How many people do you know who, when offered free money—a significant quantity of it—just ignore the offer and walk away?
My plant has 130 employees. We have an excellent 401(k) plan with dollar-for-dollar company matching contributions for up to the first 6% of salary that an employee will “defer” (put into the plan for their retirement).
Of those, 25 are currently contributing less than 6%. And 17 of THOSE are contributing ZERO!
I try to tell them that if they put in 6% it will only reduce their take-home pay about 4.5% due to the tax savings. I try to tell them it’s the only 100% guaranteed way to double their money instantly, and with no (current) tax consequences!
I ask them if they expect to live on Social Security when they retire. They shrug. Many tell me they can’t afford to defer “right now.”
“But you just got a big raise earlier this year,” I counter. “Use some of that windfall to save at least something!”
“Well, next year when we get a raise I’ll try to put some in the plan.”
Yeah. Right.
We offer 32 investment options. We offer a Roth 401(k) option that will allow them to take out their contributions and all the interest and earnings completely tax free. Did you hear that? Not tax-deferred; TAX FREE! Where else are you EVER going to get tax free money in this country?
I plead. I cajole. I belittle and shame.
Does little good.
Some would view my actions as paternalistic. “They’re big boys and girls—let them make their own decisions.”
But I’ll keep trying. It just feels like the right thing to do.
Somehow I feel sure they’ll be grateful later.
(Okay, end of rant. I feel better now.)
5 comments:
While I love my job and work for a pretty great company, there are some days I wish I worked for yours.
r.e.,
Well, the best part of this company is the terrific H.R. management team!
(OW!! I think I just sprained my arm from patting myself on the back.)
John
I wish I worked for your company too, John. I have no benefits at all.
It's a shame they don't take advantage of this when there are so many people without any benefits.
Maybe you could give a little seminar on this kind of thing sometime?
Candace,
Oh, I do, I do! We stress the importance of retirement savings at orientation. Then I periodically send out reminders about how expensive our benefits package is, and how wasteful it is for employees NOT to take advantage of it. I promote and promote, wring my hands, twist their arms, bite my tongue, (choose your favorite cliche!)
We're considering automatic enrollment and deferral, with people having to specifically opt OUT to lose the company match.
But you're right. It IS a shame!
John
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