Author Topic: Coworkers opening 401k's  (Read 5691 times)

channtheman

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Coworkers opening 401k's
« on: February 02, 2018, 02:27:14 AM »
Not sure if this is the best place to put this, but it felt like a decent enough sub forum.

I overheard 2 coworkers talking about taxes last night (mild rants about how much they are taxed, that sort of thing) and later on in the night when things had settled down a conversation regarding finances, taxes, and retirement was sparked up between myself and 1 of them.  My CW mentioned she had been wanting to open a 401k but didn't know how and didn't know what to invest in.  She didn't want to have to call Charles Schwab to set it up and all these reasons kind of led to her just not doing it. 

I told her we can sign up online without calling them and I have some good index funds I can show her if she's interested.  I highly encouraged her to start a 401k and at least contribute 6% (our match).  The conversation died and I felt good that perhaps a seed was planted.  Well, I get back from my lunch break and she starts talking to herself loudly enough for me to hear "I don't know what to pick.  I don't want to have to call them."  I assumed this was her way of asking me what to do without asking me.  I walked over and she was very receptive to me walking her through the process of picking what essentially boils down to a customized VTSAX index fund using the fund selections we have available.  She even set it up to increase by 1% per year until she hits 12%!  What an awesome win!

Fast forward to tonight.  While she is on her lunch break, another CW calls me and says "Hey, "X" (name omitted for privacy) is here and she said you helped her set up her 401k last night.  Can you come help me get mine set up?"  Of course I tell her yes and can't believe how great this is! 

I go and walk her through the same process and get her set up with the company match and my customized VTSAX fund.  I encouraged both of them to just forget about it and don't even look at it for 10 years and then they might want to look into bonds as they get older (they are both mid-late 30's). 

I can't believe how receptive they both were to this and it kind of gave me some perspective that a lot of people want to do the right thing but just have no idea where to start.  I know they should take control and learn what they need to learn but for many years I could relate to them too and didn't know what to invest in or where to start either. 

When I was helping the second CW get hers setup, a whole group of my coworkers kind of gathered around and expressed interest in getting their 401k's going as well.  Hopefully some more of them ask for my help. 

former player

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Re: Coworkers opening 401k's
« Reply #1 on: February 02, 2018, 02:42:08 AM »
Definitely one for the badassity thread.  Well done.

Smokystache

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Re: Coworkers opening 401k's
« Reply #2 on: February 02, 2018, 06:01:38 AM »
Isn't it amazing to think that they will likely have tens of thousands of dollars more just because they were willing to listen and follow through .... And you were key to making it happen!

jinga nation

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Re: Coworkers opening 401k's
« Reply #3 on: February 02, 2018, 06:43:51 AM »
Awesome job @channtheman !

About this time last year, between getting tax refunds (which really aren't refunds) and the rising stock market, my office was buzzing with talk of 401K. They were thinking of putting refunds into the retirement plan in a rising stock market. Come to find out that in a team of 16, I was putting in the max, way above the 6% to get a 4.5% match, into Vanguard funds.

So they asked me how I picked funds, and I showed them Bogleheads Lazy Portfolios and using Portfolio Visualizer to graph past returns. Some ended up in Target Date funds, others picked VTSAX, or some simple 2-4 fund portfolio. I think that most are scared of calling Vanguard for advice, even though we can sign up for the fee advisor, who is free for the first 90 days. I told them of this option. I made it clear that I'm not a financial advisor, I don't show preference for one fund over another, and each person must invest according to their risk profile. I told them to use VG's risk calculator/gizmo as a starting point, and to come up with an IPS.

It's that overload of fund info and fear of asking that led to spend not save. It was a fear of missing out on market gains that brought them back in. Hope they stay the course and don't bail when there's a market dive. I told them to stop checking funds daily/weekly. I don't work there anymore so can't know if anyone fell off the bus.


Miss Piggy

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Re: Coworkers opening 401k's
« Reply #4 on: February 02, 2018, 06:52:40 AM »
That's awesome!!!!  Good on you!

birdman2003

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Re: Coworkers opening 401k's
« Reply #5 on: February 02, 2018, 06:56:22 AM »
Awesome idea - glad you acted on it.  I have some young engineers on my team and I think I will try and set up a meeting where I'll explain the basics and offer to walk them through setting it up.

Brother Esau

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Re: Coworkers opening 401k's
« Reply #6 on: February 02, 2018, 09:14:42 AM »
When I graduated from college, my older brother gave me a copy of the book "Wealth Without Risk". Immediately signed up for the 401k and profit sharing plan at my first job.

nouveauRiche

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Re: Coworkers opening 401k's
« Reply #7 on: February 02, 2018, 11:01:07 AM »
channtheman, you rock.  You've changed two peoples lives for the better (they just may not realize it yet).

