Mastercard Employees Should Be 401(k) Millionaires

Mastercard, Inc. has one of the best employer match programs in the entire world. It matches 125% of employee contributions up to 10% of salary. If you are an employee of Mastercard reading this, you would be a fool to put anything less than 10% of your salary into the company’s 401(k) plan.

Right now, Mastercard has several jobs posted on that list a starting pay of $80,000. This future employee will have the choice to save 10% of his salary, or $8,000 per year, and receive a $10,000 match from Mastercard in his 401(k). We are talking $1,500 per month socked away into retirement savings, free to compound with an annual tax toll, and outside the reach of creditors. A 401(k) plan with a meaningful employer match is one of the best wealth compounding tools in existence.

The numbers are staggering. Over the course of a forty year working career with no wage growth, we are talking about $5.2 million in funds if the employee puts in 10%, collects the Mastercard employee match, and then earns 8% on his investment selections. Assuming the same 8% investment returns but that the employee’s salary rises every year by 3.5%, and we are looking at a $10.2 million retirement fund created just by setting aside 10% of one’s income.

If someone is a Mastercard employee, he really should be on the fast-track to millionaire status.

Even if this employee benefit proves ephemeral and doesn’t last for the long-term, it should still lead to a fortune. Mastercard increased its 125% match from the first 6% of an employee’s salary to 10% last year. Even if this program only lasts for five years, or even if an employee is only employed by Mastercard for five years, that is still sufficient to cross the $1,000,000 threshold provided that 10% of an $80,000 or higher salary is put into a Mastercard 401(k) plan for five years consecutively and, assuming contributions stop there, is then permitted to grow for thirty years.

I am not aware of any other legitimate investment opportunity broadly available to a participant pool where a lower effort will result in a higher possibility of an eventual seven-figure payday.

It reminds me of the Warren Buffett quote where he mentioned that he would apply his same discipline for investing in stocks to selecting an employer because things like fringe benefits can dramatically alter your outcome in life even if it doesn’t seem like it.

Imagine if someone has a choice between an $80,000 job at Mastercard and the same job at Synchrony Financial? Synchrony also has a generous employer match of 50% up to the first 8% of an employee’s salary. You are looking at $3,200 in matching funds instead of $10,000. The Mastercard employee will end his career with an additional $2.1 million in cumulative wealth at the end of his working career compared to an identically situated Synchrony employee, assuming that both commit the same act of investing up to the employee match and earning 8% returns for an entire working career.

I don’t say this to criticize Synchrony, as its 401(k) plan is one of the better plans in corporate America.

But it does reinforce how these esoteric side issues have dramatic consequences for where your household will end up. If you work for Mastercard, or know someone who does, you should end up with a 401(k) balance and net worth that far exceeds your global peers that earn a similar wage throughout their working careers. The Mastercard employer 401(k) match is absolutely life-changing, and is one of the best employee benefits in the country. It takes people who earn middle-class and upper-class salaries and hurls them toward riches.

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