September 19th, 2012
How I Started A 401(k)
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When I got in to work at 8AM, there was a note on my computer: “See me. –Tom.” My first thought was: what did I do wrong now?
Tom was the Editor-At-Large for Institutional Investor News, where I was working as a reporter. Editor-At-Large meant that he’d been with the company since the early 1970s and had achieved the status of elder statesman, guiding light, etc., etc. But at the same time, he didn’t really even really work there anymore. He just kept coming in every day and doing the same thing he’d been doing at the company for 30 years—terrorizing reporters.
I hurried to Tom’s office, which was decorated with hundreds of framed pictures of his racehorses and smelled strongly of the cigars he was no longer supposed to smoke in it, he barked at me: “Sit down.” When he was good and ready, he folded up his Wall Street Journal, and gave me his attention.
“You’ve been here awhile,” he said. “Why haven’t you signed up for your 401(k)?”
“Well…” Because I needed all the money I could get? Because my starting salary at Institutional Investor News was $40,000 a year, and I lived in New York City? Wait, was I in trouble or not?
But Tom didn’t give me a chance to answer. “If you’re smart you’ll do it. It’s free money. You know what an employer match is?”
“Look, I have over a million dollars,” he said, gesticulating around vaguely at the pictures of his racehorses. “When you get to be as old as I am, you’ll figure out that the only way to make money is to make it slowly. Adding up over time. Unless you’re living paycheck to paycheck, you should be contributing the full amount to get the most free money, and letting it add up for the longest time you can.”
“Okay, well, I’ll think about it…” I worked 50 hours a week at Institutional Investor, and in my limited free time I did the bare minimum to keep my finances, and the rest of my life, from falling apart. I did know what a 401(k) was, what the employer match was, and had some vague idea that the smart way to save for retirement was to start early, but that was about it.
“That’s free money too. We’ve got you out there covering RMBS,” Tom said, referring to bonds backed by home mortgages, a complex financial product. “I don’t know if we can keep you on that beat if you’re not even smart enough to set up a 401(k). You buy a latte every day? You could be saving that money.”
I didn’t want to tell him that the Starbucks I was holding in my hand (an Americano, not a latte) was the only thing keeping me calm enough not to throw it in his face.
“Look,” he said, his voice softening. “I’m telling you this, it means we want you to stick around longer. You’ve been doing okay. We want you to stay here, and that means set up your 401(k). That’s all. Now, get back to work.”
Later that day I got a call from the company’s 401(k) representative, which Tom had scheduled. I set up my 401(k) to get the maximum employer match – grabbing all the free money I could. I would never have done that if Tom hadn’t made it happen for me, and told me that starting the 401(k) was a sign of job security, of success in my position, rather than a punishment or just one more thing using up my limited spending money.
Sometimes you need a push to get going on financial self-improvement, and I’m very grateful that I got mine.
Amelia Granger is a blogger and analyst for NerdWallet Personal Financial Management. Prior to NerdWallet, she was a Senior Reporter for Institutional Investor News’ Total Securitization and Wall Street Letter. She lives in San Francisco and enjoys traveling, reading, writing and is on a quest to find the best burrito.
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