But that means maxing out your contributions, too.
That has proven to be a tremendous challenge for millions of American workers, a quarter of whom aren’t taking advantage of their employers’ 401(k) matching programs because they simply don’t have enough room in their budgets to put additional money aside for retirement.
All told, Americans are leaving $24 billion in unused 401(k) matches on the table each year.
It’s a colossal problem. Lendtable may have the solution.
What is Lendtable?
Launched just last year, Lendtable is a rapidly growing startup whose aim is to ensure Americans, regardless of income bracket, will save more money for retirement without having to work longer or harder.
“What we realized is that 401(k) matches are a huge opportunity to provide money to people that they can save and invest,” says Isaiah de la Fuente, head of growth at Lendtable.
Lendtable’s business model is simple: If your employer offers a 401(k) match, but you can’t afford to contribute as much to it as you’d like, the company will advance you the money you need to max out your contribution and, consequently, your employer’s.
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How does Lendtable work?
Let’s say your employer will match up to $5,000 a year in 401(k) contributions.
If you’re like most Americans, that’s a lot of money to set aside, especially if your plan is to contribute the same amount every year. If you can only kick in $1,000 -- and good for you if you can save that much -- your employer will also only contribute $1,000.
That means you’d miss out on $4,000 in what is essentially free money.
In this case, Lendtable would front you the $4,000. Your 401(k) contribution will be maxed out for the year and your employer will be required to match the full amount. Now, instead of having $2,000 in your account at the end of the year, you have $10,000.
When you repay your loan amount, Lendtable’s cut is a flat percentage — between 6% and 12% — of your employer’s contribution.
“We are not a personal loan company,” de la Fuente says. “There are no fees. There’s no credit checking. There are no ongoing compound interest charges. There’s no ‘Will I get approved?’ As long as we can verify where you work and that your company has a match, you do get approved.”
In the example above, Lendtable would be repaid $4,400 -- the original advanced amount plus a 10% profit-split -- and the client would be left with $5,600, all but $1,000 of which would be free money that didn’t require them losing any of their income month-to-month.
“That’s something that can work every single year -- for the rest of your life as an employee -- so long as you’re working,” de la Fuente says.
Where things get interest-ing
One of the reasons Lendtable is so eager to boost Americans’ 401(k) balances is so they can enjoy the benefits of compound interest.
“We can literally turn people who can’t afford to save into millionaires through their 401(k)s because of the effects of compound interest,” says Celena Chong, the company’s head of marketing.
She’s not exaggerating.
Consider the case of a typical worker. We’ll call her Paula.
Suppose Paula’s 25 and earns $32,000, slightly higher than the nation’s median income.
Now suppose that Paula contributes 5% of her gross paycheck — $1,600, to start — into a 401(k) paying 7% interest a year, on average, and that her employer’s retirement-savings program will match every cent of that annual 5% contribution (not an uncommon arrangement among U.S. employers).
Assuming she keeps this up every year, and assuming a modest average annual wage increase of 4%, Paula’s 401(k) balance after 40 years — including all her contributions, her employer’s matching funds and compound interest — would be $1,125,889.
Yes, you read that right.
If Paula’s employer matched only 50% of her contributions all those years, she’d still wind up with $844,419 at age 65.
And if she didn’t get her 401(k) up and running until she was 40, but all the other factors stayed the same, her savings would still come in at a healthy $305,624.
“That’s a lot of money that people don’t realize they could be saving,” Chong says.
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Lendtable fits into everyone's plan
Anyone with a 401(k) whose employer matches their contributions can use Lendtable.
De la Fuente says Lendtable’s clients range from people who can’t afford to put anything into their accounts to high-earning employees at major corporations.
“If you work at Microsoft and are offered a match of up to $19,500, that’s a lot of money for anybody to save in a year, even if you’re making $100,000,” he says.
Lendtable is also an option for workers who have enough money to max out their employer’s 401(k) contributions but would rather concentrate on other investments that help preserve their liquidity.
Rather than locking $10,000 of your own money into a retirement account, you might instead access the same amount from Lendtable and use your own funds to invest in the stock market, cryptocurrency or a REIT.
“Regardless of your income level, regardless of who you are, you are able to save, invest and have a better retirement,” de la Fuente says.
And if you’re worried that your employer may think less of you for using Lendtable’s resources to juice your 401(k) contributions, don’t be.
“We actually have partnerships with employers. They’re not concerned. They want their employees to be maxing out this benefit — that’s why they offer it,” he says.
De la Fuente says that you could theoretically borrow 401(k) contributions using a credit card, but because credit cards’ lending terms — especially their heavy interest rates — it’s more advantageous to use Lendtable.
How to get your 401(k) funded in minutes
Lendtable’s funding process is as straightforward as its business model. All you really need to show the company are accurate 401(k) documents and a copy of a recent pay stub.
“If you work where you work, make what you say you make and your company’s 401(k) match is what you say it is, we can get you approved in three minutes,” de la Fuente says.
Just make sure you change your payroll contributions to your employer’s maximum match amount first.
There are some real goodies to be found once you’re in Lendtable’s dashboard, including advice about different investment vehicles and a helpful blog that highlights various other aspects of personal finance.
The dashboard also includes calls to action that can help you reduce the amount of money you owe Lendtable. If you post about the company on Twitter, write a testimonial about its services or sign up for one of its high-interest savings accounts, you earn money that goes toward your outstanding balance.
“Hypothetically, you could actually get your cash advance for free if you’re willing to do enough of the tasks available on the dashboard,” de la Fuente says. “If you’re willing to help us by doing a little promo work, we’re more than happy to pay you back.”
And the fun doesn’t stop with 401(k)s. Lendtable offers similar services for workers with access to employee matches on other retirement accounts like ESPPs, which allow for discounted purchases of your company’s stock, and more niche products like 403(b)s for non-profit workers and TSPs for government employees.
If you’re concerned about the state of your retirement funds, you owe it to yourself and your family to see what Lendtable has to offer.
Getting the most out of your 401(k) -- and the next stage of your life -- has never been easier.
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