With more and more college graduates of our generation joining the ranks of the service industry, there has never been a greater need for employers to offer 401k retirement plans. Some pioneering corporations have answered the call and are beginning to offer great benefits.
Perhaps it would be helpful for those just entering the job market to explain exactly what 401k plans are. Having a 401k means that employees can choose to put a certain percentage of their wages into an account before income tax is applied and they won’t pay any tax until they access the account after retirement. It’s essentially a tax break that helps people save money to support themselves when they eventually retire. Until now, it has been more closely associated with full-time careers, rather than part-time jobs and other jobs that don’t require a college degree. Another important aspect of the agreement is that employers often agree to match a certain amount of what employees choose to save, which can double the savings at best.
The company that first comes to mind when thinking of service industry employers with 401k plans is Starbucks. In their system, benefits are available to what they call “benefit-eligible associates” (ie, those who work more than 20 hours a week). Benefits include discounted bonuses, health insurance and stock options. Its 401k options allow for a range of 25 to 125 percent matching of employee contributions up to 4 percent of total salary. That, in combination with the free pound of coffee Starbucks employees are entitled to, probably makes some employees very happy.
Whole Foods, another forward-thinking corporation, not only has a reputation for paying its customers more than competitive supermarkets, but also offers more than 30 401k retirement plan options. The fund, which is established through Fidelity NetBenefits, has more than 4,500 participants and contains $379,087,293, according to Future Advisor. The average 401k balance for those who choose to participate is approximately $8,000.
For today’s workforce, it’s definitely a good thing to see more employers participating in retirement funds. However, things are not perfect. One employer, Darden Restaurant, already with a reputation for its terrible 401k plan, made headlines by making changes to retirement plants to make them even worse. The company owns several high-volume restaurant chains across the country, including Olive Garden, Long Horn Steakhouse, and Red Lobster, so it is perhaps not surprising that they provide less personal attention to their employees. Only about 13 percent of Darden employees participate in the unpopular program, and with stock prices plummeting, the options for investing retirement savings aren’t great.
For now, it seems like the options range from great plans like Starbucks deals to not-so-sexy deals from Darden Restaurant. Only time will tell if the examples set by progressive employers will win a majority following.
