Employer 401(k) match can make huge difference in retirement

When you're choosing between two job opportunities, many people will compare the salaries, and go with the higher pay. But it's just as important to compare the benefits.

Eric Ryles managing director at ALM Intelligence, says working for a company that provides an employer match in your 401(k) versus one that doesn't could mean a huge difference in your retirement savings at the end of your career. His firm did a study of the benefit at supermarket chains.

"The employer match is one of those things that doesn't seem like a big deal when you are picking a company," he says. "If you go somewhere and stay for whole career, the employer match could hit to the tune of hundreds of thousands of dollars. That's the miracle of compound interest. But in this case it's working against you, not for you."

The study looked at one that provided a 401(k) match that ended up paying $449 less than the industry average, which was $1,000. So at the end of a long career (40 years was used in the example), what was the difference between the two employees?

"It was $168,000," he says. "It's a huge amount of difference if there is not employer match or if it (the match) gets reduced. That has long-term consequences."

"Over 40 years, $449 a year is only $20,000," he says. "But it's all the growth. It's all the compounding. That's the killer."

He says the match also serves as an incentive to employees to save. Fewer people contribute to 401(k)s when there is not an employer match.

Ryles says companies need to do a better job of educating employees. "Employers don't do a good enough job of explaining to employees the benefits of long-term investing," he says. "There is a lack of good financial education, especially at employer level, to let employees know why they should be saving, how they should be saving and why they should be doing their homework."