There is something I’m deeply embarrassed/ashamed to admit, and since we’re coming off a #TotalHonestyTuesday, I suppose now is a good a time as any. I have a confession to make: I worked at a traditional office job, where a 401(k) program was made available to me (one that came with a 50% employer match), and I didn’t sign up for it for the three years I worked there — while living at home with minimal bills. There! I said it, and it truly pains me to look back on this missed opportunity. This is one of the dumbest things I’ve done, financially speaking, and I’m here to tell you a) why I didn’t sign up for the program b) why I regret it and c) the steps you can take so you don’t make the same mistake I did. Here we go!
So, let me paint a picture to help illuminate the reason why I didn’t sign up for my employer matched 401(k) program — don’t worry, it won’t take long. It’s because I was indecisive and downright lazy. When I got my first job out of college at an ad agency, it felt incredible because I was finally able to be a ~professional designer~, and do the thing I loved most. It already felt like enough of a success to have a real salary in my ideal field. However, the parameters of the job weren’t right for me, and I quickly realized I might want to make a move after I put in a year.
This indecisiveness made me feel like I didn’t have to bother to sit down with anyone to learn about the programs/perks my company offered. I simply rationalized stalling the establishment of a retirement fund because I thought if I might switch jobs anyway, what did it matter? I thought, if the account only had a little while to mature/accrue money from my employer, it probably wasn’t worth starting one. Right? Wrong. The truth was, I was missing out on free money. I say free money because an employer-match program means that for every dollar you put away into your 401(k), your employer matches it by a set percentage. In my case, it was 50%, but some companies offer a straight-up dollar for dollar match.
My situation became an ongoing one when my supervisor left, and I decided to stay at the job longer because I was given more responsibility and autonomy (and a raise). I thought to myself, “Hey, there’s still a great deal to be learned here, and I can take this relevant knowledge and apply it to other jobs, so what the hell.” By that point, I had completely forgotten about the 401(k) match, and on the rare occasion it did cross my mind, I ended up getting distracted by something else. Once, I did get so far as to ask for the paperwork to start the registration process, but when I had to provide
tedious necessary information like my employee number, bank routing information, and other details, I decided I just couldn’t be bothered. Sigh.
Now, to be fair, I was still saving a lot while I was working at this job. But, I was saving in the wrong way. I would simply take a lump out of each paycheck and throw it into my stagnant savings account. There it would sit for the next few years collecting dust until I had a project/career move to invest in. That savings wasn’t making money for me in stocks, it wasn’t sitting in a 401(k) accruing money via compound interest — in addition to the free employer match — and it certainly wasn’t working for me in any useful way.
Even as I type this, and am forced to reflect on what a dumb decision it was to let this insane opportunity for free money pass me by, I can feel myself pounding on the keyboard a little bit harder. So, I’m urging all of ya’ll working at companies that offer this perk, to make an appointment with an HR representative ASAP, and get the information you need! It takes some effort and a little bit of time, yes, but the rewards are ones that you will reap for years to come.
So my advice is this: upon getting a full-time job, be sure to take care of “housekeeping-type” tasks first and foremost, so they don’t go unresolved. The longer you put off tasks, the less of a chance they will ever get done. My mother is one of those people who does. not. procrastinate, and she gets shit done months in advance. She always urged me to not put off simple tasks that can quickly snowball into larger headaches and anxieties. And I’ve learned firsthand that they definitely do. We all have our thing, and I’m sure that some of you reading this will probably think my laziness is unforgivable, and it is! Now that I don’t have the luxury of an employer match available to me, I’m kicking myself for leaving that free money on the table. Learn from my regrets.
Below are some resources that will help you not only understand what 401(k) plans are, but how and why employers match them. There are also some links out to companies who provide generous matches.
- Why Every Employee Should Participate in a 401(k) Plan
- The Role of The Company Match in Your 401(k) Plan
- The Best 401k Plans: See How Your Company Ranks
- The World’s Easiest Guide To Understanding Retirement Accounts
- How To Tell If You Have A Lousy 401(k) Plan
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