The daughter of some family friends came by our house this week to use our printer.
She's 22, just graduated, and starts her first real job in a couple of weeks.
Apparently nobody under 30 owns a printer anymore, which is how I found out I am now OLD.
She needed hard copies of her onboarding packet — direct deposit forms, her W-4, benefits elections, the whole stack.
So she sat at our kitchen table filling it out, and every few minutes she'd look up with a question. Which parts am I supposed to fill in and which parts does HR do? What's this form even for? Is it bad that I don't know my routing number by heart?
Then she got to the retirement section and asked the one that actually mattered.
"How much am I supposed to put in my 401(k)?"
Nobody had told her. Not her school, not her parents, not the HR portal. There was just a blank box with a percent sign next to it, and no indication that the number she wrote in it was worth more than everything else on the page combined.
Start With the Only Number That's Non-Negotiable
I told her the honest answer: I don't know what her budget can handle, and neither does anyone else writing generic advice on the internet. She's got rent, a car payment, groceries... and a starting salary that has to cover all of it.
But there's one floor, and it isn't really about retirement planning at all. Contribute at least enough to capture your employer's full match.
A 401(k) match is money your employer adds to your account on top of your salary, but only if you put in your own money first. The most common formula in Vanguard's plan data is 50 cents on the dollar for the first 6% of your pay. Some employers are more generous, some less, and about 95% of Vanguard's plans offer some form of employer contribution.
Here's what that formula looks like in dollars. Say she starts at $60,000. If she puts in 6% — $3,600 a year, or $300 a month — her employer adds $1,800.
That $1,800 is not a return on an investment. It's not a bonus tied to performance. It's compensation she is entitled to that simply does not get paid unless she checks a box. Turning it down is a voluntary pay cut, and it's the only one I know of that people regularly take by accident.
The Trap Nobody Warned Her About
Here's the part I really wanted her to hear, because it's new and it catches people who think they've already done the right thing.
Under the SECURE 2.0 Act, most 401(k) plans are now required to enroll new employees automatically. That's a genuinely good policy — inertia used to leave millions of people saving nothing at all. The law sets the default contribution somewhere between 3% and 10% of pay.
Notice that the low end of that range is 3%. Notice that the common match formula runs to 6%.
If her plan defaults her in at 3% and her match runs to 6%, she gets auto-enrolled, sees money going into a retirement account, reasonably concludes she's handled it — and collects $900 instead of $1,800. She's doing something right, which is exactly what makes it so easy to miss that she's leaving half the free money behind.
That $900 gap doesn't stay $900. If she contributed at the default rate for a full career instead of at the match threshold, that forgone match alone — $900 a year, growing at a 7% average annual return for 40 years — works out to roughly $180,000 she'd never see. And that math assumes she never gets a raise, which makes it the conservative version.
So the instruction isn't "make sure you're enrolled." It's: find out what your specific match formula is, and set your contribution to at least that number. It's in your summary plan description, and if you can't find it, HR can tell you in about 90 seconds.
The Asterisk on "Free Money"
One thing worth knowing before you count that match as yours: It may not be yours yet.
Every dollar you contribute is 100% yours from the moment it lands, permanently, no matter what. But employer contributions can come with a vesting schedule — a waiting period before you own them. Federal law allows two structures: a three-year cliff, where you own none of the match until year three and then all of it at once, or graded vesting over as long as six years, where you own a rising share each year. Plenty of employers vest immediately.
This matters more for a 22-year-old than for almost anyone else, because she is statistically likely to change jobs a few times in her twenties. Leaving two months before a cliff date is a real and avoidable way to walk away from several thousand dollars.
It doesn't change the advice — take the match either way, because a match you might not keep still beats no match at all. It just means "free money" comes with a date attached, and it's worth knowing yours.
What About Everything Above the Match?
She asked, reasonably, whether she should be doing more than the match. The federal limit on what you can put in yourself is $24,500 in 2026.
More is generally better, and 10% to 15% of pretax pay is the range worth building toward. But I'd rather she hit the match every single year for forty years than stretch to 15% now, discover in March that she can't cover her car insurance, and turn the whole thing off. Consistency is what compounds. Ambition that gets switched off four months in doesn't.
I also told her not to measure herself against the $24,500 ceiling. Almost nobody clears it, and the people who do are overwhelmingly high earners — it's a cap, not a target.
One thing that does help: The money comes out pretax, so it costs less than it looks. In the 22% federal bracket with no state income tax, contributing $100 reduces her take-home pay by about $78, not $100. (Payroll taxes still apply to the full amount, so it's not free — just cheaper than the sticker price.)
Back to the Kitchen Table
Ultimately, she opted to change her contribution amount so that she maximized her match.
That was the whole intervention. Thirty seconds, one field, no financial planning, no budget spreadsheet, no discussion of asset allocation or target-date funds or any of the things people assume you need to understand before you're allowed to start.
Most of the money advice aimed at 22-year-olds is about restraint — skip the coffee, cook at home, resist the impulse buy. This is the opposite. This is the rare case where the entire decision is one number, the right answer is knowable in a single phone call to HR, and the payoff is a raise you give yourself by filling out a form correctly the first time.
If there's someone in your life starting a first job this fall, ask them what they put in that box. There's a decent chance nobody else will.
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