MilesTeg

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Re: Coworkers opening 401k's
« Reply #8 on: February 02, 2018, 11:09:43 AM »
Similarly, I convinced my friend to set up her 401k at her first "real job" and luckily her plan had some decent options (vanguard admiral shares). What finally convinced her was when I told her she was basically throwing away 6% of her pay by not doing it.

Still working on one of my co workers who for over a decade now has resisted.

SunshineAZ

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Re: Coworkers opening 401k's
« Reply #9 on: February 02, 2018, 11:27:51 AM »
When I worked at <big aerospace company>, probably 15 years ago now, we had a young engineer come on our team.  He was from a central american family and the first to get a college degree.  After he had been there a few months, I asked him if he had set up his 401k yet, and he said no, so I told him he should and if he didn't I was going to bug him until he did.  I kept bugging him for a few months and finally I said, ok we are going to your desk and doing it right now! You will thank me later.  We set it up and that was it. 

Fast forward about 7 years, I now work in a different state but on the same program.  He has to come there for some testing and he came up to me and said "Remember when you made me set up my 401k and said that I would thank you later?"  I said yes, and he said "You were right, thank you."  Of course I said "I told you so!"  :)   It was nice to know I helped someone and that they appreciated it. 

I think it is awesome that you are helping your coworkers.  I hope they thank you later.  :)

channtheman

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Re: Coworkers opening 401k's
« Reply #10 on: February 02, 2018, 02:44:14 PM »
Isn't it amazing to think that they will likely have tens of thousands of dollars more just because they were willing to listen and follow through .... And you were key to making it happen!

I was especially surprised how after my initial encouragement how quickly both coworkers acted on my advice.  The second one makes me a little nervous since she was making sure she can stop it at any time.  I'm hoping she just forgets about it and never notices the small difference in her paycheck.

ysette9

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Re: Coworkers opening 401k's
« Reply #11 on: February 03, 2018, 02:03:03 PM »
What wonderful stories. I have slowly become known among a small group of friends at work as someone who knows about finance stuff. I have shared my fight to try to get our 401(k) fees lowered (utterly unsuccessful), and periodically send out my explanations of changes that happen to our investment options and whatnot. Several people have asked for educational material so they can learn about personal finance. It thrills me to send them links to the Bogleheads investment startup kit or whatever else is relevant. :)

Goldy

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Re: Coworkers opening 401k's
« Reply #12 on: February 04, 2018, 07:05:22 AM »
I recently helped two coworkers get set up in 401kís after not contributing for 8 years and missing out on a nice 6% match.  They were just paralyzed with picking the wrong choices but any choice would be better than missing out on the match.

BTDretire

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Re: Coworkers opening 401k's
« Reply #13 on: February 04, 2018, 09:20:30 AM »
To the OP, write up a blurb about the sequence used to signup for the 401k and why, then post it on bulletin board.
 Or if possible put a copy on everyone's desk.
Great job btw!

Landslave

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Re: Coworkers opening 401k's
« Reply #14 on: February 04, 2018, 06:26:53 PM »
What a good deed you have done!  I am impressed with your soft sell and the impact it had on all your CW.  You are doing such good. 

  I preach to anyone and everyone I can get to listen, and the main theme is that TIME is the variable that conquers all else in investing.  Those final years of compounding just cannot be overcome, especially if the management costs had been kept low.  I have thought of volunteering to teach high schoolers and college kids an hour lesson on the value of early-in-life investing.  And the dividend of delayed gratification.  If we could get 18-year olds to contribute the IRA max annually to a low cost indexed ETF and let it ride for 50 years, imagine what a service we would be providing to them.  The hordes don't see retirement until they are 45.  To have the long view (EQ and IQ) of seeing it when you are 15 is the crux of the difference. 

Malkynn

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Re: Coworkers opening 401k's
« Reply #15 on: February 07, 2018, 07:40:10 AM »
Most people are looking for someone to hold their hand through this type of thing and tell them exactly what to do.

Itís exceptionally uncomfortable for most people to do anything outside of their usual patterns. We think weíre such rational creatures, but we arenít. Weíre just extremely good at *rationalizing* our nonsensical behaviours.

Amazing job. Youíve probably had a HUGE impact on their lives and they probably donít even realize the massive value of what youíve done for them.

