Friday, February 05, 1999

Hey, New Hires! Sign Here!


At the age of 25, I accepted a job with a large telecommunications company in the Midwest. During the usual first day (try to look busy... find the bathroom) I was given a stack of paperwork to complete.

One of the forms was the 401(k) contribution application. After reading that the company matched 75% of the first 6% of pre-tax income that I contributed, I figured "what the heck, it sounds like free money to me." Since I was new to the job, my bring-home pay always included the 6% deduction going into the 401(k). I never missed the money, since I based my spending on what I brought home each month.

After working 7 years at the company, I accepted a position with a new firm. After completing the proper paperwork, I was mailed a 401(k) rollover check that totaled $70,000. I Foolishly rolled this money into an IRA account, and using some of the techniques found on these web pages, the IRA now totals over $200,000 after 3 years.

I think back to all the money I spent between the ages of 25 and 35. New cars, computers, bad relationships, and beer money are normal purchases made by folks in this age bracket. Without signing the 401(k) contribution application, I guarantee that I would have spent that remaining 6% of bring-home money (if there was any after taxes), and wouldn't be on the road to a comfortable retirement.

So enroll in your 401(k) program at work now, new hires! You can't afford not to!

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