Thursday, August 25, 2011


Recently I was talking to one of the guys at work about signing up for the company sponsored savings program.  Although he is also eligible, he said he was probably not going to enroll.  Now our company, like many others now days, is a little tight fisted when it comes to giving raises.  They are few and far between and you're not going to get much of one regardless of performance.  The guy I was talking to is also one of those guys who are constantly complaining about not getting a raise.  Yeah, I like raises too, but there is something to be said about the number of people out of work right now and being thankful that you at least have a job.  That being said, why would you pass up an opportunity to help yourself to a raise.  Where we work, they might be stingy with raises, but their savings plan is quite generous, offering a dollar for dollar match of employee contributions.  For every dollar we put in, our employer contributes an equal amount, up to a certain percentage of our pay.  Why would you pass that up???  It's like they're offering you the opportunity to give yourself a raise.  I don't know about anybody else, but if the only thing I have to do is save a little money to get more money from work, I'm going all in.

I'm afraid he didn't see it that way.  He said he couldn't afford to defer any of his pay for savings, even though I explained to him that money withheld in "before tax" dollars would most likely make little if any difference in his take home pay.  This is something most people fail to realize.  If you're withholdings for savings are in "before tax" dollars, your taxable income is less and therefore you pay less in taxes on the remaining paycheck.  Which means that often times, your take home pay remains relatively unchanged.

As I've mentioned before, I have no real plans to continue working for my current employer until I retire.  However, why shouldn't I take full advantage of all the benefits they have to offer while I'm there?  No matter how much I end up saving, with employer matching contributions and more than 10 years before I plan to retire, it could definitely add up to a significant amount of money when I'm likely to need it most.

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