DirtDiva

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Re: Coworkers opening 401k's
« Reply #16 on: February 15, 2018, 05:56:26 AM »
A respected co-worker gave me a gentle nudge re: 401k contributions at my first job after college 29 years ago.  Iím still thankful to him to this day.

gggggg

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Re: Coworkers opening 401k's
« Reply #17 on: February 16, 2018, 04:09:30 PM »
I constantly nag on people at my work to contribute, it's like pulling teeth. They get an automatic 5% for free, and most of them have never even logged in to look at it. One or two I talked to finally started contributing, but the majority say they can't afford it (all the while driving new cars, having fancy homes, and eating out daily).

channtheman

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Re: Coworkers opening 401k's
« Reply #18 on: February 16, 2018, 10:26:27 PM »
I constantly nag on people at my work to contribute, it's like pulling teeth. They get an automatic 5% for free, and most of them have never even logged in to look at it. One or two I talked to finally started contributing, but the majority say they can't afford it (all the while driving new cars, having fancy homes, and eating out daily).

Part of my argument to my coworkers was that they wouldn't even notice the 6% missing from their paycheck required to get our match.  Since it's pretax, the post tax amount is even less.  Most people, amazingly enough, do not know how much they are paid hourly or weekly and just trust the direct deposits in their bank.  They never even look at their pay stubs to make sure there are no errors.  I hope my coworkers forget they are even contributing.

ThatGuy

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Re: Coworkers opening 401k's
« Reply #19 on: February 17, 2018, 09:42:16 PM »
I constantly nag on people at my work to contribute, it's like pulling teeth. They get an automatic 5% for free, and most of them have never even logged in to look at it. One or two I talked to finally started contributing, but the majority say they can't afford it (all the while driving new cars, having fancy homes, and eating out daily).

Same here.  One woman says she's tired of the job but absolutely refuses to save anything for retirement because, "she wants to live life now".  Living life now consists of drinking a 12 pack a day while watching her live in unemployed boyfriend play video games and talking to his live in unemployed mother.

I have gotten a couple of co-workers actively involved in their retirement savings and a few others dipping their toes in the process.  One woman repeatedly says she wishes she would've started sooner.  I keep reminding her I told her to start years ago.

rdaneel0

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Re: Coworkers opening 401k's
« Reply #20 on: February 18, 2018, 09:57:47 AM »
Congrats, you just did them a MASSIVE favor. That's awesome!

One Noisy Cat

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Re: Coworkers opening 401k's
« Reply #21 on: February 18, 2018, 07:38:02 PM »
Congratulations to you and also to them for listening. Hopefully you will tell them not to panic over any short term stock market drops. I had $12,500 in my IRA in October 1987 when the market lost 22% in one day. It felt like I was punched in the stomach. But I didnít panic and when January 1, 1988 came I was mailing checks to invest more. Alright, I should have had more than just an IRA (my company didnít get a 401k until 1989). But it was something and my present self thanks my past self every day for some good sense.

Mezzie

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Re: Coworkers opening 401k's
« Reply #22 on: February 19, 2018, 06:04:05 AM »
Everyone at work has a 403(b), but no one knew about the 457 available (I didn't either until thus forum). People are pretty excited about it even though not everyone is in position to contribute to both. It's always nice when advice like this is well received.

Good for you for helping your colleagues out! You've made a major positive impact in their lives. :)

RelaxedGal

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Re: Coworkers opening 401k's
« Reply #23 on: February 19, 2018, 07:43:06 AM »
When I was helping the second CW get hers setup, a whole group of my coworkers kind of gathered around and expressed interest in getting their 401k's going as well.  Hopefully some more of them ask for my help.

That is so awesome, good job!

I've only managed to get one coworker to sign up for the 401k (the rest already contribute I believe).  There was general grousing about raises this year and I told him "If you're not investing in the 401k you're missing out on a 2% raise!"  We have a 50% match on the first 4%.  That finally convinced him to get started.

imadandylion

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Re: Coworkers opening 401k's
« Reply #24 on: February 24, 2018, 08:15:23 AM »
I love that you did this! I wish I had someone at my office that was like that. Of course, no one really talks about money except almost to compare lifestyles - never about investing!

I recently got on this subject, though, with a couple coworkers. One does very well and contributes the max annual amount. The other one admitted she has no idea, despite her father being in finance, but at least contributes to an IRA, even though it is a very small amount. I didn't want to overwhelm her, so I recommended a book on investing to her. I'm not sure if she has had a chance to read it yet.

channtheman

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Re: Coworkers opening 401k's
« Reply #25 on: May 20, 2018, 04:45:54 PM »
About a month or so ago, I had another coworker ask me to help her set up her 401k to get the match.  Word has gone around that I'm the person to ask if they want to get that set up.   That's 3 coworkers now who have their 401k set up!

