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IN MARCH 1999, I began my job at the chemical plant where I still work today. During the weeklong orientation, I had my 26th birthday. It was the start of a job where I felt I couldn’t make any excuses. I needed to be an adult.
I would be making good money. After graduating high school in 1991, I’d averaged $18,000 to $23,000 a year in various jobs. In my first full year at the plant, I made $42,000. The next year, after completing the training program and working 500 hours of overtime, I made more than $60,000—good pay for a guy in his late 20s with a high school diploma.
Over the years, I’ve heard many bits of advice from the old-timers at the plant. I’ve also picked up many lessons from watching these folks over the past two decades. The first lesson came during an informal talk that a worker gave at the orientation. Today, it probably wouldn’t be allowed because it would be considered financial advice from someone without any formal credentials. But his talk was valuable in its simplicity and its roots in real-life experience.
The technician implored us to begin contributing to our 401(k) immediately. He talked about the company match and how it was free money. He suggested we consider our investment allocations carefully. Because of our young age, he believed we should be in the aggressive portfolio. We had time to ride out the rough spells, he said.
I began to save in the 401(k). There was a whiff of euphoria in the air. The market had been on fire for the past few years and it was still raging. Returns of 20% or more were typical. This technician, who was approaching retirement, was feeling good seeing his balance grow to numbers he’d never thought possible.
A few years later, around the mid-2000s, I saw the same man. He was now retired and bagging groceries part-time. Maybe the dot-com crash burned him and he needed a job for a bit. Maybe he was bored and wanted something to do. I didn’t feel comfortable enough to ask, and he didn’t work at the store that long.
Many veterans at the plant had started in the 1970s. The company had something similar to a 401(k) back then. As the great bull market began in 1982, they rode an incredible wave until 2000. Over time, I began to see the role luck and timing played in investment results. When you were born, and when you got hired, all had a big impact on your returns.
If I were to guess, I’d say 98% of the plant workers saved in the 401(k). My older brother had been hired a few years before me. When he started, the old-timers in his area always told him, “You can’t afford not to.”
My brother never read The Wall Street Journal. I would ask him occasionally which funds he was in. He’d say he hadn’t looked in a while and wasn’t sure. He left it alone for the most part and retired early. I checked my funds often, moved my money around more than him and haven’t done as well.
I would hear rumors occasionally of the few who never joined the 401(k). They had lost out on hundreds of thousands of dollars, maybe a million. But I could understand how this might happen. Many in the plant were from poor or working-class families. Some started families when they were young.
They may have thought about saving. But they probably always felt they couldn’t afford the 7% of pay they needed to get the full company match. They were raising kids and paying bills. Often, their spouse was staying at home and that was important to them. Maybe they’d start next year.
In that era, the pension plan was generous. The folks who were whispered to have never joined the 401(k) would invariably retire later, usually as soon as they could claim Social Security at age 62. Between Social Security and the pension they earned over 35 to 40 years of service, they could replace all the income they were making at the plant.
It was always interesting to see the moment people pulled the trigger. One lady—a friend of mine—had started working at the plant in her 20s. She had a straight-day job later in her career, but then unfortunately had to return to the production line and work the swing shift that came with it.
She started her week one Sunday with the 11 p.m. to 7 a.m. shift. She was frustrated with the poor planning from leadership the week before. Her night was going to be stressful, with all kinds of problems and little support. As I helped her with a question, she had a few choice words about the mess and said that she was calling her financial advisor that week to see what options she had.
She’d worked decades and made good money. A single mom, she’d raised her kids and, by then, they’d finished college. She retired a few months after that night and has enjoyed the years that followed. I was happy to hear that. She was a sweet lady. In her early years at the plant, it couldn’t have been easy being one of the few women, but she made it.
One of my coworkers got called out one weekend in the freezing cold of winter to deal with a problem. As he was walking around, examining all the pipes while trying to solve the issue, he asked himself, “What the hell am I doing here on a Saturday night?” He put in for retirement, though he worked several more months.
I saw him at Wal-Mart a few years ago. That call-out was just a blip, he told me. He said the real reason for his retirement was that his sister had passed away and it was weighing on him. He had plenty of money. Life was too short.
There was a kind, older guy on my shift who grew up on an Iowa farm and had worked in our area since the early 1970s. I went to his retirement party. He waved his wallet at an old friend, smiling as he said, “This thing has decided every major decision in my life.”
