A great article from the Washington Post on ESOPs and wealth Generation.  While an ESOP is a retirement plan, unlike a 401K where most of the money in the account is contributed by the wage earner, all the funds contributed to the ESOP are done so by the company.  Some call this free money – but a more realistic view might be that this money is earned by the worker in terms of sweat equity in helping to make the company more profitable and grow.  From a short term perspective these funds (within the limits of the plan documents) are owned by the employee and move with the employee if they elect or are no longer able to work, or if they transition to a new opportunity.

A quick summary of the article:

S-ESOP employees surveyed have more than twice the national average in their retirement accounts — $170,326 versus $80,339.  Moreover, nearly all S-ESOP companies offer their workers at least one additional retirement plan beyond the ESOP. S-ESOP employees nearing retirement are thus better prepared, because their ESOP account balance is supplemented by savings in traditional accounts like 401(k)s. In contrast, the St Louis Fed reports, around 35 percent of U.S. households do not participate in any retirement savings plan, either on their own or through an employer.

The upshot? Workers in S-ESOPs save more and are far better prepared financially for life after work. With median S-ESOP balances of more than $20,000 and additional median non-ESOP retirement account balances of $10,000, millennial employees of S-ESOP companies are far ahead of their peers in preparedness for retirement.

As the stock market continues to drop (-653 points currently) what is fueling your retirement?