Here's how Americans are missing out on $24 billion a year

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If someone were to walk up to you, wave a $100 bill in your face, and offer to let you keep it with no strings attached, would you say no thank you, or would you snatch the bill out of that generous stranger's hand and stick it right in your wallet? The answer should be fairly obvious.

So why are so many people passing up free money by turning down employer matches in their 401(k)s?

A 2015 report by Financial Engines estimates that American employees are passing up $24 billion per year by not contributing enough to their 401(k)s to receive their full employer 401(k) match. According to the study, in 2014 one in four Americans with 401(k)s didn't save enough to receive their full employer match, missing out on an average of $1,300.

In a world where few things are free, millions of Americans seem strangely OK with saying no to huge amounts of free, no-obligation money.

It also seems that lower earners -- those who could use free money the most -- are more likely than higher earners to pass up employer matching dollars: The study revealed that 42% of 401(k) plan participants earning less than $40,000 a year did not receive the full employer match to which they were entitled.

Let's also not forget that when you turn down matching contributions, it's not just the match you're missing out on; you're passing up growth potential, too. Say your employer is willing to add up to $1,300 a year to your 401(k) in matching contributions, but you forgo that money.

After five years, you'll lose out on $6,500 in matching dollars and the capital gains you could have earned with that money. If you instead take that $1,300 per year and invest it at an 8% return (a bit lower than the stock market's historical average), you'll have an extra $8,000 sitting in your 401(k) after five years.

Vince Caligiuri/Getty Images

Make the match happen

Of course, getting that employer match requires you to spend some of your own money on your 401(k) savings, and if you're living from paycheck to paycheck, that may be easier said than done. On top of that, if you're unable to save enough to get your full employer match, then you're probably behind on your retirement savings to begin with. It's a painful double-whammy for those who are struggling to save.

If you're in this predicament, then it's time to make some changes. First, and most importantly, start saving any amount you can -- even if it seems insignificant. A small contribution today can grow to a surprisingly large amount years or decades down the road.

For example, if you saved $50 per month for 15 years, getting a 50% match from your employer and earning an average of 8% per year, then you'd have $26,000 in your 401(k) in 15 years' time. Now let's assume you get a 3% raise every year. Put that raise straight into your retirement savings, and you'd end up with over $31,000.

You can also contribute any financial windfalls like bonuses and tax refunds. Last year, the average American taxpayer got a refund of about $3,000. If you allocated even half that amount to your 401(k) every year for 15 years, assuming the same employer match and returns as above, you'd have another $66,000 in retirement savings.

Finally, consider taking on freelance or part-time work to generate some extra cash, which will allow you to contribute more of your full-time salary to your 401(k) and thus take advantage of the free money that comes with it.

If you want to retire in comfort, then your own savings will have to do the heavy lifting; Social Security alone may not even pay your bills, let alone fund the occasional beach vacation or round of golf. Passing up your employer's 401(k) contribution is a financial sin. Your retirement account won't magically fund itself, but the employer match comes pretty darn close to that.

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