CheapScholar

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Re: Coworkers opening 401k's
« Reply #26 on: May 20, 2018, 07:35:48 PM »
That's awesome.  I have the imagine of Shawshank Redemption in my head when Andy eventually does all the tax returns for the entire prison guard staff.

eostache

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Re: Coworkers opening 401k's
« Reply #27 on: May 20, 2018, 08:59:39 PM »
Thanks to all the savvy folks on here I opened a Vanguard IRA last fall. This year I have already contributed the max to it.

My job situation just changed a few days ago. I was working at a small company (few benefits, no 401k) that just entered into a partnership with a large company (with a lot of great benefits!). My job was transferred and now I am an employee of the large company. They have a 401k with a match. They automatically enroll employees into it, unless you opt out.

channtheman

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Re: Coworkers opening 401k's
« Reply #28 on: July 28, 2018, 09:40:39 AM »
So one of the coworkers who I had helped set up her 401k told me this morning that she helped another of our coworkers with her 401k.  So now the people I showed how to set it up and good index fund selections are telling other people! 

Number of coworkers who have their 401k is now at 4.

SwordGuy

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Re: Coworkers opening 401k's
« Reply #29 on: July 28, 2018, 10:54:02 AM »
Congrats!

But you may not have actually helped them.  In fact, you may have hurt them.

With their current level of information, what are they likely to do the next time the stock market drops 20-30%?

Most of them will sell immediately and then blame you for their losses.

That's because they don't understand the market cycle and staying the course over the long haul.   

Help them to understand that.   They may still panic and sell, but at least you'll have done your part.


So, go back in and share that info for the total win!!!!

Raymond Reddington

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Re: Coworkers opening 401k's
« Reply #30 on: July 28, 2018, 11:21:56 AM »
People in general are sheep who are unwilling to go out on a limb unless led. As the saying goes, "you can lead a horse to water, but you can't make him drink," well, with most people you end up finding out the horse are thirsty, it tells you every day, but while you can tell them there's water over the hill, you have to bring them to where they can physically see it before they'll move an inch on their own.

Props to you for being a great coworker. I second the notion that you should get them to understand the ebbs and flows of the market so they don't panic and sell (and, worse, trigger early withdrawal penalties) if they get cold feet during a downturn. If their contribution rates are high enough, they'll never even realize it's down, to be honest. But they should transition to less risk exposure over time, so the best bet would be a life cycle fund, if one is offered. If not, it might be worth it to tell them to throw a small percentage (5-10% depending on age) into a stable value fund, and just explain that this is their safe haven which will never really decrease (since these typically invest in treasuries and short term obligations), so they will never get "wiped out" unless they sell out. Then explain that the stock fund should do very well for them, but if there is a downturn, will go down temporarily, and eventually go back up again. While that's not the optimal mix, looking at where we are in the business cycle and the psychological effect on people who are less experienced with investing, it might be a small price to pay for the long term good of keeping them in the market whenever things hit the fan again.

I too try to advise people at work (or personally) to save & invest, and stay out of credit card debt. etc, even offering to look at numbers for things if they'd like (such as "should i buy this house" or "is this a good deal?") - but in general, people want someone to sit with them and walk them through the process. In my current role, I can't always offer to do that with employees I supervise (which just feels like it walks a border of what is proper or improper, unless they come to me specifically, of their own volition), but that's what most people seem to want. There's a coworker I've got to talk to about her account specifically (not someone I supervise) who has expressed interest in it in the past, and I figure next time I catch up with her it would be good to check in and see if she was able to enroll, or if she needs me to actually walk her through it.

pressure9pa

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Re: Coworkers opening 401k's
« Reply #31 on: August 09, 2018, 11:38:05 AM »
My father taught public school for ~35 years.  When he was in the first day of school in probably year ~28, a young female teacher in her first year approached Dad and asked if he had any advice for her.  Dad's response was simple - "Yes, start contributing to your 401k right now.  You've never received a paycheck, so you won't miss it.  Also, start a Roth this month." 

The young lady was a bit taken back.  She re-phrased her question along the lines of "Do you have any advice for me in the classroom?"  Dad didn't let up.  "That is advice for the classroom.  One day you'll want to step back from after-school activities.  You'll want to stop teaching in the summers.  You may want to change school systems for a job with a better location and calendar even though it pays less.  If you've saved up, you can do those things and not feel like your in prison when you come in to teach.  That will make you a more effective educator."

The conversation really never came up again, but about 6 years later that lady quit teaching ... to become a financial advisor.  She researched all of those things my father told her, and found all of it interesting.  Dad never really knew it, but she later told him that his 3 minute talk with her was what jump started her knew career.  And ... in about 5 more years she had nearly every teacher in that school as a client!