It finally happened – 7 years out of college and I am finally getting my first 401k match! I’ve dreamed of this moment for so long (yes, I have weird dreams – deal with it). While working at all of my previous jobs, I never qualified for the 401(k) match (if they even had one). If they did have one, you were not eligible for it until you had been there 4 or so years, which is basically unheard of in ad agencies. Well played HR. Well played.
But now it’s happened! I heard some backroom whispers that the reason we’re getting the match now is to incentivize people to join the plan so we don’t lose it. Now getting a confused email from finance asking if I missed a decimal point when I said put “62%” of each paycheck into my 401(k) makes a lot more sense…I’m not sure if it’s the high fees or fear of investing that is holding my colleagues back, but I intend to find out.
Not All Heroes Wear Capes
I tried to fix both of those concerns separately. For fees, I gave a presentation to our finance lead showing how much less we (the employees) would pay by using Vanguard and was immediately shot down because apparently it would be much more expensive for them (the company). Go figure. The second issue, fear, I’ve been trying to combat one person at a time. After being asked by colleagues how to manage finances, I’ve been going to lunches and hang outs to discuss investing, books I recommend, and how to get started. Trying to change the world one person at a time!
How Much Of A Match?
So let’s get to the dirty details: How much is this 401(k) match? In a move I’ve never personally heard of, we will be receiving a set amount, not a percentage of our contribution. I wonder if this is because I max mine, basically no one else contributes apparently and would be raking in all the dough…They’re onto me! Anyway, we will receive $50/month regardless of how much we contribute (as long as we do), which means my ‘salary’ just increased by $600 without having to do anything extra – my favorite way to make money 🙂 .
If you want to have a chuckle, check out the hilarious (and terrifying) things our 401(k) advisor said when he visited recently in this live tweet thread:
My company's 401(k) advisor is presenting today and watching this insanity has inspired me to do my first ever LIVE TWEET EVENT! Buckle up…🤑
— A Purple Life (@APurpleLifeBlog) September 21, 2018
A Possible, Surprise Stack Of Cash
And now a surprise: I referred a friend and former colleague of mine to my company because it’s the best place I’ve worked so far (despite its ups and downs). And she was just hired! I was then reminded that if someone we refer stays we get money! So no pressure to my friend if she leaves (no worries – I don’t need the money), but if she likes the job and stays, I get 1/2 of this bonus after 3 months and the other 1/2 after 6. What’s the bonus? A cool $1,000. Not a bad chunk of change to throw on the pile if it happens.
So What Does All This Mean For Retirement?
Unsurprisingly, not a lot. Though it does add $600 to my annual salary (full breakdown below) and more strongly solidifies my hope of achieving my goal of retiring on or before October 2, 2020, the numbers and projections remain about the same. Despite these awesome changes, it’s not enough to move the needle based on my current savings rate. Still feels nice though! Let’s see how much extra dough I can roll together before retirement!
2018 Salary Breakdown
Base: $93,600
Target Bonus: $10,000
Stretch Bonus: $0 to $5,000
Phone: $600
401(k) Match: $150 (Since I’ll only get it for 1/4 of the year, in 2019 it will be the full $600)
TOTAL: $104,350-$109,350
How about you? Have you ever qualified for a 401(k) match? Has it moved the needle for you?
That live twitter feed is hilarious and scary at the same time. The issue is that if you talk to coworkers about it , they’ll likely dismiss what you say since it contradicts what the “expert” said. On another note, that matching 401k is abysmal. $50/month?!? All the places I’ve worked offered at least a 4% match on salary. This was an interesting post
Surprisingly my coworkers have asked to hear my opinions on investing instead of going to this guy – maybe they sense he’s not the ‘expert’ he seems? Or maybe they’re just looking for multiple opinions. No idea!
And haha – the match is more than $0 and more than I’ve ever had before so I’ll take it lol. 4% would be great though! Maybe in the future. Thanks for stopping by!
Who’s the investment expert here: the guy giving presentations trying to get people into troubled/troubling finances (for the Nth year in a row), or the gal less than 2 years from retiring at age 30, five years ahead of original schedule?
Hint: the one who’s figured out what “balls to the wall” really means. 😉 😀
Hahahaha – thank you! And you may be onto something. I’m happy to offer (free) investing advice to friends and colleagues who ask for it. And someone after this meeting did joke that people should talk to me instead of going to this 401(k) guy so maybe it’s working!!
Congrats on getting a 401(k) match. amazing that it took your company so long to offer it. Better late than never, though, right?
And that is impressive how you were able to max out your contributions in such a short time frame. I maxed out my 2018 contributions in August and it has been nice having the extra pay for the rest of the year.
Before maxing out I confirmed with HR that I would still get the company match going forward. A former employer of mine would only true up the match at the end of the year if you maxed out your contributions early.
So now I am thinking through my 2019 plan and how quickly I will try to max out next year. I already have a model in place with a few options!
Thank you! And the company has been around 10 years, but we’re really small so when I joined I was surprised we had a 401(k) at all. I’ll take it!
Congrats on maxing yours out! I’m a pessimist who’s been laid off a lot of times and don’t like the hassle of trying to be perfect at filling a 401(k) at a second company (it’s surprisingly hard to be premise based on my experience. Plan seem to vary wildly in ow they calculate how much you can put in). The extra pay is nice though I do prefer it going into tax-advantaged vehicles for the tax savings. It feels like I’m ‘hiding’ money when I put it in the 401(k) 🙂 .
That’s really weird that they would only give you the match if you maxed early – I’ve never heard of that! I’m going to check with my people to make sure there are no weird rules like that. Thanks for the heads up!
Good luck in 2019! We can race if you want 😉 . Thank you for stopping by!
Bonuses are always nice to receive even if they are small. Even more so when unexpected and not planned. Yours may not move your FIRE date but I bet you have had a little smile on your face for a few days!
Congrats on the 401 match. here in the UK we have somethin similar that some people (myself included) are lucky enough to have – pensions that our employers contribute an amount to – it varies from minimal (1%) to generous (18%).
It is now mandatory for almost all employers to pay the minimum – think it might have even gone to 2-3%.
I mean yeah I’ll take any extra money I can get 🙂 . A pension sounds awesome and a mandatory 2-3% WOW! And 18%?! I can’t even imagine. I have even more incentive to move over there now 😉 . Thank you for stopping by!
18% comes with a lower salary than private industry – UK government/civil service. But who’s going to complain?! Although believe me, many civil servants do. We’ve had max 1% pay rises for 10 years so there’s definitely downsides to that 18% pension contribution.
Interesting! It seems like everything comes with strings. 1% pay raise is more than I’ve gotten at all jobs but this one. And it looks like we’ll get nothing this year. I can always get worse lol! Very interesting to hear though. I had no idea about this stuff!
Hey! Wow, nice job on contributing 62% of your paycheck! And even nicer that you’ll be retired by 30. Of course congrats on a new match.
So I get 2% of my salary put into my simple IRA. It’s not much but I figure if I keep driving up my income, it’ll get better. My real FIRE power comes from me maxing out my accounts.
Thank you! And fingers crossed on the ‘retiring at 30’ part. I am at the mercy of Mrs. Market 🙂 . And putting in 2%, maxing your accounts and trying to increase your income is great!! Thank you for stopping by!