Boeing employees say no to $98M in free money

[REWahoo]

We had a similar but far smaller problem getting employees to participate in the 401k at my workplace, but nothing approaching this scale.

Bet none of them would have passed the marshmallow test...

I came across a notice to Boeing employees informing them that they collectively left $98 million on the table in 2013 by not taking advantage of matching funds in the company's 401(k) plan.

According to this report, approximately 8,400 Boeing employees declined to participate at all in the program last year, and another 48,000 "didn't contribute enough to receive the maximum company match." Boeing didn’t respond for comment but my hat’s off to them for being so forthcoming with their employees.

It's startling to realize that about a third of all Boeing employees are voluntarily taking less pay than the company wants them to have. To receive the full company match, employees would only need to contribute 8% of their base pay.

Boeing matches those contributions at the rate of an extra 75 cents on the dollar. In other words, set aside $1 and get an instant one-time-only return of 75%.

Don't make the mistake that cost Boeing employees $98 million

 

[Lakewood90712]

It's not all stubborn or ignorant folks, some are living paycheck to paycheck , and can't afford any deductions . And not just the lower paid people !

 

[LoneAspen]

It's not all stubborn or ignorant folks, some are living paycheck to paycheck , and can't afford any deductions . And not just the lower paid people !

Exactly.

When the company I'm at IPO'd last year and started an ESPP plan, it was an automatic enrollment. Two-year lookback and 15% discount off the lowest of either the starting or ending price of the purchase period. Great terms!

However, the maximum contribution (15%) is calculated pre-tax but taken out of after-tax pay. That hurt!

It hurt so bad I was tempted to drop out, but stuck it out through the first purchase period. In the end, it was worth a few extra thousand after taxes, but nothing earth shattering.

I could very easily see people reducing their contribution or dropping out entirely. I almost did. Sometimes, it's not about the future ROI, it's about present cash flow (or lack of it).

 

[gauss]

Speculating Here:

Is it possible that these are newly eligible Boeing employees who's DB pensions were recently modified? Might be some resentment built up by long term employees.

FWIW, I ended up resigning from my employer of 22 years after the DB pensions were frozen and I would never be able to accrue on the highly valuable last 8 years of the curve.

-gauss

 

[Andre1969]

I'm surprised that Boeing's match is still that good...75 cents on the dollar up to 8% is effectively a 6% match. I worked for Boeing in late 1997, 1998, and 1999, when they took over McDonnell-Douglas.

Our match at McDonnell-Douglas had only been 25 cent on the dollar up to 4%, or effectively, 1%. We were SOOO looking forward to that new Boeing 401k, until we found out they were keeping us under the old plan and calling it "heritage" or something like that.

 

[clifp]

Exactly.

When the company I'm at IPO'd last year and started an ESPP plan, it was an automatic enrollment. Two-year lookback and 15% discount off the lowest of either the starting or ending price of the purchase period. Great terms!

However, the maximum contribution (15%) is calculated pre-tax but taken out of after-tax pay. That hurt!

It hurt so bad I was tempted to drop out, but stuck it out through the first purchase period. In the end, it was worth a few extra thousand after taxes, but nothing earth shattering.

I could very easily see people reducing their contribution or dropping out entirely. I almost did. Sometimes, it's not about the future ROI, it's about present cash flow (or lack of it).

I understand but a few thousand is still probably the equivalent of a years raise in today's environment, maybe even two years .

There are very few things in life worth putting on a credit card at 12-20% interest, ESPP, and employer 401K matches are actually worth racking up credit card debt.

 

[REWahoo]

Speculating Here:

Is it possible that these are newly eligible Boeing employees who's DB pensions were recently modified? Might be some resentment built up by long term employees.

Could be. Resentment can cause all sorts of self-destructive behavior, including refusing to allow an employer to give you money even though doing so only benefits the employer.

 

[Sunset]

Could be. Resentment can cause all sorts of self-destructive behavior, including refusing to allow an employer to give you money even though doing so only benefits the employer.

Possibly, you see the same thing with SS, I've had folks tell me they are taking it at 62 because they don't trust the Gov't to pay it out later, so get what they can as soon as they can.
Some other reasons for doing it at 62 are valid.

 

[Senator]

I think that is standard across many companies. It's too bad. No one can save anymore.

I put my contribution rate in at 75%. So, January is like double pay. By the end of January, I have already put in enough to get the maximum match.

 

[38Chevy454]

I agree, it is bad economics to leave free money on the table. But if an employee was so stretched they need cash now that might explain it. My argument to that employee would be to cut back to a level of spending so you can get the free 6% matching, and at same time they are savings 8% of their own money. Total savings each year is 14%.

 

[Chuckanut]

If somebody offered me the Boing Aircraft deal I would take it in a NY minute. Then figure where to cut.

 

[Texas Proud]

It's not all stubborn or ignorant folks, some are living paycheck to paycheck , and can't afford any deductions . And not just the lower paid people !

Well, it IS all ignorant folks.... even the ones living paycheck to paycheck....

Put the money in the 401(k)... get the match.... take out a loan for the amount you put in leaving the match... do this until it hurts... then default on the loan and make it taxable income... pay the taxes and even the penalty and you are still ahead of where you were with no contributions....

You might not be able to contribute for a year if you default, but you still have more money....

 

[Walt34]

It's not all stubborn or ignorant folks, some are living paycheck to paycheck , and can't afford any deductions . And not just the lower paid people !

