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Choosing between an employer who has a 401(k) match and one who doesn’t


When you’re choosing between two job opportunties, many people will compare the salaries, and go with the higher pay. But it’s just as important to compare the benefits.

Eric Ryles managing director at ALM Intelligence, says working for a company that provides an employer match in your 401(k) versus one that doesn’t could mean a huge difference in your retirement savings at the end of your career. His firm did a study of the benefit at  supermarket chains.

“The employer match is one of those things that doesn’t seem like a big deal when you are picking a company,” he says. “If you go somewhere and stay for whole career, the employer match could hit to the tune of hundreds of thousands of dollars. That’s the miracle of compound interest.  But in this case it’s working against you, not for you.”

The study looked at one that provided a 401(k) match that ended up paying $449 less than the industry average, which was $1,000. So at the end of a long career (40 years was used in the example), what was the difference between the two employees?

“It was $168,000,” he says. “It’s a huge amount of difference if there is not employer match or if it (the match) gets reduced. That has long-term consequences.”

“Over 40 years, $449 a year is only $20,000,” he says. “But it’s all the growth. It’s all the compounding. That’s the killer.”

He says the match also serves as an incentive to employees to save. Fewer people contribute to 401(k)s when there is not an employer match.

Ryles says companies need to do a better job of educating employees. “Employers don’t do a good enough job of explaining to employees the benefits of long-term investing,” he says. “There is a lack of good financial education, especially at employer level, to let employees know why they should be saving, how they should be saving and why they should be doing their homework.”

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Question of the week: What advice can you offer others on saving in an employer sponsored 401(k)? Send comments to Please include your name, city and state. In the subject line put “401(k) advice.”

Last week’s question: Do you dream of turning a hobby or a dream into a business after you retire? 

Mark Bechthold of Lodi, Calif.:

I’ve long said that I’m willing to work as long as they are willing to pay me, but I just can’t guarantee that they will be willing to pay me as long as I’m willing to work. In addition to my own children, I have assisted a number of other students (and their parents) through the college admissions process. I decided to earn a College Counseling Certificate through UCLA Extension, and I have started a side business as an independent college consultant. I plan to transition to helping students fulfill their college dreams as a flexible second act career that should protect me from forced retirement.

Chad Crabtree of Elkhart, Ind.:

I love that art of letter writing and send hand written cards and letters at every chance I get. When and if I retire (I am currently 41) I dream of starting a stationary, pen and knick-knack store.

Lee Smith of Herndon, Va.:

Your feature in Sunday’s Washington Post prompted me to respond. After five decades of working in advertising and marketing, I retired in 1998. I’m a native California who relocated to Northern Virginia with my wife, Janet, to work for a major software publisher. With careful investments, retirement funds and Social Security, it’s not necessary to continue to create income. However, sitting quiet in retirement didn’t work for me. With a lifetime of interest in all things aeronautical — a sergeant in the U.S. Army Air Force in World War II, and a private pilot’s license — my fascination in aviation borders on, I guess, obsession.

An opportunity to train to become a docent for the Smithsonian Air and Space Museum was presented to me and I leaped at the chance. Today, after considerable training, I am a qualified docent at the Steven F. Udvar-Hazy Museum in Chantilly. I’ve enjoyed this activity for 11 years, and it contines to be exciting and fulfilling. Recently I read a short quote attributed to the late Robin Williams that I have adopted: “Maybe it’s never too late to live the life you’ve always wanted!” That’s what I’m doing.

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