IBM is abandoning the 401k match program for their employees. What if your employer did the same?
What IBM 401K Change Means
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⏰ Table of Contents ⏰
0:00 What IBM said about 401K
2:55 What IBM is doing instead
7:31 Can Retirement Benefit Account really benefit?
#FIREPsyChat #FinancialIndependence #401K
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IBM, one of the world’s leading technology companies, recently announced that it will be canceling its 401k match for employees starting in 2022. This decision has sparked concern among employees and industry experts alike, as it raises questions about the future of retirement benefits in the corporate world.
The 401k match is a common benefit offered by employers to help employees save for retirement. Typically, employers will match a certain percentage of an employee’s contributions to their 401k plan, providing them with additional funds for their retirement savings. However, in light of the economic challenges brought on by the COVID-19 pandemic, some companies have been forced to reevaluate their benefits packages in order to cut costs.
IBM’s decision to cancel its 401k match has been met with mixed reactions. While some employees understand the company’s need to make adjustments in response to the current economic climate, others are disappointed and concerned about the impact this will have on their retirement savings. Many employees rely on their employer’s contributions to their 401k plans as a key component of their retirement strategy, so the loss of this benefit can have a significant long-term impact.
The question now is whether other companies will follow suit and also cancel their 401k matches. The decision to do so is a delicate balance for employers, as cutting retirement benefits can have a negative impact on employee morale and retention. On the other hand, many companies are facing financial challenges and may need to make difficult decisions in order to stay afloat.
It remains to be seen how the cancellation of IBM’s 401k match will influence other companies in the technology sector and beyond. Some may view IBM’s move as a necessary cost-cutting measure that they may need to consider as well, while others may see it as a cautionary tale about the potential consequences of reducing retirement benefits for employees.
In the meantime, employees at IBM and other companies facing similar decisions will need to reevaluate their retirement savings strategies and make adjustments in order to ensure they are still on track to meet their long-term financial goals. It’s a challenging time for both employers and employees as they navigate the uncertain economic landscape, but proactive planning and communication can help mitigate the impact of these changes.
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IBM has made their new retirement plan like difficult coding
I would get a new job ASAP.
My comment has a pension fund with our union, it’s all based on 10 year treasury rate, for the last few years, we’ve gotten very little growth at all. And it’s calculated once per year. Only good thing is it cannot go down as it’s a personal cash balance account. I’d rather have that in my 401k. I also get a 4% match
"In New York". All you need to hear. LMAO Clown world.
What's a match??? I haven't had a real match in 20 years. .25 of a percent up to 5% and it's capped to $1250. it's up to the company if they're doing it that year too. So once a year I might get some money from them.
This would make me look for new work immediately
After 23 years of maxing out my 401k…. I am shocked when Fidelity tells me 20% of the portfolio value fund source is from employer match….OMG, free money!
Overall a pretty terrible move for IBM employees, but I'm sure it's making the insurance company that is providing the DBP very happy.
Overall a pretty terrible move for IBM employees, but I'm sure it's making the insurance company that is providing the DBP very happy.
Great content, The company I work for cut 401k match for 1 year (COVID Timeframe) they received a huge backlash from everyone, so they promptly resumed matching contributions the following year!
Thoughts:
1. It's understood that Americans are horrible at saving for retirement.
2. Pensioners tend to have better retirement (ie, pension + social security + some 401k, if they've got it) and tend to do better than those that have the "freedom" to not contribute to their retirement.
3. So in one sense, forcing someone to have the matching fund in a location they can't get at it until retirement is probably a good idea.
3a. This is not limited to finances – humans being bad with freedom is a well-understood phenomena.
3b. ie, people tend to be happier long-term when they are forced to do the right thing.
3c. Yes, that prevents the outliers from optimizing – but it prevents the majority from falling on their butts and not saving anything (or pulling their money out of their 401ks when they roll over, or something equally foolish), which seems to be what is ACTUALLY happening.
4. However – yeah, that's a sucky RoI over time. Treating your pension like the conservative part of your portfolio sounds like a good idea.
5. That being said, I'd probably prefer some equivalent of a targeted retirement fund, set up on the assumption that the individual will be fully-invested in bonds by age 55, and have some proportion of stock/bonds to account for that. It would still be conservative, but at least not "all bonds all the time!" that they seem to be going for.
Well younger ones believe the "company cares" and nobody wants to pay "Union dues" to thugs . So enjoy the corporate thuggery. Severe mental health problems amongst Millenials is gonna skyrocket in the next 20 to 30 years .
I don't like it at all. IBM is doing this for the company's benefit because this will be part of their assets. We are retired and fortunately have both a pension and a former 401K, now Traditional and Roth IRAs. We were so blessed to have a company who matched 75% of our contribution up to 8% of salary. Those days are long gone now and I don't know how the next generation is going to do in retirement. I think your idea of investing the entire 401K in equities is a good remedy to help mediate a bad situation.
Great video ! Thanks !
Under 401k the fund is owned by the worker, pension plans are part of the company asset who can take loans against it. So if the company makes a bad decision and goes into bankruptcy, that define pension plan can be gone to pay off the loan outstanding to creditors.
Thanks for your content. My 457 has no match. Life of a Corrections Officer. 27 years pension was paid for but the newer employees have to put 4% of their earnings into it
Fell Vet here. Keep up the great content and information please!