Making 401(k)'s Part of Your Job Hunt

Recently ABC had an article, Why 401(k)s Matter to Your Job Hunt. The article made the following opening statement.

No match, no deal.

If you're out hunting for a job, that's what I would tell prospective employers when it comes to a 401(k) plan.

Now, I don't know about you, but in this time, when jobs are hard to find, I am not sure that, not accepting a job, because they didn't give you a matching 401(k) is wise. In fact, I have always heard that money isn't a good thing to bring up in the interview.

Perhaps, if the job you were applying for was a job in which you were in contract negotiations with, it might be OK, to make it part of the contract. However, most of us are not privileged to have such contract laying out such things.

The article continued by explaining,

An employer contribution that matches a portion of what you save in a 401(k) or other workplace retirement savings plan, should be a minimum requirement when you're out looking for work.

The overall quality of a 401(k) plan is a critical factor for workers as the traditional pension plan disappears from the private sector workplace. A lousy retirement savings plan can leave you with hundreds of thousands less in retirement.

So, if you're out looking for a job now, or expect to be looking soon, here's what to look for in an employer contribution to a 401(k), 403(b), SIMPLE IRA or other retirement savings plan.

- ABC News

I agree, that if you work for a company that contributes even a partial match, you could be many thousands of dollars ahead of someone who received no match. Then again, an employer that doesn't match, might just pay a higher wage. A higher wage could mean that your contributions are as high (or more) as the person with the match. So, it's not as cut and dry as the article try's to make it out to be.

My current employer (the one that bought out my previous employer) makes a 3% match to my retirement plan (in this case Simple IRA), which is what the article states is what should be the minimum match amount. They even, give a 3% contribution to those that wish to have a retirement plan, but doesn't fund it their selves. That means, like one of my 17-year old employees, they are getting 3% of their income put into a retirement plan by their employer for free. If they are smart and leave that money on a retirement plan and eventually start adding to it, they will set really well, when they retire in 50 or so years.

There are a variety of ways the 3 percent figure can be calculated. Some employers may offer a dollar-for-dollar match of what you contribute. Others will kick in 3 percent, even if you contribute nothing.

The most common formula is one in which the employer kicks in 50 cents for every dollar you contribute, up to 6 percent of your pay.

- ABC News

The article also warned the reader to be careful of companies that offered company stock instead of cash as part of the retirement package. It did say that would be different, if the company stock was on top of the retirement package.

I should note that my warnings about company stock apply to 401(k) plans. If a prospective employer offers stock options or an employee stock purchase plan on top of a sound 401(k), that's an offer worth considering. Again, just be careful to avoid placing too much faith in a single company.
- ABC News

The author, David McPherson concluded by giving an example of why you should refuse a job, based upon the company's retirement package.

Consider the potential difference in retirement savings for two 30-year-olds, each making $50,000 annually in similar jobs at different employers within the same industry.

One person receives a 3 percent match; the other receives no match.

Assume each contributes the same 6 percent of his salary to the company 401(k), receives 2 percent annual pay raises and earns a 7.5 percent average annual rate of return.

In 35 years, the person receiving the 3 percent match would accumulate $864,735 by age 65. The person receiving no match would accumulate $576,490.

Are job satisfaction and other factors going to be enough to make up for the $288,245 difference?

- ABC News

While his numbers are sound, I still can't help wondering if the one without a company match might not get a bigger wage and larger pay raises over their work career. Of course their is no way of knowing, and I found the article interesting, but I just had those couple questions/rebuttals to the article.
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go ahead share your thoughts with me now.

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