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More Young Associates Should Contribute To 401(k) Plans – Above the Law

It’s
been
a
while
since
I
wrote
an
article
about
personal
finance,
even
though
I
started
my
column
here
at
Above
the
Law
over
seven
years
ago
almost

exclusively
discussing
student
loans
and
related
subjects
.
However,
I
was
recently
discussing
some
personal
finance
decisions
with
friends,
and
it
made
me
think
of
one
of
the
biggest
financial
mistakes
I
made
as
a
young
attorney

one
that
I
hope
other
lawyers
will
not
make
themselves.
If
your
law
firm
offers
an
employer
match
to
a
401(k)
account,
it
almost
always
makes
sense
to
contribute
up
to
that
cap
to
your
401(k)
even
if
you
have
student
loans
or
other
related
financial
commitments
to
consider.

Of
course,
not
all
law
firms
offer
employer
matches
to
401(k)
accounts.
I
once
worked
at
a
small
shop
that
did
not
offer
any
kind
of
match
for
employees
who
worked
at
that
law
firm
for
a
short
period.
However,
at
the
beginning
of
my
career,
I
worked
at
a
Biglaw
shop
that
offered
all
kinds
of
employee
benefits,
including
a
401(k)
employer
match.
The
employer
match
was
not
crazy
high,
but
it
was
well
into
the
four
figures.
Pretty
much
everyone
around
the
office
contributed
enough
money
to
their
401(k)
accounts
so
that
they
could
maximize
the
amount
their
employer
would
match.

However,
I
decided
not
to
contribute
any
money
to
my
401(k)
at
that
time,
and
so
I
did
not
receive
any
benefit
of
the
employer
match.
At
the
time,
I
had
close
to
$200,000
of
student
loans,
and
I
was
singularly
focused
on
paying
off
this
debt
as
soon
as
possible.
About
$90,000
of
this
debt
had
an
interest
rate
close
to
8%,
so
I
reasoned
that
I
might
not
make
this
return
in
the
market
so
it
made
sense
to
defer
retirement
saving
until
after
my
student
loans
were
paid
off.
Many
people
around
the
office
pointed
out
that
this
was
a
bad
strategy
and
that
I
was
leaving
money
on
the
table
by
not
contributing
to
a
401(k)
plan
with
an
employer
match.
However,
I
reasoned
that
the
other
workers
did
not
know
what
it
was
like
to
live
with
crushing
student
debt
and
that
my
strategy
was
worthwhile
in
the
long
run.

I
definitely
regret
this
decision.
Even
if
I
could
not
make
more
than
the
interest
rate
of
my
debt
in
the
stock
market
(which
is
a
huge
“if”
considering
the
stock
market
has
been
on
an
absolute
tear
over
the
past
decade
or
so)
the
additional
funds
available
through
an
employer
match
would
have
made
up
for
this.
Moreover,
the
early
years
of
a
retirement
strategy
are
far
more
important
than
later
years
due
to
compounding
interest.
I
did
not
start
saving
for
retirement
until
shortly
before
I
turned
30,
which
is
better
than
some
people,
but
not
better
than
people
who
start
right
when
they
begin
their
legal
careers.
Whenever
I
compare
myself
to
people
who
started
saving
for
retirement
as
early
as
possible,
I
am
amazed
at
how
beneficial
that
head
start
was
toward
building
their
nest
eggs.

Young
lawyers
have
many
financial
pressures,
including
student
debt,
the
desire
to
save
money
to
purchase
a
home,
and
other
responsibilities.
It
might
be
difficult
for
first-year
lawyers
and
other
young
professionals
to
think
about
retirement,
especially
since
retirement
seems
far
off,
and
it
might
seem
like
other
goals
should
take
priority.
However,
the
value
of
saving
for
retirement
cannot
be
overstated:
if
lawyers
work
for
an
employer
that
offers
an
employee
match,
contributing
money
to
a
401(k)
to
receive
the
match
should
be
a
no-brainer.
Failure
to
contribute
money
to
benefit
from
an
employer
match
leaves
money
on
the
table
and
can
create
a
worse
financial
situation
than
if
the
individual
opened
a
401(k)
account
earlier.




Rothman Larger HeadshotJordan
Rothman
is
a
partner
of




The
Rothman
Law
Firm
,
a
full-service
New
York
and
New
Jersey
law
firm.
He
is
also
the
founder
of




Student
Debt
Diaries
,
a
website
discussing
how
he
paid
off
his
student
loans.
You
can
reach
Jordan
through
email
at





[email protected]
.