Sometimes, a company will match, dollar for dollar, up to a certain percentage of your income – let’s say 5%. At Jay’s company they match 100% of the first 3%, plus 50% of the next 4%. So, in order to maximize his company match Jay contributes 7% of his income. He has, in the past, contributed up to 15% of his income. But, these days we’ve settled on 7%. His contributions and the company match came to over $11,500 in 2012 – so it’s a significant amount.
Of course, you can’t touch the money (without penalty) until age 59 1/2 and there’s no guarantee that your 401K will perform as hoped/expected. But, in my opinion, you should contribute, at a minimum, enough to get the maximum company match. If you don’t you are saying “no” to a significant benefit.