Like many I saw at the plant, he had put family first. His kids were raised and done with college. A small early retirement package pushed him over the finish line. He told me he was ready to be done with swing shift work and with the plant. But he then took a job as a school janitor for 20 years and finally retired for good with an Iowa state pension to add to his retirement savings.
One old friend, who had been my Little League baseball coach for a short time, told me—when I saw him at a bar a few years after he retired—that he simply did some math and felt comfortable calling it a career. He added together his 401(k)’s historical annual return, his pension and his other savings, and asked himself if he could live off half that number. He could.
He shared with me something I hadn’t heard many folks say. He had a great-paying job. He’d had it for decades. He didn’t really need the job anymore. And he knew that someone out there, a young person most likely, did need the job he had. It would change his or her family’s life, like it changed his and mine, so he retired.
One guy, who was a bit of a miser, said he put his notice in when no one told him not to. His wife and his financial advisor both agreed he had enough money to retire. He had worked for more than 30 years. He was still on the swing shift. He’d invested in some Iowa farmland before the prices skyrocketed. He was frugal, and had his 401(k) and pension. He seemed to abhor debt and that had served him well.
One recent retiree had been in leadership roles for more than half of his blue-collar career, so he hadn’t worked swing shifts for decades. He had many years under the old, more generous pension system. Yet, unlike so many in the plant, he wasn’t missing a beat. His mind was sharp, he was fit and still full of energy.
I’ve always thought that some 20% of plant workers have the skills, ambitions and mindset that aligns well with the work we do. He was one of them. I never heard him pine to be an artist or chase a different dream or career. His talents were valuable and he had kept up with the changing technology. In his early 60s, I know he could easily have done the work for another 10 years.
He shared with me that it would be silly to still be working at the plant in his 70s. What was the point? He retired after 40 years. We quickly discovered, when he headed off to winter in Florida, all the “little” problems he’d been solving that no one else noticed.
I enjoy talking with the younger people who have been hired in droves since the baby boom generation exited the plant. If they’re interested and ask, I’ll share some of the mistakes I made with my money while working at the plant.
I also let them know that I intend to keep my job there. Even after 23 years, I hesitate to call it a career. I don’t know why, I just do. Most know me as the guy who wrestles in a mask. It wasn’t my dream to work at the plant, and my talents don’t always align with my job. But I do my work well.
People seem to like having me on their team, so I must be doing okay. I appreciate all the lessons that my coworkers have taught me over the years. And I hope the younger generation working at the plant has picked up a thing or two from me.
Juan Fourneau’s goal is to retire at age 55. When he isn’t at his manufacturing job, he enjoys reading and writing about personal finance, investing and his other interests. Juan, who is married with two children, retired from the ring after wrestling on the independent circuit for more than 25 years. He wrestled as a Mexican Luchador under the name Latin Thunder. Follow Juan on Twitter @LatinThunder1, visit his website and check out his previous articles.
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Thanks so much for your perspective. I too was a union man. 32 years with the Teamsters. Made a decent salary. Worked for 4 different companies in the commercial bakery industry. Fortunately my pension was portable with these different employers. Took my pension at age 55 after being laid off after 20 years with the last company in 2009 during the recession. Not ready to retire, it was very difficult to find another job at my age. I eventually found work that I enjoyed, though at about half the pay. Thanks to my pension we were able to make it work until fully retiring at 63. Luckily my wife also had a very good 401K. Managed to put 3 kids thru college and comfortably retired now. With SS and the pension, we have not needed to touch our retirement accounts which are currently worth almost $900,000. Not bad for a couple of “working folks “. Good luck with your early retirement plans.
Thank you! I think you and your wife did a great job. Especially impressed with getting three kids through college. I’ve talked to a fair share of retirees from my job who have been able to retire comfortably without touching their 401K for many years.
It’s become fashionable to bash the 401k in some financial circles, which I’ve always found odd. I think it’s clear that it is the #1 vehicle for most Americans to become millionaires and retire with dignity.
Yes, in many cases, the bashing makes no sense. Folks focus on the tax bill due in retirement — but fail to fully appreciate the value of the initial tax deduction:
https://humbledollar.com/money-guide/how-to-think-about-that-tax-deduction/
Juan, thanks for sharing some of your life experiences. I was fortunate to have worked for a company that offered both a pension and a 401k. I remember learning from the old guys and then becoming one of the old guys. Always pay yourself first was the one of the rules I tried to follow. It’s nice to have choices and investing in ourselves helps in that regard.
Thank you! A pension and a 401k is a great combination.
