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Level Up Your Finances: Level Five

Level 5 – You are maxing out your employer’s retirement matching program, and you know where the money is invested.**

Why it Matters

Canadians are missing out on $3 billion (with a b) in free money from their employers because they aren’t maximizing their company’s retirement savings match (you can read the full article here).

Retirement savings matches, also known as Employer Retirement Matching Programs, are like free money – your employer will offer to match your contributions to your own retirement savings. For example, they may match 50% of your contributions, up to a maximum of 3% of your salary. If you put in $100, they give you $50. For free. It’s very hard to make a 50% return in the stock market, which is why you want to prioritize this form of savings over any you do yourself.

You also want to make sure you know where the money is invested to make sure it’s working as hard as it possibly can for you. If you don’t know where it’s invested…how do you know you aren’t missing out on even more free money?

Goals for this Level

In Level 5 we want to make sure two things are in place:

  1. You are maxing out your employer’s retirement matching program

  2. You know where the money is invested

  3. Bonus: You know what to check on your regular statements

1 – You are maxing out your employer’s retirement matching program

What’s a Retirement Savings Program?

Many employers offer some form of retirement savings plan where if you contribute a % of your paycheck (generally between 1 and 5%) your employer will also put money into your retirement savings.

It’s like a buy-one-get-one sale on retirement savings. Many companies have a pretty high limit on how much they will match such as 50% of your contribution, up to a maximum of 6%. So that means if you put 6% of your pay each paycheck into your retirement savings, your employer would give you a bonus 3%.

How do I get signed up?

  1. Email HR to sign up and confirm what your company’s matching policy is. Is there another department as nice as HR? Didn’t think so. We have a draft email below you can copy and paste to get what you need.

  2. Login to your retirement savings plan account and update your contribution level. Take advantage of retirement BOGO! Try to get as much of the match as you can, but do not hurt your ability to meet your current payments for day-to-day expenses or high-interest loans like credit card debt.

  3. Login after your next pay-day to make sure it is working. And give yourself a pat on the back for giving future you a better retirement

2 – You know what you are invested in

How do I check what I’m invested in?

If you never picked what funds you want your money to go into, your money may be stuck in the default option, which may not align with your investment goals.

Money in a group retirement plan will typically be invested until, well, you retire, which is a long way away. Because of this longer time horizon, you may want to focus more on growth funds as opposed to more conservative investments.

Each plan provider (the company that administers the plan and invests your money on your behalf) will have typically have an online portal where you can log in, see your account balance, and pick how much of your paycheck goes to the plan and what it is invested in.

Generally speaking, you want to login and navigate to the “Your Account” or “Your Investment” section and look for a reference to “Investments” or “Holdings” to see what you are invested in.

Common investment options you may see are:

  • Target-Date Funds: These investments hold a mix of stocks, bonds, and other investments. The mix is based on when you want to retire – known as the target date. The funds change what they own over time so that you have more exposure to stocks (e.g. higher risk) when you are younger and less exposure to stocks (e.g. lower risk) when you are closer to retirement. You pick a target-date fund based on the date you retire, and the fund manager will automatically adjust what the fund holds to decrease the risk as you near retirement.

  • Asset Allocation funds: These investments hold a mix of stocks, bonds, and other investments to achieve the desired risk level. You pick an asset allocation fund based on your desired risk level. For example, if you are prepared to take on more risk, you would select an asset allocation fund with a higher portion of its portfolio invested in equities vs. cash and bonds. If you are seeking less risk, you would select an asset allocation fund with a higher portion of its portfolio invested in cash and bonds vs. equities. Unlike target-date funds, the % of stocks, bonds, and other investments in an asset allocation fund doesn’t change meaning that the allocation stays relatively constant over time.

  • Money Market funds: These investments hold high-quality short-term debt, cash, and cash equivalents. Although they are not as safe as cash and there is still a risk they could lose value, they are considered an extremely low risk on the investment spectrum. These types of investments may generate some interest income but they do not have high growth. As a result, they are often not helpful if you are far away from retirement, because your money will not grow very much between now and your target retirement.

  • Fixed Income funds: These investments own different types of debt that generate interest income (hence the name income fund). Types of debt including Treasuries (debt from the government), corporate bonds (debt from different companies), and municipal bonds (debt from cities). These funds generate interest income, but generally do not have high growth in value. Similar to money market funds, they are often not helpful if you are far away from retirement because your money will not grow very much between now and your ultimate retirement.

