- Jun 4, 2004
- 16,849
- 13,784
- 146
They end up taking on more debt than they save.
WSJ (behind a pay wall)
https://www.wsj.com/articles/downside-of-automatic-401-k-savings-more-debt-1515148201
Now maybe that turns around for some assuming continued employment and steady investment gains over a longer time period, but damn if that isn’t disappointing.
WSJ (behind a pay wall)
https://www.wsj.com/articles/downside-of-automatic-401-k-savings-more-debt-1515148201
The] study found that four years after hire, the employees who were auto-enrolled amassed an average of $3,237 more in 401(k) contributions than those who were left to sign up on their own. (That number includes both employee and employer contributions, but not market growth.)
But the auto-enrolled employees also had an average of $1,563 more in consumer and auto debt than those who were hired before auto-enrollment. When mortgage debt is factored in, the picture becomes more complicated. The auto-enrolled employees owed $4,131 more, on average, on their homes than their colleagues who were hired before auto-enrollment.
This debt more than offsets the extra $3,237 the auto-enrolled employees contributed to the plan, including the employer match.
Now maybe that turns around for some assuming continued employment and steady investment gains over a longer time period, but damn if that isn’t disappointing.