For job seekers, the future might matter more than the present.
A competitive company 401(k) plan is among the top 10 considerations for people when choosing an employer, according to a recent report commissioned by AARP.
Retirement benefits were the sixth-most important factor for job seekers, ranking below salary and health benefits but above development opportunities, company reputation and work challenges.
“This shows that people are really valuing their retirement benefits,” said Tiffany Lundquist, communications director for AARP in Maryland. “People today are very conscious about having enough money to retire.”
It?s best to start saving early. If a 30-year-old making $40,000 a year placed $2,000 a year into a 401(k) for 35 years ? assuming a 9 percent rate of return, a 3 percent annual salary increase and the employer matching half ? he or she would have more than $920,000 for retirement.
Potential employees are looking for 401(k) plans in which a company will match a percentage of the employee?s savings, Lundquist said. It also helps if enrollment in the company plan is automated, eliminating some of the indecision that might prevent a person from enrolling on his own.
Automated enrollment for new employees can also benefit companies, the study showed.
Twelve area employers participated in the AARP study, and eight offer automated plans. With the automatic feature, the companies have seen increases in their plan participation and their employees? 401(k) contribution levels, along with improvements in their ability to recruit and retain employees.
“Anything the company can do to automate the plan is a win-win for everyone,” Lundquist said.
There are, however, other factors job seekers look for in potential employers, said Andrew Tignanelli, president of The Financial Consulate, an investment adviser in Lutherville.
“I think (a competitive retirement plan) is a small piece of the pie,” Tignanelli said. “But I find it hard to imagine that a good 401(k) plan has any significant effect on employee satisfaction.”
His company?s own motivational study focused on the importance of the company?s vision and values rather than employee benefits, Tignanelli said.
“Strong leadership in the company is something that can lead to employee satisfaction,” he said. “You could have a top-of-the-line 401(k), but that won?t make up for a poor working environment.”