  • Canadian / American / International Large Cap Equity: This investment targets a specific size of the company (that’s the Cap part, which stands for market capitalization. Big cap = big company. Small cap = smaller company) in a specific region. So a Canadian Large Cap fund would target large companies located in Canada. An American Small Cap fund would target small companies located in the US. International Large Cap would target the largest companies globally. You can see the exact companies that the fund holds by looking at the Fund Facts Sheet under “Holdings” or “Portfolio”. Equity funds typically carry the most risk vs. other investments and also have the highest growth potential over the long term.

How do I decide what to pick?

You have two common options when choosing what to put your employer savings program into:

  1. Call the plan provider and ask if they offer complimentary consultations. Many plan providers have a small group of financial advisors who are trained to answer questions on plan options and work with you to identify what investment option is right for you. Call your plan provider directly to inquire about this service – it should be free.

  2. Do-It-Yourself. Often, Target Date Funds or the Canadian / American / International Equity funds will be the best choice for most young investors with decades until retirement because they tend to grow more over the longer time horizon. Target Date Funds are the easiest to own because the Fund automatically adjusts the holdings as you get closer to retirement. Equity Funds tend to be the riskiest, but carry a bigger potential reward.

Try the ‘5 Year Lock Out Test’ to see if you’ve made the right choice for yourself. If you were locked out of your account for the next 5 years, would you be worried about what you were invested in? If so, you may not have made the right selection and may want to consider a less risky alternative. If you don’t think you’d be the slightest bit concerned, then you’ve likely made the correct choice for your situation!

When picking your funds, pay attention to the Management Expense Ratio or Investment Management Fee.

This is the fee you will pay to the Plan Provider to manage your money for you. Management fees erode your returns. Your fund has to actually outperform the market by the value of the fee in order for you to just meet the average market return. So if you are selecting between two similar investment options, you may want to opt for the fund with the lower management fee.

BONUS – You know what to check on your regular statements

You want to check three things:

  1. Make sure they are taking the right % of your paycheck. Check your Statement for the amount that was contributed to your plan – often referred to as “Member Contributions”. Divide that number by your pre-tax salary over the same period to see your contribution %. For example, if your member contributions were $600 and your pay over the period was $12,000, that is a 5% contribution rate. Contact HR with any issues.

  2. Make sure you are getting the right employer match. On your statement, look for the line that says “Sponsor Contributions” or “Employer Contributions”. Divide that number by your pre-tax salary over the same period to see your employer’s contribution %. For example, if your Sponsor Contributions were $300, and your pay over the period was $12,000, that is a 2.5% contribution rate. That means they matched 50% of your contribution. Contact HR with any issues.

  3. Double-check what you are invested in. Check your statement to make sure it reflects your initial investment selections. You may also want to log in once a year to see if any new options are available.

  4. See if the Plan Provider offers free consultations. Many plan providers (like Manulife or Sun Life) will offer free consultations for employees who participate in their plans. In these consultations, you can ask questions about the different funds and get advice on what funds may be right for you.


Hi [Insert name of HR person],

Hope your week is going well so far.

Could I please get your help signing up for the company’s group retirement savings plan? I’ve unfortunately misplaced the sign-up materials and the company’s matching policy. Could I please trouble you to forward me the welcome materials again?

Thanks very much for your help,

[Your name]

*Untangle Take

This is one of the simplest steps you can take to improve your financial well-being.

Stop what you're doing now.

Call your HR department and find out if you are part of your employee plan and matching. If not (or if you want to increase how much you contribute), ask them when the window opens to make changes.

Go into your calendar and block off a morning to make this change. Make it easy on yourself, include links and phone numbers that you will need.

While you're in there - make a note to yourself to check that your beneficiaries are up to date.

NOTE: the financial industry really steers women into 'conservative' portfolios. Make sure you're weighing the risk of losing some of your money with the risk of underfunding your retirement.

What's next?

Stay tuned every Thursday for a new level in the series!

In case you missed it:

Pineapple Finance Co is a collaboration between Emily and Elizabeth with a goal to answer one simple question: could they use Instagram to improve Canadian's financial literacy.

You can follow Pineapple Finance Co. over on Instagram, and we've linked two other blog posts written by Emily and Elizabeth here:

You can also follow Untangle Money over on Instagram, Facebook, Pinterest, and LinkedIn, and sign up for our newsletter here!

Financial independence is a huge part of being a strong, independent person, and it is our mission to help women, and anyone who doesn't feel safe or welcome in financial spaces typically dominated by cis men, set themselves up for financial success.

At Untangle Money we help women understand their (real!) financial picture, and obtain financial guidance from people that actually, really, get it. We would love to help you, too! Join the community of hundreds of other women looking to strengthen their financial well-being. You can check out our products and plans here or get in touch for a free consultation!

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