Such as?
How big is your 401k?
- Thread starter joesmith
- Start date
oldngray
nowhere special
Other peoples money?
The 401k is the best way for many people
If you are in a certain income range you can even get a tax credit... Aka someone else's money.
Serf
Well-Known Member
You are paid money by an employer. You have that money in your hands for five seconds, and then it is whisked away into this account and you can’t look at it again for another 20-35 years unless you want to pay a massive penalty. Will you be alive in 30 years? Hopefully! Else you will never see that money again. Ok, that’s my first problem with 401k. I like to have total control over money that is called mine.
Do you think companies really pay you free money? Companies that don’t have an employer-match pay higher salaries. The Center for Retirement Research did a study based on tax data and showed that for every dollar an employer (on average) contributes to a 401k match, they pay 99 cents less in salary/pr hr.
Yes, you save tiny amounts on taxes when you are young. But this is also the period when you have the biggest tax write-offs relative to your income (dependents, business expenses, etc). So you don’t really need the extra minor savings on taxes. You will be fully taxed at the highest rate when you pull money out 30 years from now. So why not use that “extra” money to invest in yourself right now. Invest in skills that can benefit you or experiences that you can enjoy and make you happier.
401k's have been around for decades and yet the average American does not have nearly enough saved for retirement in one. And other people are making money on your money that you cannot even get to until you are 59.5 unless you want to lose even more. I actually do not have another solution for the working class or working poor, especially those of us who slave at Express. Unless you have cold hard cash, and plan on moving to a modern 2nd world country, that's all I really got as a solution.
You are able to put more cash away buy using the pretax versus and after tax investments.You are paid money by an employer. You have that money in your hands for five seconds, and then it is whisked away into this account and you can’t look at it again for another 20-35 years unless you want to pay a massive penalty. Will you be alive in 30 years? Hopefully! Else you will never see that money again. Ok, that’s my first problem with 401k. I like to have total control over money that is called mine.
Do you think companies really pay you free money? Companies that don’t have an employer-match pay higher salaries. The Center for Retirement Research did a study based on tax data and showed that for every dollar an employer (on average) contributes to a 401k match, they pay 99 cents less in salary/pr hr.
Yes, you save tiny amounts on taxes when you are young. But this is also the period when you have the biggest tax write-offs relative to your income (dependents, business expenses, etc). So you don’t really need the extra minor savings on taxes. You will be fully taxed at the highest rate when you pull money out 30 years from now. So why not use that “extra” money to invest in yourself right now. Invest in skills that can benefit you or experiences that you can enjoy and make you happier.
401k's have been around for decades and yet the average American does not have nearly enough saved for retirement in one. And other people are making money on your money that you cannot even get to until you are 59.5 unless you want to lose even more. I actually do not have another solution for the working class or working poor, especially those of us who slave at Express. Unless you have cold hard cash, and plan on moving to a modern 2nd world country, that's all I really got as a solution.
Also you have protection fro. Lawsuits or bankruptcy. It's hard to go after 401k money.
onestoptogo
Well-Known Member
You can take money out of you 401k at age 55 without penalty if you leave the company at that age or older and intend to retire. Google "rule of 55"
Serf
Well-Known Member
Also true. I suppose, in a way; I am trying to give spirited debate for other options for those of us who make under 40K annually. And having a healthy distrust for any form of Government that could just as easily change the rules at any step in the game.
upschuck
Well-Known Member
So you are volunteering to take a pay cut if you don't take the 401k money.
The money you put in early, will have the best chance of making the highest returns(longest time to compound).
Maybe do a little of each. You will never go broke by saving money.
We didn't have a 401k plan when I started.
When we got one ,no one really explained the benefits of it.
I actually threw the paperwork out. I still remember saying. I'm not putting away money I can touch for 30 or 40 years.
Thankfully about a year later,I decided to get in.
When we got one ,no one really explained the benefits of it.
I actually threw the paperwork out. I still remember saying. I'm not putting away money I can touch for 30 or 40 years.
Thankfully about a year later,I decided to get in.
Serf
Well-Known Member
Pretty good article. And again, not incorrect. I guess I just picture the Government defaulting on Social Security and Medicare in the future, thus raising our taxes tremendously. In addition to not necessarily wanting to be pushed into a higher tax bracket with my 401k payouts when age eligible. Instead, looking at my own cash, and hoping SS is still around and not pro rated at 75% of what it should have been initially. Whatever corner of the world I may be in.
Good luck in whatever you decide.I know you don't know me nor should you take advice from strangers online.
But atleast contribute to the company match. If you are eligible for the tax credit, invest that money somewhere.
Take the free money,you can't lose that way.
Brownslave688
You want a toe? I can get you a toe.
Amen. The money I have put away will give me the freedom to walk on my terms.
That's priceless to me.
Not bad for a part timer.
brownmonster
Man of Great Wisdom
In the mid 80s my wife and I stuck a grand each into IRAs. We probably had a combined income of 30k. I've been ignoring those IRAs ever since. They're worth 34 Grand now. Doesn't matter what you make, put money away early and often.
The Driver
I drive.
Don't make fear-based decisions about money. The upside can be too great.
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