I am currently holding “an in between job before I start swimming in the corporate ocean. I’ve held a lot of jobs over my college career ranging from sales representative at Best Buy and Circuit City to a banker. Now I’m back to being a waiter at a fairly large chain in the South. The one thing that I’ve noticed in my past jobs is the use of the company’s retirement benefits by nearly 99% of the employees. People contributed at least the minimum amount to their 401(k) to receive the company match.
At my current position, the company will match four percent of the contributor’s contribution. To be eligible to participate in the plan, you must be a full-time employee (working at least 1000 hours per year. Seems like a ton when you look at it right?). After speaking with nearly every single employee, guess how many people are contributing to the plan? Most people will guess around 20-30 percent. Well, it’s actually 0%! Goose egg! Most of the serving staff has been employed with the company for more than three years; which they have elected not to contribute. Some employees have stayed at the same location since its opening and still do not contribute (eight years this summer).
Then I thought that this is only an issue with the serving staff. I later asked one of the managers and she told me she didn’t even contribute! The only person that has company stock is the general manager because all managing partners are given stock options. I decided to call the HR department and ask what the average match the company contributes to a full-time server. The representative gave me an example of how much I could be earning if I contributed. He said I would receive about $60 dollars a month. I’m only working 25 hours a week and receive much less tips versus the veteran waiting staff. So I took my number and doubled it then increased it another fifteen percent. The average full-time server has declined ~$1700 a year! The one employee that’s been working there for seven years has essentially lost $12,000 dollars. And that is only company matched dollars!
Let’s now evaluate how much real money the employee has neglected to receive.
The stock traded for $9.5 seven years ago and is currently trading for $31. Using this calculator the annual growth is about 18.4%. The monthly contributions would be $276 ($138 from the employee and $138 from the company). Now using this calculator, you can put in all the figures and come up with about ~$47,000.00. The ShareBuilding what if I invested calculator says the total net worth would be $51,400 (I think it considers the two stock splits). The total dollar amount invested would be about $11,600; which means they lost about $40,000 in seven years!
*eFIPO’s Rule* Do not ever pass up the opportunity for free money! If your company provides a match on your 401(k) contributions, take it immediately!
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It’s also part of your negotiated and earned benefits package - you wouldn’t refuse dental insurance or vacation days would you ?!
I know it’s pretty amazing. I’ve told all the employees about how much money they are truly missing out on. One girl has been there for over 9 years and still hasn’t contributed. Her total would be reaching the high $80’s. She was in shock when I told her that one. All the contributions are also the minimum requirement; which means they would still get about the same amount on their paychecks.
I know exactly what you mean…..I am trying to get these two girls (mid-20’s) to sign up for the 401K….our company matches 75 cents/dollar up to 6%.
One has already wasted a year saying that she is too busy, she has no money, blah blah blah. The other one just became a permanent employee a couple of months ago and same excuses!
They will be the same people at 62 bitching about how the government owes them social security….makes me sick!
Today in class we heard an excellent presentation on this topic.
The evidence is compelling. People are foolish to walk away from this gift of money! Those dollars, compounded over a career, will mean a much higher living standard in retirement! - Plus that money will allow people to be gracious and generous with their beloved former college professors!
Thanks!
Today in class we heard an excellent presentation on this topic.
The evidence is compelling. People are foolish to walk away from this gift of money! Those dollars, compounded over a career, will mean a much higher living standard in retirement! - Plus that money will allow people to be gracious and generous with their beloved former college professors!
Thanks!
I think it has a lot to do with the complication of the matter. These plans can get confusing and when you throw math into it many people simply don’t want to deal with it. When someone breaks it down for them clearly of course it was a miss opportunity.
The average person thinks how money works or benefits them now not in the future. Which is why we have so many people working way past their 60s trying to save for retirement. Its a hard concept for people because they will always say they need the money now and cant afford to save.