Steven Dibble, Stratford Schools
If I were to advise co-workers about contributing to our 401(k), which I have done, by the way, I always tell them it is a must. At the minimum, you must contribute the percentage that our employer matches, which is 6 percent. But that's just a start! I tell them that once they see how little it actually affects their paycheck, they are going to want to do more and more. I am currently contributing 25 percent of my gross pay to my 401(k), but on my salary as a teacher at a private school, I still don't max out by the end of the year. I've been told by the younger teachers that they can't afford to contribute, and I always reply that they can't NOT afford to! They are throwing money away if they don't start with at least the 6 percent needed to maximize the employer match. I wish someone had had this talk with me when I was much younger. I didn't join a 401(k) until I was almost 40 years old, and that 401(k) is now a rollover IRA. When I rolled it over, it only had about $20,000 in it, but in the fifteen years that I have let it grow, it now has over $115,000! That's the next conversation I have with my young coworkers - watching your money grow.
There are so many more reasons to join a 401(k)! One of the most exciting reasons is seeing your money grow through the magic of compound interest. I can track my portfolio's performance on the easy-to-use website that my employer has set up through ADP. It even tells me what my monthly expected distribution will be when I turn 67! And speaking of portfolios, you can manage your own portfolio or seek the advice of a consultant whose services are offered by my employer. Be careful of fees, however, as they can be hidden and not easy to track. I also remind my coworkers about the tax benefits of contributing to their 401(k). You pay yourself first with your contribution, and then the remainder of your gross pay is taxed, which puts you into a lower tax bracket, saving you even more money. Lastly, I warn them to not count on Social Security being around when they retire, and if it still is, their benefit won't be enough for them to retire on. Clearly, a 401(k) is the way to go!
What would you be willing to do to inspire non-participants to participate in the 401(k)?
I would be willing to do just about anything to spread the word. I am a confident public speaker, so I would be willing to attend seminars or speak at staff meetings. I would also be willing to record videos or participate in webinars. With a little help from a technical expert, I would even create PowerPoint presentations that include showing how compounding interest works so that people could view it at their own pace and when it is most convenient for them. I would even dress up in a silly costume if it would attract attention to the cause! I've done it before, and I'll do it again! if that doesn't show my passion and dedication, I don't know what does!