Nearly 20% of Americans are making a 'huge mistake' with their retirement savings

Nearly one in five Americans don't contribute enough to their employee-sponsored 401(k) plans to earn the company match, according to a new survey by MagnifyMoney. That means they're missing out on "free money."

"That's your company literally saying: 'Hey, here's some free money, do you want to take it?'" financial expert Ramit Sethi tells CNBC Make It. "If you don't take that, you're making a huge mistake."

While it's fair to think about your employer match as "free money," it's better to view it as part of your total compensation package. If you contribute enough to earn the full match, you'll get all of the money your employer owes you. That can be a significant amount: The average employer 401(k) match reached 4.7% this year, according to retirement plan provider Fidelity.

"A buy-one-get-one-free deal is how I think of it," Monica Sipes, a certified financial planner and senior wealth advisor at Exencial Wealth Advisors, tells CNBC Make It. "The match is something that's considered in your overall compensation, so by not taking advantage of it you're not getting a full freight of what your employer was expecting to pay you."

If you earn $55,000 a year plus a 4% 401(k) match and contribute at least $2,200 to your account, your employer will also contribute $2,200. If you only put in $1,000, your employer will as well, which means you're missing out on another $1,200 that could be growing in the market.

It's a good idea to start investing as soon as possible because it gives you more time to take advantage of compound interest. With compounding, a smaller amount of money invested earlier can grow to exceed a larger amount of money invested later.

Of course, you should run the numbers first to ensure you can afford to contribute to your 401(k), Edward P. Schmitzer, a certified financial planner and president of RCA Wealth, told MagnifyMoney. If doing so lowers your net take-home pay too much, and it would be impossible to cover living costs, you may want to wait or start by contributing less to your retirement savings now and building up over time. But aiming to contribute enough to at least earn the match is a good goal.

If you aren't sure how your 401(k) contributions will affect your take-home pay, you can consult with your payroll manager, Schmitzer says.

And if you're trying to bulk up your retirement savings, here are some savings tips to get you started:

• Strategies to save for retirement without going broke
• How to save for retirement if you don't have a 401(k)
• How to use a health savings account for retirement savings

Don't miss: Why it's a great time for millennials to contribute to a Roth IRA

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