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Gen Z’s financial ignorance is resulting in the generation leaving thousands of dollars in free money on the table. For one woman, the “gigantic money mistake” resulted in a loss of $60,000 from her retirement savings.
Starting a new job is stressful.
Not only do you have to find a groove with your tasks, but you also have to navigate office personalities, deal with return-to-office policies, and try to impress your new boss. That’s not to mention the mound of paperwork like signing up for insurance and retirement savings, which for young professionals in particular, can be confusing. But putting it off can quickly result in a major money blunder.
For one woman, that ignorance added up to a six-figure financial mistake.
“I found out, after having worked for my company for many years, that I was leaving behind 100% match on my 401(k),” Teresa Greenip tells Fortune.
After landing a job at a commercial real estate firm, she neglected to take advantage of a retirement savings plan with a match program that in total would have been $60,000 in free money. Had it grown with her contributions at an average return rate, she would have amassed over $500,000 in retirement savings.
Making this “gigantic money mistake” was a wake-up call for Greenip, but it’s a situation that is not all that uncommon.
Nearly a quarter of all Gen Z employees aren’t enrolled in their company’s 401(k)—that’s three times the rate of millennials, Gen X, and boomers, according to BenefitsPro. Moreover, 12% of Gen Zers neglect to participate in any workplace benefits, double the rate of other generations.
A few small mistakes can compound into millions of dollars left behind
When Greenip graduated from Emory University in 2004, her heart was set on a high-paying career in the corporate finance world.
She checked all the boxes: she majored in business administration, served as a teaching assistant for tough courses like managerial accounting, and made the dean’s list. However, once she landed a job in commercial real estate, Greenip prioritized paying off her personal and student loans before considering saving for retirement.
And while prioritizing debt repayment may seem logical, it was exactly where she ran into trouble. Outweighing savings goals, even when retirement seems far away, can come back to hurt later in life.
Gradually investing in a 401(k) can be life-changing by the time retirement arrives—and the earlier you contribute, the greater the compounding. Employers commonly match up to 50% of an employee's 401(k) contributions, up to a maximum of 6% of their salary. For someone making $80,000 who begins contributing to their 401(k) at age 25, they could gain over $300,000 in employer contributions alone, which can compound over their lifetime into millions of dollars.