Author Topic: $24B in 401(k) matching left on the table  (Read 5767 times)

EricP

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$24B in 401(k) matching left on the table
« on: July 28, 2015, 10:23:35 AM »
http://time.com/money/3973561/401k-match-double/

As we all know, Americans are pretty bad at saving, and it turns out that even when offered 50% or 100% RoI, they still refuse to save.  Sad to think that many of these people would be much better off in retirement if they just went without a few percentage points of their income. 

slugline

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Re: $24B in 401(k) matching left on the table
« Reply #1 on: July 28, 2015, 10:43:24 AM »
I've only worked for one employer ever that offered an employer match, and that unvested money disappeared when the company went bankrupt. I'm mostly satisfied with my employment situation now, but I'm a bit envious of those of you who have that "free" money. Don't let it go!

MgoSam

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Re: $24B in 401(k) matching left on the table
« Reply #2 on: July 28, 2015, 10:44:42 AM »
I'm a bit envious of those of you who have that "free" money. Don't let it go!

Likewise! I work for a 8 person company and there's been no desire to set up a 401k since I would be the only one willing to contribute to it. I would like 'free' money!

Helvegen

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Re: $24B in 401(k) matching left on the table
« Reply #3 on: July 28, 2015, 12:37:32 PM »
I've only worked for one employer ever that offered an employer match, and that unvested money disappeared when the company went bankrupt. I'm mostly satisfied with my employment situation now, but I'm a bit envious of those of you who have that "free" money. Don't let it go!

The matching isn't free money for me until I have worked here for at least 2 years, but better 3, if I want to be 100% vested. Better than the old vesting schedule of 5 years, the first 3 of which you got nothing vested, basically.

However, my company also offers a compensation match of 2% this year and 4% next and that is 100% vested from the first day. So, even if you are wary of the vesting schedule for the contribution matching, people here should at least participate for the compensation match.

FuturePrimitive

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Re: $24B in 401(k) matching left on the table
« Reply #4 on: July 29, 2015, 07:42:34 AM »
It amazes me that people don't want free money.

Not that I should talk actually, as someone who feels like I started too late (actually I started my first 401k when I was ~22 but then I did stupid things) I kinda of understand why so many younger people people don't see it as a priority, retirement is for old people! Not saying I agree with it, just that I understand that mentality exists, and even had it myself at one point.

While I'm really not happy with my job at the moment the 401k is pretty good, total of 7% match with low cost index funds available.

CommonCents

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Re: $24B in 401(k) matching left on the table
« Reply #5 on: July 29, 2015, 08:40:33 AM »
I left some money on the table in my first job.  We had a match that took a few years to fully vest (3-5, don't remember) and after working there for a bit (1-2 years, don't remember) we got a few free percentage points that worked out to $1800 in the end for me (I worked there 2.5 years).

I was earning a low salary living in an expensive city.  I had student loan payments.  I planned to leave the job for grad school before much of the matching would kick in (I stayed a year longer than originally planned).  I also erroneously thought that it was better to max out my IRA than put the equivalent money in the 401k.  (My folks talked a lot about IRAs to me, but didn't really talk 401ks.)

C'est la vie.  It's hard as a young person to know and make the right decisions, when pinched by housing, student loans, and other costs in lower paying jobs.  I'm glad I saved something :)  I have less sympathy for older workers (particularly as they can withdraw the money penalty-free after getting a match!)
« Last Edit: August 14, 2015, 09:08:45 AM by CommonCents »

Jags4186

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Re: $24B in 401(k) matching left on the table
« Reply #6 on: July 30, 2015, 06:57:37 AM »
I don't understand why people call this free money. It's not. It's part of your total compensation.

People don't say "hey employer provided health insurance...yes! Free money!"  When usually that is a more lucrative benefit than the 401k match.

slugline

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Re: $24B in 401(k) matching left on the table
« Reply #7 on: July 30, 2015, 09:21:16 AM »
I don't understand why people call this free money. It's not. It's part of your total compensation.

People don't say "hey employer provided health insurance...yes! Free money!"  When usually that is a more lucrative benefit than the 401k match.

I know, and that's why I like to enclose the word "free" in quotation marks. I suppose it feels like free money precisely because not enough employees are claiming it.

