Boeing employees say no to $98M in free money

[gozer]

The company my son just start working at defaults your 401k to 3% when you start, and then increases 1% per year until you reach 10%. They match 100% on the first 6%. The default fund they put you in is one of the Vanguard age based fund. (the one that most closely matches your normal full retirement date)

 

[pb4uski]

...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.

+1 These employees are leaving money on the table but would be the first ones to complain about their pay and benefits and how big, bad corporations screw people over.

Yesterday I was having lunch with a friend and learned that an acquaintance of ours doesn't have health insurance because he can't "afford" the $150/month it would cost (he makes good money and can well afford $150/month - he is just cheap). If he has to go to the hospital and ends up with a big bill because he doesn't have health insurance, he'll probably be the first one to complain about how screwed up the health care system is. You can't fix stoopid I guess.

 

[pb4uski]

The company my son just start working at defaults your 401k to 3% when you start, and then increases 1% per year until you reach 10%. They match 100% on the first 6%. The default fund they put you in is one of the Vanguard age based fund. (the one that most closely matches your normal full retirement date)

Every employer should have something like this. You have the freedom to opt-out if you wish, but the default is to contribute. For many people starting out the only way to save is to avoid the money getting into your hands/bank account. I was that way in my 20s but realized it and responded accordingly.

 

[travelover]

Every employer should have something like this. You have the freedom to opt-out if you wish, but the default is to contribute. For many people starting out the only way to save is to avoid the money getting into your hands/bank account. I was that way in my 20s but realized it and responded accordingly.

I agree. How many would opt in to SS if it was a free choice? And how many would be sleeping under bridges in their golden years?

 

[athena53]

You can't fix stoopid I guess.

I agree. I worked for a company that was a class act when it came to its 401(k). They'd terminated the DB plan before they acquired us but in addition to a 100% match on the first 6% they gave those of us not in the DB plan an additional 6%, which was deposited every April. You got that even if you didn't participate in the 401(k).

A coworker used to take that amount out as soon as he got it and spend it, even though he knew he had to pay ridiculous taxes. And he was an actuary. Of course, he and his wife lived on a hobby farm that was a money sump and they kept buying animals such as miniature horses and ornamental Chinese hens- not good for meat, breeding or much of anything else to earn their keep.

 

[rodi]

I believe the consumer protection law that passed a few years ago requires the "default" to be a 3% contribution. New employees can opt out or increase it.... but the default is to enroll at 3%. This attempts to "fix stupid".

A friend/former coworker said her boss pressured her to enroll at 6% to get the match, when she hired on. She was grumpy about it but didn't want to piss off the new boss. She is something of a shopaholic, so this action by her boss helped save her from herself. My opinion of her boss went up several notches when she told me that story. Despite being an engineer - she was very ignorant about finances and money.

 

[Andre1969]

Looking back, my excuses for not contributing into the old McDonnell Douglas 401k were pretty lame. Even though it only matched up to 1% of my salary, that was better than nothing.

I got hired by them in the fall of 1992, part time, while still in college. Part timers weren't eligible for the 401k. I went full time in February 1994, but held off on the 401k. Here's a few of the reasons, from my mindset of the time
1) the 1% match isn't worth it
2) I'm only 24, I have PLENTY of time to save for retirement!
3) I'm also getting a pension
4) I want to save up for a house
5) I'm already investing in after tax stuff
6) I want easier access to my money if I need it
7) I'm in a low tax bracket, so it's not saving me much on my taxes

I did finally start contributing to the 401k in December, 1997. By that time, we were with Boeing, but still on the 1% match plan.

So maybe, in the overall scheme of things, I didn't lose out on *too* much. Roughly 3 years and 9 months of saving, matching, and compounding. I only made about $22,000 per year when they put me full time, so I probably wouldn't have been able to put in much...maybe just enough to get the full match.