I really enjoy your articles, Juan! Thank you. I can relate to your experiences with coworkers. A person can always learn something from others. As an instructor once told me, “even if the job is being done wrong, you’ve learned how not to do it”.
Thank you. Very true what your instructor said!
Thank you for your article. Your contributions to Humble Dollar are priceless! I hope you make your goal of retiring at 55. It would be interesting to hear what your thoughts are for your new life after 55. You have a lot to offer.
I appreciate that. Thank you.
Juan, you wrote a great article. I see in the comment section that your former boss commented. I have the experience that your boss did, advocating that employees should pick up the “free money” of the company 401K match. In the 1990s I was head of a salaried department of about 70 people with education ranging from high school to master’s degrees. In a monthly department meeting I used almost the same words, telling them that this could be the smartest financial decision they made, to enroll in the company 401K with the 60% match. At that time we had 5 or 6 investment options, and I said I would not give advice beyond strongly encouraging any holdouts to sign up. Years later, after I retired at age 55, I bumped into a retired single mom from that department who had an associate’s degree. She thanked me profusely for that talk, saying that she did join the 401K program which enabled her to retire before age 60. That was probably the nicest feedback that I ever got about my effectiveness as a department manager.
Good to hear your advice helped someone! When I started there was some good positive peer pressure to start your 401K. I’m glad I had people encourage me and answer any questions or concerns I had.
Really enjoyed this article, Thunder! You point out the “real Americans”, as I think of them, the backbone of our country, but a shrinking number, sadly, whose jobs were once considered important, but are now elsewhere at 10% of the cost and triple the profit; the unemployed here turned into a parasite class consuming illegal drugs to forget about their lack of relevance. Everyone needs to feel they have value, like the people described in this article.
I worked with some wonderful, salt of the earth folks.
“I also let them know that I intend to keep my job there. Even after 23 years, I hesitate to call it a career. I don’t know why, I just do.”
When the time comes, you’ll know. It’s a big decision, one that’s irreversible in many ways, and you want to get it right. And the only person who’ll know when that right time comes is–you. In the meantime, keep doing what you’re doing, and keep writing about it! I can identify very strongly with your perspective, and reading about it is much appreciated, thank you.
Thank you for the kind words. It’s a big decision that I’ve seen many struggle with. No perfect answer.
As a college kid, I earned money to pay my tuition by working in a factory during the summer. I’d work 11PM to 7AM, but often got extra shifts and holiday overtime. I liked the people, and actually enjoyed the work. But I knew my time was transitory and I’d be moving on (and hopefully up.) I recall vividly some of the discussions I often had with coworkers. Most of them knew, almost to the day, how long they had left to work before they could retire. Their answers were usually something like “12 years, 7 months and 4 days… but who’s counting?” And they knew what their pension and social security would be. Few understood the value of the 401(k). I didn’t want that kind of calculus to drive my work life.
Your comment reminded me of a story my father used to tell. He and his sister grew up in Newcastle, in the north of England, the children of working class parents. Both went to the University of Cambridge, a remarkable achievement at the time, given their backgrounds. During one winter vacation, my father dug graves.
One of the fulltime gravediggers asked my father what he usually did. My father, perhaps a little puffed up by his attendance at one of the world’s greatest universities and making use of the upper-class accent he’d acquired from his fellow students, announced, “I’m an economist at Cambridge.”
He later overheard the gravedigger tell another employee, “This one ‘ere, ‘e says e’s a communist.”
I worked in an office that didn’t pay all that well, but it was a good group of people, and we were all learning a lot. My office manager told me that it looked like to him that office employees generally ended up better off than some manufacturing plant employees. He didn’t have a reason why this might be the case, just the observation. I think it just got down to how they managed their money. I knew a guy (in an office job) who never made more than $60,000 a year but ended up with $10,000,000. He was pretty good at managing his money.
I know after 23 years I certainly made enough money. Did I manage it well? I could have done better.
I worked in employee benefits in a utility with both a pension and 401k for nearly 50 years.
Your stories mirror all I saw over my years running these plans, and working with the unions and thousands of employees. I knew union workers who had vacation homes and yachts due to tons of OT and other who refused to participate in the 401k.
I stopped the pension plan for new hires back in 1996 and replaced with a less generous cash balance plan plus 401k.
There are key factors in both our experiences. The industries tended to attract workers who planned to stay on the job and they were unionized. The cry today that 401k plans are failures and not as good as a pension is only valid for those of us who had long careers with one employer. A pension is of little or no value in a world where the average job tenure is four years or so.
That makes a 401k and leveraging any employer match that much more important for the majority of workers today.
