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What You Don't Know Can Hurt You

According to a 2005 study done by Hewitt Associates of "low savers"—that is, employees who either did not contribute anything to their 401(k) plan or did not contribute enough to meet the requirement for a full company match—a majority of these employees do not have even a basic understanding of how their company 401(k) plan works. In addition, 73 percent do not know the rate at which their company matches employee 401(k) contributions. Most disturbing of all, 54 percent of these low savers do not even know whether their employers offer a matching contribution.

In his song "Kodachrome," released in 1973, Paul Simon sang that his "lack of education did not hurt me none." When it comes to being able to take advantage of your company's 401(k) program, however, ignorance can cost you dearly in lost savings over the years.

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