One thing I do remember losing out on, though, is that McDonnell-Douglas stock did really well in that timeframe. I forget what it was going for by the time I was full time, but in 1992-93 I remember it being around $20-25 per share. During the time I was a full time employee, it did a 3:1 split, then a 2:1 split, and then a 1.3:1 split when it converted to Boeing stock. And Boeing was going for around $57 per share when we converted.

 

[Texas Proud]

I believe the consumer protection law that passed a few years ago requires the "default" to be a 3% contribution. New employees can opt out or increase it.... but the default is to enroll at 3%. This attempts to "fix stupid".

A friend/former coworker said her boss pressured her to enroll at 6% to get the match, when she hired on. She was grumpy about it but didn't want to piss off the new boss. She is something of a shopaholic, so this action by her boss helped save her from herself. My opinion of her boss went up several notches when she told me that story. Despite being an engineer - she was very ignorant about finances and money.

I am not sure, but I think that it allowed the default of 3% but did not require it....

 

[Chuckanut]

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.

I remember my father getting SS early in case they decided to stop paying it. As a younger person, I suspected SS would be reduced or eliminated for my generation. I was partially correct as my full retirement age was raised to 66. But, overall, I am getting what one could have expected.

I think today's younger folks will probably see more SS cutbacks in the form of raising the full retirement age again. Given the increased life spans, this seems reasonable if we protect people from age discrimination.

And, I expect that many people (like many here) will see some increased taxation of SS benefits. The tax limits are not indexed to inflation, so...... it's already happening.



IIRC, former Senator Simpson who was on a SS reform group, said that simply raising the full retirement age by two years over about a 20 year period would fix SS.

 

[mike143]

Company I work for max match is 2% on 4%. I max ($17.5k), 31% of my salary. Always amazed the people that don't take the company match but have plenty of money to burn (toys, trips, extravagances, etc). This is the second year I maxed and plan on doing so until early retirement, currently age 31.

 

[imoldernu]

Given the choice, best place to place that part of the earnings?

American Household Credit Card Debt Statistics: 2014 - NerdWallet Credit Card Blog

U.S. household consumer debt profile:

Average credit card debt: $15,593
Average mortgage debt: $153,184
Average student loan debt: $32,511

Current avg APR:
credit card 13.02%
mortgage 4.01%
student loan 4.66%

Also... how to balance the saving dollars from the later, highest earning years with the needs during the young working years.

Memories....
$220/month as a 2nd Lt. with wife and new baby... She dropped a bottle of milk, and cried.. Not a time of life to put away 7% of pay.

 

[Car-Guy]

In my early years I was pretty much living paycheck to paycheck but I still could not understand why anyone would not participate in our comapnies 401k program the way it was structured. If I remember correctly, the first mega corp I worked for matched 50% up to the legal limts, the second company I worked for matched 100% to the legal limits. And in both companies the employees were "well compensated professionals". (no disrespect, but these were not fast food places) I find it hard to believe that "many of them" could not afford to at least contribute enough to get the matching funds. I think most did participate but I know of many that did not. I'm well over a million dollars richer today because of 401k's. It's money that I really didn't miss contributing once I got started and that I would have probably just blown over the years had the plan not been there.

 

[MaddMaxx]

I currently work for a company that matches 100% up to 15% of my pay. It took me three years to get to the ability to save 15% of my check due to being the sole bread winner with a spouse and three teenagers in the house. But now that I am able to max it out, I love it!

 

[unclemick]

Late 60's participated to the max - when the 'last person leaving Seattle' layoff came - the Credit Union got first crack at my account(without informing me, no option). I got a paid up Sports car and $98 bucks.

heh heh heh - resentment! Resentment? I still chuckle that my pension check comes from their main US competitor. . I maxed their 401k although not as good BUT Bogle's Folly was the big dog. All praise to index and ER.