Thank you King R!
I like to state “Well finished is well started”
My experience is, I worked at THE phone company, AT&T and such for 30 years and then the manufacturing operation in Denver was sold to a Canadian company. The Union contract was terminated, giving every member a buyout and a start to the available pension. We left one Friday in 2021 from one company, walked back in on Monday working for another, with a lifetime pension. That pension was set according to a pension band you were in which is dictated by your job description and we had nothing to say in it. But, I’m not complaining, the deposit still comes in.
The new company started cutting jobs, I volunteered to leave, getting severance pay and more. I had lined up a job with the local mass transit system starting at age 54.
Now, can you just think of a company that needs not a profit, has no stock holders, no competition and gets money from the government? What a deal.
They also have a Union bargained pension, only a far better deal than the phone company. This one’s pay out is determined by two things. Your length of service, and the average of your 5 highest pay years. When I studied the numbers, I thought ‘this can’t survive.’ True, It was changed in 2011, and again last year.
The old pension for folks hired pre-2011 are provided a maximum, after 30 years of %75 of your 5 highest pay averaged. I get 42% for 16 years and 10 months service.
You can determine how much pension you want! What a deal.
But, try showing people that and telling them how to max their pension. I made a spread sheet to illustrate the ‘what if’s’ and many still don’t work all the OT those last 5 years. You can sell back vacation and sick time to get a boost in the earnings but many people still take it all before retiring.
The latest Union contract has the new hires in 2023 going to the equivalent of a 401K and no pension for them. The match is 5% and the company puts in 9% for everyone for a total of %19 of the earnings every month. Once again, work the OT, get a greater reward. But, try to show all this someone looking to start a job. Sigh.
All they hear is ‘mass transit!’ Ewwwwww.
But I will say, I wish I had started working with this and then after 30 years, go to the phone company for a few more years.
I had both for more than ten years before the company stopped funding the pension. Those who had both for most or all of their years had something rare and fleeting.
It’s interesting to hear your perspective because I was the guy who was your boss. I wasn’t your plant manager but that was my job at a billion dollar oil refinery and chemical plant and I had several hundred guys like you working at our complex. I retired at 60 after 38 years at the same company. No pension, but anyone who lived on less than they earned and invested the difference shouldn’t need one to retire at least slightly early. I always told my hourly coworkers they were the ones who made the company profitable, I was purely overhead.
If all I did was contribute 10%, get my good company match, and left it alone in a S&P 500 index fund all these years I would be fine retiring at 55-59. Unfortunately, I didn’t always do that. That’s on me. I hope my real estate and small pension make up for that mistake.
Thanks for the article. The theme through this for me is that pensions are the reason most people are able to retire with confidence. My company took mine away 20 years ago and while I have always saved via the company 401K it is very difficult to know how much is enough and what my investment mix should be (as we we see the downfall of the 60/400 rule.) Very difficult times for many of us close to retirement without a pension. And my taxes keep going up to provide very generous pensions for government workers whose salaries are at parity with industry.
I think I’ll have around $800 in a small pension after it quit being funded. But I’m grateful to have had it. It’s not common for anyone from my generation to have a pension at all.
Juan, thanks for an interesting article. I resonate with many of the stories and lessons you describe. I was intrigued by your friend’s, the former LL coach, thinking about moving on and opening up spots for the next generation. When I joined GE Aerospace in the mid-80s most of the first line managers were in their late 50s. I remember hearing peers complain about the lack of opportunity. Within 5 years most of them had retired or moved on. Now my generation is retiring, but some are hanging on, some perhaps longer than they should. It’s an interesting topic.
It was an interesting perspective and a breath of fresh air.
But who will replace them?
Only speaking from my job. They will continue to find folks to replace these well paying manufacturing jobs. The jobs these young workers are hired from? That will be more challenging.
Great reflections.
I’m older than you and likely from a different State. But dang if I didn’t work with all the same characters that you did. I strongly suspect that my grandfather also worked with the same folks. Before I retired, I was the old timer dispensing advice to the younger workers. Thus, they were working with the same characters that we did. To the next generation of workers, you’re the old-timer now.
I am the old timer! And happy to be, hopefully, seeing a decade or less of working in front of me.
Hi Juan, this is Chris. I loved reading about your coworkers. Reminded me so much of my grandpa, who was also a factory worker. I think you are a great addition to the HD writer’s group and add a different perspective. Keep up the good work. 👍
Thank you for the kind words and reading the article! The blue collar life isn’t so bad.