It's telling that there's been some discussion at my workplace of pay-raises-versus-401K-matching. We know it's all coming from the same place.

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Re: $24B in 401(k) matching left on the table
« Reply #8 on: July 30, 2015, 09:29:48 AM »

The matching isn't free money for me until I have worked here for at least 2 years, but better 3, if I want to be 100% vested. Better than the old vesting schedule of 5 years, the first 3 of which you got nothing vested, basically.


I'm on a 2-year vesting but it is 0 to 100%- there is no middle ground.
At least with my 5-year schedule, I got a little bit each year.  If I make it to 2 years, then I'll be happy.

I don't work somewhere with a match though. They just have an automatic contribution. And they require all employees to put in a certain percent.  It isn't optional. 

vhalros

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Re: $24B in 401(k) matching left on the table
« Reply #9 on: July 30, 2015, 10:15:31 AM »
Its free in the sense that you can just decide "Hey, I would like more money!" and they give it to you, up to some limit, with absolutely no change in your expected work or responsibilities. Yet some how people choose not to take it...

EricP

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Re: $24B in 401(k) matching left on the table
« Reply #10 on: July 30, 2015, 10:39:10 AM »
I don't understand why people call this free money. It's not. It's part of your total compensation.

People don't say "hey employer provided health insurance...yes! Free money!"  When usually that is a more lucrative benefit than the 401k match.

So you're telling me that you consider how much a company gives in a 401k match when negotiating a salary?  That seems doubtful.

Helvegen

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Re: $24B in 401(k) matching left on the table
« Reply #11 on: July 30, 2015, 10:41:59 AM »

The matching isn't free money for me until I have worked here for at least 2 years, but better 3, if I want to be 100% vested. Better than the old vesting schedule of 5 years, the first 3 of which you got nothing vested, basically.


I'm on a 2-year vesting but it is 0 to 100%- there is no middle ground.
At least with my 5-year schedule, I got a little bit each year.  If I make it to 2 years, then I'll be happy.

I don't work somewhere with a match though. They just have an automatic contribution. And they require all employees to put in a certain percent.  It isn't optional.

Interesting. My husband and I have worked at places with automatic enrollment, but not with mandatory participation. I thank whatever participation isn't mandatory for my husband. At his job, the 401k options are just beyond garbage. All high ER'd crap funds, not a single Vanguard fund to be seen. And then there is no match unless the company decides it wants to give one (whenever that is...) and then it is only a max 25% with 5 year vesting. Needless to say, it isn't worth it to participate. Money goes in the IRAs/HSA instead.

Jags4186

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Re: $24B in 401(k) matching left on the table
« Reply #12 on: July 30, 2015, 10:48:06 AM »

I don't understand why people call this free money. It's not. It's part of your total compensation.

People don't say "hey employer provided health insurance...yes! Free money!"  When usually that is a more lucrative benefit than the 401k match.

So you're telling me that you consider how much a company gives in a 401k match when negotiating a salary?  That seems doubtful.

So you're telling me you don't consider the benefits package when considering a new job? That's seems foolish.

EricP

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Re: $24B in 401(k) matching left on the table
« Reply #13 on: July 30, 2015, 10:49:18 AM »

I don't understand why people call this free money. It's not. It's part of your total compensation.

People don't say "hey employer provided health insurance...yes! Free money!"  When usually that is a more lucrative benefit than the 401k match.

So you're telling me that you consider how much a company gives in a 401k match when negotiating a salary?  That seems doubtful.

So you're telling me you don't consider the benefits package when considering a new job? That's seems foolish.

I've never actually interviewed for a job, but I was under the impression that most companies don't disclose that until after they hire you.  Am I wrong?

vhalros

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Re: $24B in 401(k) matching left on the table
« Reply #14 on: July 30, 2015, 10:51:54 AM »
I've never actually interviewed for a job, but I was under the impression that most companies don't disclose that until after they hire you.  Am I wrong?

Yes, you are wrong. They absolutely disclose 401k information to you as well as other benefits (it is, after all, a recruiting tool for them). You can also often learn about it on glassdoor.com with out even talking to any one.
« Last Edit: July 30, 2015, 10:54:04 AM by vhalros »

EricP

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Re: $24B in 401(k) matching left on the table
« Reply #15 on: July 30, 2015, 10:53:28 AM »
Quote
I've never actually interviewed for a job, but I was under the impression that most companies don't disclose that until after they hire you.  Am I wrong?