My older sister worked at a company that managed 401(k) and other retirement plans and they had a lot of their own employees living paycheck-to-paycheck, many of them earning six figures plus.

Some of them told her that if they didn't get paid by noon on payday they couldn't eat lunch!

Sheesh, even in high school when I was working at a gas station I always kept a cash stash in a drawer. The behavior of those people is beyond my comprehension.

 

[Brat]

Boeing retired engineer story:

A former collogue married a retired Boeing engineer. She shared me her dismay when she learned that he cleaned out his 401k prematurely and gave the proceeds to his kids (before she met him), then failed to file tax returns for YEARS. Thankfully she did not put his name on her assets before she discovered this. The IRS then tried to get the unpaid taxes out of her hide shortly after the innocent spouse provisions were added to the tax code. She actually grieved for the guy when he passed away from a heart attack.

Personally I would kicked him to the curb.

I was in NIKE HR when they instituted their 401k. Many of their employees were in their 20s at the time. It was like pulling teeth to get them to participate and the match was in NIKE stock. Basically they were just starting out, often newly married or with babies at home, and felt they needed every dime each paycheck. My secretary didn't want to do that because she wanted all her earnings for her upcoming wedding. Arahh!!

 

[Greencheese]

This is what terrifies me for the future, companies literally cannot PAY people to save. As more and more DB plans go away and social security keeps getting pushed out/potentially cut, there's going to be huge issues in the future. While people here obviously are planning and saving, what will it look like 40 years from now when 100 million people are dependent on an ill funded national pension and 100 million are living the comfortable life on savings?

 

[Walt34]

While people here obviously are planning and saving, what will it look like 40 years from now when 100 million people are dependent on an ill funded national pension and 100 million are living the comfortable life on savings?

It will look like the 1930's. Not good.

But the generation behind them, having seen the results of not planning ahead and saving, will do quite nicely.

 

[youbet]

Resentment can cause all sorts of self-destructive behavior.

+1


It's one of my favorite things to observe...... so very interesting.

 

[LoneAspen]

Possibly, you see the same thing with SS, I've had folks tell me they are taking it at 62 because they don't trust the Gov't to pay it out later, so get what they can as soon as they can.
Some other reasons for doing it at 62 are valid.

That's what I'm planning to do (although I'm only 47 right now).

I know SS has always paid out, they say funds are available to pay out in future, blah, blah, blah, lies, damn lies, and statistics...

But I don't care, as I've never had much faith in SS. After being forced to put MY money (not the government's money...MY money) into the program for 30+ years, I want to start getting MY money back as soon as I can get my grubby hands on it.

 

[CaliforniaMan]

My older sister worked at a company that managed 401(k) and other retirement plans and they had a lot of their own employees living paycheck-to-paycheck, many of them earning six figures plus.

Some of them told her that if they didn't get paid by noon on payday they couldn't eat lunch!

Sheesh, even in high school when I was working at a gas station I always kept a cash stash in a drawer. The behavior of those people is beyond my comprehension.

+1
There is always some excuse not to save. I was self employed and had to fund my own retirement via Keogh then 401k. Sure it was hard to max out my contributions every year, had to cut back, file extensions, whatever, but I found a way.

Unless you have some catastrophic medical problem or something like that "living paycheck to paycheck" is not an excuse for not funding your retirement.

And when your employer is giving you free money? I agree, the behavior of these people is really beyond comprehension. I would have done anything to get that match.

 

[UnrealizedPotential]

If somebody offered me the Boing Aircraft deal I would take it in a NY minute. Then figure where to cut.

Agree.I can only dream of an employer 401k match.

 

[meierlde]

That's what I'm planning to do (although I'm only 47 right now).

I know SS has always paid out, they say funds are available to pay out in future, blah, blah, blah, lies, damn lies, and statistics...

But I don't care, as I've never had much faith in SS. After being forced to put MY money (not the government's money...MY money) into the program for 30+ years, I want to start getting MY money back as soon as I can get my grubby hands on it.

I do know the idea of social security not paying out has been around since the 1960s. I recall my mother saying at the time that she did not expect to get her social security. Of course she got it for 19 years. So at least some folks have felt that SS is at least a bit of a ponzi scheme since the system started paying out.

 

[Lakewood90712]

...........snip..........

I was in NIKE HR when they instituted their 401k. Many of their employees were in their 20s at the time. It was like pulling teeth to get them to participate and the match was in NIKE stock. Basically they were just starting out, often newly married or with babies at home, and felt they needed every dime each paycheck. My secretary didn't want to do that because she wanted all her earnings for her upcoming wedding. Arahh!!

A little off topic , but the money spent on weddings for young couples starting out could be a whole chapter in a stupid money decisions book,. Mid 5 figures or more spent , instead of a nice down payment on a house

 

[kagarnett]

My company matches 100% up to 2% of your pay. Better than nothing I suppose. I'm lucky at the moment to be able to contribute 18% of my pay.

Sent from my SCH-I535 using Early Retirement Forum mobile app

 

[Gumby]

It's not as if they're rocket scientists or anything . . . Oh, wait . . . .

 

[pb4uski]

It will look like the 1930's. Not good.

But the generation behind them, having seen the results of not planning ahead and saving, will do quite nicely.

And from what I have seen with our kids/nieces/nephews who are in their 20s today, that may be the generation that figures it out. DD, DS and nephew are all prodigious savers and I'm not sure why.