Roth IRA, before HSA, before paying down debt (except high-interest).
The math is unbeatable
If your employer matches 50% of your contributions up to 6% of salary, and you earn $75,000, here is what happens when you contribute $4,500 (6% of salary):
Your contribution
$4,500
Employer adds
$2,250
Instant return
50%
No stock, bond, ETF, or savings account offers a guaranteed 50% immediate return. Not capturing the full match means leaving thousands of dollars per year permanently on the table.
Common match structures
The vesting schedule caveat
Some employers require you to stay for 1-3 years before the match is fully yours (vesting schedule). Immediate vesting means the match is yours on day one. Cliff vesting means you get nothing if you leave before year 2-3. Graded vesting phases in over 2-6 years.
Even with a 3-year vesting schedule, getting the match is almost always worth it. A 50% return even if vested over 3 years still beats most investment alternatives.
When to deviate from the match rule
High-interest debt (credit cards at 20%+) should be paid before going beyond the match. The 50% match return beats 7% market returns but not 20% credit card interest. Get the match, pay off high-interest debt, then max the Roth IRA. The order matters.