Yes, you are wrong. They absolutely disclose 401k information to you as well as other benefits (it is, after all, a recruiting tool for them). You can also often learn about it on glassdoor.com with out even talking to any one.

Just click the quote button in the top right of the post you want to quote.  It does the formatting for you.

vhalros

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Re: $24B in 401(k) matching left on the table
« Reply #16 on: July 30, 2015, 11:00:10 AM »
Just click the quote button in the top right of the post you want to quote.  It does the formatting for you.

Thanks.

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Re: $24B in 401(k) matching left on the table
« Reply #17 on: July 30, 2015, 01:57:45 PM »
I've even tried, with no luck, to get people to make the contribution, get the match, then withdraw it and pay the penalty for an 80% instant return.  You can lead a horse...

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Re: $24B in 401(k) matching left on the table
« Reply #18 on: July 30, 2015, 02:02:17 PM »

So you're telling me that you consider how much a company gives in a 401k match when negotiating a salary?  That seems doubtful.

Absolutely I do!  And they do too.

I had a company low ball me a bit on salary, claiming that their 403b was much better than my last place (it was marginally better, not 'much'). They SPECIFICALLY pointed to 403b as better compensation that could then make up for lower salary.

I pointed out their health insurance was higher, with less coverage, so I would need compensation to make up for that.




Ferrisbueller

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Re: $24B in 401(k) matching left on the table
« Reply #19 on: July 30, 2015, 05:52:46 PM »
Employer contribution is 10% of my base sal ($140k) pa and I have to contribute 5% (I contribute 20%) on top.

Only my first job had no pension match.

Tabaxus

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Re: $24B in 401(k) matching left on the table
« Reply #20 on: August 02, 2015, 02:00:55 PM »
I don't understand why people call this free money. It's not. It's part of your total compensation.

People don't say "hey employer provided health insurance...yes! Free money!"  When usually that is a more lucrative benefit than the 401k match.

So you're telling me that you consider how much a company gives in a 401k match when negotiating a salary?  That seems doubtful.

The hell?  $1 of 401(k) match is more valuable than $1 of compensation (taxes).  Why on earth would you not consider the match? 

Gin1984

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Re: $24B in 401(k) matching left on the table
« Reply #21 on: August 02, 2015, 02:38:11 PM »
I don't understand why people call this free money. It's not. It's part of your total compensation.

People don't say "hey employer provided health insurance...yes! Free money!"  When usually that is a more lucrative benefit than the 401k match.

So you're telling me that you consider how much a company gives in a 401k match when negotiating a salary?  That seems doubtful.
I look at total compensation, match, health insurance, vacation etc.

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Re: $24B in 401(k) matching left on the table
« Reply #22 on: August 03, 2015, 09:47:10 AM »
I don't understand why people call this free money. It's not. It's part of your total compensation.

People don't say "hey employer provided health insurance...yes! Free money!"  When usually that is a more lucrative benefit than the 401k match.
I hate semantic arguments online, but you at least understand why people view it that way, right?
You get your salary regardless of what you do with your money. Nothing more is guaranteed. However, if you just move some of that salary from one place to another under a specified set of circumstances, you get more. So, call it what you will. It's not guaranteed, and the criteria to obtain it do not include a material cost, so "free" is close enough.
Most of us pay something toward our employer-sponsored health insurance and we never see the part they pay, so people are less likely to view it in the same way.
« Last Edit: August 03, 2015, 10:10:32 AM by zephyr911 »

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Re: $24B in 401(k) matching left on the table
« Reply #23 on: August 03, 2015, 10:08:11 AM »
Quote
People don't say "hey employer provided health insurance...yes! Free money!"

Some people do.
There is one employer in my city (in my industry- my city has 4 employers in this industry) that has NO premium for insurance.  People know this.  And it is a major selling point of why to work for that employer.  They also have an excellent 403b, though not the highest contribution of the 4. If you can get a job with them for the same salary as one of the other places, you come out ahead. And people know this.  Free health insurance IS free money.

And every company I've ever worked for at the end of the year sends out a total compensation statement that explains how you actually make 3 times what you think you do because of what the company spends on you for life insurance, health insurance, professional development, etc.