Recently I was speaking with a friend of mine who had just started working for American Express.? Having known others who worked for the company in the past, I was somewhat familiar with the impressive benefits package they offer their employees.
???They have a really good 401k program, don??™t they???? I asked him.? I was surprised by his response.
???Yeah it seems pretty good.? I??™m not going to use it though.???
His reasoning for not taking advantage of the opportunity was that he was in an entry level job and didn??™t see how he could afford to have a percentage of his income yanked out of each paycheck and socked into a program that he wouldn??™t be able to benefit from for some time.? The fact that the company was willing to match, dollar for dollar, the amount he invested up to a certain percentage didn??™t sway his decision at all.
His attitude, unfortunate as it is, is not uncommon.? According to Hewitt Associates Incorporated??™s 2004 benchmarking report How Well are Employees Saving and Investing in 401k, just over 70% of eligible American workers were participating in their companies??™ 401k plans.? This number represents an increase over previous years, but there is no conceivable reason that it is not in the 90-100% range.
Refusing to participate in an employer??™s offered 401k program is like turning down free money.? If your employer offered to give you an extra fifty dollars every week, just for showing up, you??™d take it.? When employers match workers??™ 401k contributions, even by just a percentage; that is essentially what they??™re doing.
If you have the opportunity to invest a percentage of your salary in a 401k or similar retirement plan through your employer, take it.? Even if you??™re not going to be at the job for an extended period of time, there are programs, which allow you to transfer those funds to the plan offered by your next employer.
If you have your own company? explore the possibility of starting a single employee 401K plan, if that is not possible try a SEP IRA plan. 401k plans, stock options, and profit sharing programs offered by companies to their employees can only help you establish a savings and investment plan for your retirement, your children??™s education, and your general future.? By failing to participate you??™re denying yourself the opportunity of a more secure future and, essentially free moneyNot even Bill Gates or Donald Trump is so wealthy that they??™d turn down free money.? Are you that wealthy?