Kiersten Peshek, Citrine Capital
If you were to advise co-workers about why they should contribute to (and/or maximize) their 401(k)s, what would you say?
The big reasons I contribute to a 401(k) are the employer match (if available), the contribution limit, and the tax advantages. If your employer offers a match for your retirement account this is a part of your compensation package. If you are not contributing enough to receive the full match (or not contributing at all) you are leaving money on the table that future you could use! On top of that, 401(k)s allow you to contribute up to $19,500 per year. That is significantly higher than the IRA contribution limit of $6,000 per year. Finally, by contributing to a pre-tax 401k, you can reduce your current tax burden because those contributions are not included in yourincome. Or, by contributing to a Roth 401k, you can reduce your tax burden in retirement as the contributions and growth will come outtax-free. The choice is yours! Ultimately, receiving the full match is step one. If you have an employer match of 4%, contribute 4% to your 401(k) so that your employer is contributing the full match. Get that FREE MONEY y'all! Beyond that, it's up to you and your financial situation on whether you want to go as far as maxing out the 401(k) or contributing toother investment vehicles such as IRAs or taxable brokerage accounts. My goal for 2022 is to max out my 401(k) for the first time andto continue to do so until I retire in about 15 years!
What actions have you taken to inspire non-participants to participate in the 401(k)? Please explain, being as specific and detailed as possible.
At my previous job, I created a Personal Finance workshop for my co-workers discussing emergency funds, high yield savings accounts, the company 401(k), and what types of assets are available for investment. I presented this workshop to about 60 of my coworkers at different times over the course of two years and provided a copy in our wiki so folks could review it at any time. One of the big points in my presentation was that our employer has a 401(k) that offers a 4% match if you contribute a minimum of 4% of your salary to the account. That match vested immediately (cha-ching!!) AND they offered what is known as "True Up". The True Up feature looks at the previous full year of income, deferrals, and matching to determine if your 401(k) needs an additional employer contribution after the end of the year to make sure you get the full 4% match on your earnings. What a sweet way to support and even boost your retirement savings! With goofy memes scattered throughout to get folks laughing and enjoying the content, I presented this information as simply as possible. At the end I offered to sit with my co-workers as they set up their 401(k)s so they could ask questions of me during the process. Several of my co-workers took me up on that offer. Plus, I had a few reach out to tell me they are now contributing to their 401(k)s when they weren't before my presentation! It was and continues to be an incredible feeling knowing I was helping spread the good word about taking care of your personal finances and investing in the company 401(k) for retirement. As an added bonus, I changed careers in May of this year and now, as an Associate Wealth Advisor, I spend much of my time advocating for 401(k)s (and other retirement savings vehicles) with my clients. I truly love helping folks save and invest to meet their retirement goals.
The big reasons I contribute to a 401(k) are the employer match (if available), the contribution limit, and the tax advantages. If your employer offers a match for your retirement account this is a part of your compensation package. If you are not contributing enough to receive the full match (or not contributing at all) you are leaving money on the table that future you could use! On top of that, 401(k)s allow you to contribute up to $19,500 per year. That is significantly higher than the IRA contribution limit of $6,000 per year. Finally, by contributing to a pre-tax 401k, you can reduce your current tax burden because those contributions are not included in yourincome. Or, by contributing to a Roth 401k, you can reduce your tax burden in retirement as the contributions and growth will come outtax-free. The choice is yours! Ultimately, receiving the full match is step one. If you have an employer match of 4%, contribute 4% to your 401(k) so that your employer is contributing the full match. Get that FREE MONEY y'all! Beyond that, it's up to you and your financial situation on whether you want to go as far as maxing out the 401(k) or contributing toother investment vehicles such as IRAs or taxable brokerage accounts. My goal for 2022 is to max out my 401(k) for the first time andto continue to do so until I retire in about 15 years!
What actions have you taken to inspire non-participants to participate in the 401(k)? Please explain, being as specific and detailed as possible.
At my previous job, I created a Personal Finance workshop for my co-workers discussing emergency funds, high yield savings accounts, the company 401(k), and what types of assets are available for investment. I presented this workshop to about 60 of my coworkers at different times over the course of two years and provided a copy in our wiki so folks could review it at any time. One of the big points in my presentation was that our employer has a 401(k) that offers a 4% match if you contribute a minimum of 4% of your salary to the account. That match vested immediately (cha-ching!!) AND they offered what is known as "True Up". The True Up feature looks at the previous full year of income, deferrals, and matching to determine if your 401(k) needs an additional employer contribution after the end of the year to make sure you get the full 4% match on your earnings. What a sweet way to support and even boost your retirement savings! With goofy memes scattered throughout to get folks laughing and enjoying the content, I presented this information as simply as possible. At the end I offered to sit with my co-workers as they set up their 401(k)s so they could ask questions of me during the process. Several of my co-workers took me up on that offer. Plus, I had a few reach out to tell me they are now contributing to their 401(k)s when they weren't before my presentation! It was and continues to be an incredible feeling knowing I was helping spread the good word about taking care of your personal finances and investing in the company 401(k) for retirement. As an added bonus, I changed careers in May of this year and now, as an Associate Wealth Advisor, I spend much of my time advocating for 401(k)s (and other retirement savings vehicles) with my clients. I truly love helping folks save and invest to meet their retirement goals.