Bari Scheinbach, Moveo
Around the office, if you ask anyone for advice on finances, fitness, and fabulous food, I’m the go-to woman. With this informal role of influence, I have taken it upon myself to offer the more junior associates advice (when asked, of course) on how to improve their financial lives, and a key component of our discussions is always the pillar of a 401k. The financial stability I am fortunate to have in my life is in large part due to learning important principles early in my career, and applying those learnings consistently. I want to be sure I’m sharing the wealth so to say, and encouraging others to utilize tax advantaged vehicles as much as possible to leverage the free money, compound interest, and time in market.
I am fortunate that the company I work for has a generous 25% match on all contributions, which for me equates to a $4,875 addition to my max contribution of $19,500. In just 4 years, it’s an additional year of contributions that I never worked for! Even without a match I would be participating as much as I could afford to make sure I had money in tax advantaged accounts, but the match just sweetens the pot exponentially. There is no reason not to contribute and set myself up for later in life – who doesn’t want a comfortable retirement? Because of my experience managing money for myself and setting others up for success, I’m able to point out the key differentiators that a 401k can offer, and ensure this foundational financial element is maxed to my co-workers’ greatest potential.
My “elevator pitch” typically goes something like this when we begin the discussions:
Let’s talk about your goal of financial independence and stability in your life to be able to travel the world/send your kids to college without debt/take care of your parents in their old age/own and enjoy nice things in life and not have to worry about how to afford it. There are a few financial principles I recommend solidifying, and in this game of money, earlier is always better. Let’s focus on the 401k piece first, as this is the only tax advantaged vehicle available to you that actually gives you free money! For every dollar you put in, we’re getting a bonus of $0.25. That may not sound like much, but when you extrapolate it across all the contributions and years you work here, it could add up to hundreds of thousands of dollars toward your financial goals in retirement because you not only get to take advantage of money you didn’t have to work for, but you get to have the market do its job to grow that money further as the economy grows, and plenty of time in your career to ride out downturns. This means you get compound interest and growth in the market on free money! The only catch is that the money is either taxed now or taxed later, and we should talk about which makes sense for you at this time of your career. Typically I recommend a Roth 401k because you’ll only pay taxes at your (presumed) lower bracket now, and then never pay taxes again. So all that money in your account is yours at retirement! Just wait until retirement and you can enjoy all the hard work you did to earn that money, and all that free money you amassed just because you contributed something. And did I mention it’s free money just for participating?? I definitely love my 401k for that and you will too.
What would you be willing to do to inspire non-participants to participate in the 401(k)?
Of course I would be happy to inspire non-participants to start contributing to our 401k! I’m incredibly passionate about money and building a stable and rewarding financial life, and already have my coworkers’ ears on this topic, so I see being a 401k Champion as a natural extension. During open enrollment for our insurance benefits, I would recommend having a financial training session for interested participants to ask questions about their contributions, funds within the account, and strategies they can employ. Leading a session like this with prepared materials (I’m one of those planners who creates presentations for her friends to outline trip itineraries) could make a compelling case for participation. I would detail financial implications of waiting longer to contribute, the rate of growth in the market over time, and other interesting financial metrics while also broadly educating the team on reaching their financial goals.
I would also talk to the partners of the company and see if they’d be willing to throw in a little bonus amount for anyone who’s not contributing, or contributing under a certain percentage of their income to see if we can encourage more participants/increased contributions. Sometimes a little extra incentive is all people need to do what they already know they should be doing. This could be handed out as a 401k additional match, or for those close to maxing it out already, it could be a cash bonus for achieving that amount. If someone is already maxing, the financial reward to not exclude them could be the same bonus but either in cash or in our HSA accounts. This way we’re showing coworkers that the company and partners care about their financial well-being and want to be sure they’re going to be taken care of.
Lastly, I would offer one-on-one Q&A sessions with anyone who isn’t comfortable sharing within a group or has individualized questions. Things like looking at their fund allocation, how much they can afford to contribute based on their budget, or more understanding of the difference between a Roth and Traditional 401k could be more helpful outside of a group setting.