I have been told I should be careful how often I check my retirement savings. It is a long-term investment, and patience is key to keeping your sanity. I recently checked my 401k and was reassured when I saw the balance.
I was reassured for two reasons. First, because it was a large enough amount of money, it will change my retirement quality. Second, because, as an employer, we are doing right by our coworkers.
The first point shows the resilience of the markets. My 401k has gone through “crashes” on three occasions. Losing 25-40% of its value each time.
The second point takes a lot more explaining.
Back in the early 1990’s Willmar Electric started a 401k plan. Each fall since then, we make a push to get everybody to enroll and engage in their personal account. Over the years, a lot has changed with the plan. I think with each step, we improved the benefit for our coworkers.
A few years after we launched the plan, we combined it with our profit-sharing program. Doing so allowed everybody to have all their money in one place. Next, we added a Roth option, so people could save for their retirement with post-tax funds. Many people use this option to save on future taxes.
We continue to make profit-sharing contributions in years when we have a profit. Over time, we have raised our company match. Each time we made a change, it was hoping it would encourage people to make additional contributions. Each time our hopes were fulfilled.
About 10 years ago, we started auto-enrolling people when they came on board. This change has also been a success in getting people engaged in planning for their retirement.
Every year at our fall enrollment meetings, similar things are said about the need to start saving for your retirement. We tell young people to start saving young, and it will compound. If you don’t think you can afford to deduct anything from your paycheck, you should consider picking a small amount. Starting at 1% gets you in the door. Over time, you increase the amount by 1%, and a few years later, you will be saving 7-10% without having to take a hit upfront.
(Please note I started at 2% and raised my contribution by .5% every year until I got to 10%. Talk about a slow pace. Too slow. I should have been more aggressive.)
We encourage people to take advantage of our match. Letting them know it is a chance to give themselves a raise. It is free for them.
The people who took this advice and started when they were in their twenties 15 to 20 years ago have hundreds of thousands of dollars set aside for their retirement and decades to go before they retire.
We started the program a long time after some people started their careers or joined us later in their careers. Every year we tell people the same advance. It is never too late to start. Even if you have only a few years before you are retiring, you need to save as much as you can. Anything you save is going to help in the long run.
The people who have retired from Willmar Electric and used this benefit have changed their retirement quality.
Every time we explain the benefit of using this benefit and urge them to start saving early in their careers, some people don’t see the need or the urgency. In hindsight of nearly 30 years, we can see how the people who took it seriously started early, saved as much as possible, and used the company match, are living proof 401k plans work.
I know when my Dad started the plan, he thought it would be a good benefit. I doubt he knew he was setting up people to retire with a seven-figure 401k if they started young and stuck with it for the long haul.
Those of us who started our careers at Willmar Electric owe my Dad a thank you.