 

[FUEGO]

For many of these employees, they put in 8% but it only takes 5% out of their take home pay due to tax savings. Then they get matched the 6%. The total amount saved is 14% of gross at a cost of 5% of take home pay. That's almost a 200% immediate return on investment. I'd sell plasma to get that kind of return.

 

[mike143]

Every time I got a raise I upped my 401k contribution so my take home was the same. Once I paid off higher interest debt I used that same accelerated amount to max 401k. I bought a house that is probably half what I could qualify for and buy economical cars. It's not magic its realizing a problem and doing something about it. I maxed my credit cards twice and did a consolidation loan. I learned the hard way. Now I exploit the credit card companies for the points and signing bonuses. People spend themselves broke at all income levels. You can't spend your way to financial freedom.

I just really wish they taught finances in high school. It took me time and loss of money to see the light. My father said to save, but he didn't and didn't expand upon that simple phrase. I will pass what I have learned onto my child so they don't have to make the same mistakes I or everyone else do.

 

[scrabbler1]

In my first few years of working (full-time, back in the 1980s), I did not take full advantage of the company match (at the time it was only 50% of the first 6%, in the early 1990s it was raised to 75%). I put only 3% into my 401k because I had several big-ticket items I spent a lot of money on: (1) I bought my first car with cash, avoiding a costly car loan, (2) I paid off my student loans, avoiding more high-interest debt, and (3) I was saving up to buy my co-op apartment, including the closing costs which nearly wiped out my savings. So, the extra $1,200 I kept in take-home pay was needed to help with all 3 items. As soon as bought my apartment, I raised my 401(k) rate to 6% to take full advantage of the match.

 

[Gumby]

To my dismay, I have never had a 401k match, and I find it appalling that those with a match don't take advantage of it.

 

[MRG]

Mega matched the first 3% at 100%. Despite the free money half the folks didn't participate. Every year I was required to talk to my group about free money. Never pressured but did put some numbers on the board to try to explain.

Sent from my SAMSUNG-SGH-I337 using Early Retirement Forum mobile app

 

[brett]

As a manager, it never ceased to amaze me how many people in the group left free money on the table-most in matching pension opportunities.

And I was amazed when I heard the stats on how many actually logged, checked their employee directed plans, and made changes to allocations, investment selections, etc.

It may be why I retired at 58 and they are still working.

 

[foxfirev5]

I was amazed that my companies 401k was not rated higher than it was. 70% match of the first 10% plus an additional 5% company contribution each year. Low cost Vanguard Inst class index funds (.05-.09 ER) and only $50 per year in recordkeeping. The reason for a lower than perfect score - below average participation. Now my suspicions are confirmed. I do work with quite a few idiots.

 

[MRG]

...snip...

The reason for a lower than perfect score - below average participation. Now my suspicions are confirmed. I do work with quite a few idiots.

That's why I was required to talk with my group every year. Upper management wanted increased participation to get better numbers.

Sent from my SAMSUNG-SGH-I337 using Early Retirement Forum mobile app

 

[haha]

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.

Well, it is by definition a Ponzi scheme if a Ponzi scheme relies on later joiners to fund payments to earlier joiners. But the belief is that payments will be augmented when the time comes, at least if any politicians plan on reelection.

Ha

 

[jazz4cash]

i remember the employee meeting very distinctly when Mega Corp rolled out thier 401k around 1984. It replaced an employee stock savings plan that was more of an annual bonus plan than a savings plan. The 401k at the time was in addition to a DB pension and I don't think anyone envisioned the DB pension being phased out. I signed up right away. The clincher for me was the ability to borrow the money out of the plan in a pinch. That is one reason I don't have a problem with responsible use of 401k loans. I started putting my kids tuition funds in there as well since 529 plans did not exist. Out match varied from 25 to 100 % on the 1st 4% depending on business conditions.

 

[John Galt III]

I bet a lot of the 401K refusers remember the 2008 scam and just don't trust that their money will be safe in the "Wall Street Casino". Even in a fixed income investment vehicle.