Hoping to Grow Your Nest Egg Faster? Here's the One Thing to Do Every Month

Key Points

• Many Americans are worried they'll have too little retirement savings.

• You can grow your nest egg faster by earning your full 401(k) match.

• By making contributions, you can earn free money from your employer.

• The $23,760 Social Security bonus most retirees completely overlook ›

Around 60% of Americans say they have money saved in a retirement plan, according to a recent Gallup poll. Unfortunately, only half of retirement account owners think they'll have enough money saved to live comfortably in retirement. And these numbers are even worse for those without a retirement plan, as only 31% of people within this group believe they'll be retirement-ready.

If you are concerned your wealth-building efforts will fall short and you want to grow your retirement account more quickly, there's one simple way to do it. It's an option everyone should take advantage of if they are able, as it can make a huge impact on the size of your nest egg in the end.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

Don't pass up this opportunity to grow your nest egg more quickly

One of the best and most foolproof ways to supercharge the growth of your retirement account is to make sure that you are earning your full 401(k) match. A 401(k) match is a contribution that your employer makes when you invest in your own workplace retirement plan. Matches are structured in different ways in each employer-sponsored retirement plan, but some of the most common options include:

• A 100% match on a certain percentage of your salary, such as 4%
• A 50% match on a certain percentage of your salary, such as 6%

If you are eligible for a 100% match on 4% of your salary and you make $50,000 per year, then your employer would match up to $2,000 of contributions (4% of $50K). So you'd want to invest at least $2,000 per year in your 401(k) to claim the full $2,000 that your employer is willing to offer you, as you're getting a 100% match.

If you were eligible for a 50% match on up to 6% of your $50,000 salary, your employer would be willing to contribute a total of $3,000 to your 401(k), but you would need to invest $6,000 to claim it. It's still worth it, since you don't want to pass up this free money -- you just need to make sure you're investing a little more to max out the employer contribution.

Why is maxing out your 401(k) match so important to grow your nest egg?

Earning the maximum 401(k) match is a great way to grow your nest egg because you are getting free money when you do this. Not only that, but the tax breaks you get for a 401(k) investment mean you don't have to reduce your take-home pay by that much money in order to get a large contribution to your account.

Let's say, for example, that you're in the 22% tax bracket and you want to invest $6,000 to earn your $3,000 maximum match. Since you don't pay taxes on the $6,000 you are contributing, you can save up to 22% on this amount, or $1,320. So, your contribution only reduces your take-home income by $4,680. Your employer gives you $3,000 in this scenario on top of the $6,000 you invested, so you end up with a $9,000 contribution to your 401(k) account -- even though you only reduced your take-home income by just over half of that amount.

When you look at those numbers, it's easy to see why this is such a powerful wealth-building tool and why it should be a key part of your retirement planning. You should give it a try to see your nest egg grow dramatically larger and to set yourself up for a secure future. You can reach out to HR or your 401(k) administrator to find out what your match is and increase your contributions to ensure you earn it.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.