401k contribution - Yay or Nay

[Shoot Summ]

I take a different approach, I'm not a contribute as much as you can afford guy, unless you currently have no savings plan in place and/or no discipline in saving and investing. I would always get the company match, that is "free money" until you withdraw that money hopefully later in life. You are taxed when it is withdrawn, and penalized if it is before a certain age.

Beyond that look at other ways to save that are tax deferred, but also keep in mind that you need to have accessible money put away, so tax deferred isn't the complete answer.

If your company offers a High Deductible medical plan option with an HSA take a close look at it. Many employers make a contribution to the HSA for you as well(more free money). The high deductible plans can look scary, unless you've tracked your medical expenses. I found that I had a similar out of pocket expenses yet ended up with a significant amount in the HSA. Those funds can be used tax free for medical expenses when you retire.

All of this is great, but your first step is to get your financial house in order, know your income and expenses, and what you can save. There are a number of great tools, I like mint.com from Intuit, check it everyday, know your finances.

To summarize, invest in tax deferred plans and get free money, but do not put all of your eggs in one basket. Get the match from your employer on 401K's and HSA. Look at Roth IRA's if they are available as well. Build a post tax savings and investment fund, find a good balance of pre, and post tax savings.

 

[joegrizzy]

stack metals n boolets and pray everyone else agrees to do the same.

pull your money and leave the "elite" with nothing. they win because you play. i just don't get it. ye is showing the way.

 

[JD8]

stack metals n boolets and pray everyone else agrees to do the same.

pull your money and leave the "elite" with nothing. they win because you play. i just don't get it. ye is showing the way.

Shhhh Joey...... let the adults talk.....

 

[YetiSam]

I'd probably go a step further than most and tell you to max out the contribution annually if you can afford it. Lowering your income and the long term gains make it too good. At a minimum not doing the company match is throwing part of your compensation away.

 

[HarryBear]

I know some folks who don't put in to where the agency matches, to me this is loosing out on potential cash for them to be matching what their employer contributes. Then again, I know a lot of people who don't contribute at all.

 

[Bocephus123]

Mason Jars.

 

[A.Hinkle]

Good ol enrollment came up at my work for everything. Last almost two years of being here I haven’t contributed to my 401k and I wish I would have but was worried about the election at the time of starting this new job and my fears were true that The Big Guy got the job, although a Democrat in that seat is good for oil and gas prices, and that means we are making a lot of money, all I’ve heard from everyone else in my office is that their 401k’s have taken a lot of damage this last year.

Is the time right to contribute if I haven’t been contributing or should I wait. Company matches up to 6%… I somewhat listen to Dave Ramsey on financial advice and he says don’t contribute to retirement until all debt is paid off.. He also says to sell everything and eat rice and beans but I ain’t about that life.

So what say ye, OSA? Should I start contributing to 401k or put that money towards guns and ammo instead and bet on the odds I don’t even reach retirement age.

Dave Ramsay has a lot of good advice but he gives it from the perspective of a millionaire, which unfortunately most of us aren't.

Contribute up to the match, then sit down with a financial professional and work out a plan to prioritize paying down the debt. Nothing grows as fast as doubling instantly. Consider making Roth contirbutions as long as your company will still match (though they will almost certainly only match pretax).

Finally consider investing in equity funds (as opposed to fixed income) because everything is down but the potential to rebound from both a size of rebound and time of rebound perspective is much better for equities than bonds. Less risky (safe is inaccurate) funds mitigate voltility by holding more fixed income which usually can't fall much in value - until market interest rates rise significantly like this year. They will reclaim their value as they come due and have a return of principal, but typically the types of bonds in target date funds have an average duration of 5-7 years. Equity will likely rebound faster and more even with the incoming recession as the market is forward looking and most of the coming slowdown (if not all) is already priced in. You'll glbe getting fantastic deals on new contributions for the next 6 months or so before things start trending upward.

 

[Raido Free America]

Good ol enrollment came up at my work for everything. Last almost two years of being here I haven’t contributed to my 401k and I wish I would have but was worried about the election at the time of starting this new job and my fears were true that The Big Guy got the job, although a Democrat in that seat is good for oil and gas prices, and that means we are making a lot of money, all I’ve heard from everyone else in my office is that their 401k’s have taken a lot of damage this last year.

Is the time right to contribute if I haven’t been contributing or should I wait. Company matches up to 6%… I somewhat listen to Dave Ramsey on financial advice and he says don’t contribute to retirement until all debt is paid off.. He also says to sell everything and eat rice and beans but I ain’t about that life.

So what say ye, OSA? Should I start contributing to 401k or put that money towards guns and ammo instead and bet on the odds I don’t even reach retirement age.

We have been comfortably retired for 20 years, starting at age 56, largely due to a 401k! You will get to make money, not only on your money that would have been gone for state, and federal taxes, all that time, but the 6% your employer puts in. Invest this in higher risk/ higher yield mutual funds, if offered, while you are younger! When everyone else is whining about their 401k being down, remember, when the market is down, YOU, and your employers money, are buying BARGAINS, that will go back up!! We started with the minimum to get the emploiers matching money, when I got a raise, we added 5%, and didn't even miss it! Old age has a way of slipping up on people, be prepared!

 

[TANSTAAFL]

Good ol enrollment came up at my work for everything. Last almost two years of being here I haven’t contributed to my 401k and I wish I would have but was worried about the election at the time of starting this new job and my fears were true that The Big Guy got the job, although a Democrat in that seat is good for oil and gas prices, and that means we are making a lot of money, all I’ve heard from everyone else in my office is that their 401k’s have taken a lot of damage this last year.

Is the time right to contribute if I haven’t been contributing or should I wait. Company matches up to 6%… I somewhat listen to Dave Ramsey on financial advice and he says don’t contribute to retirement until all debt is paid off.. He also says to sell everything and eat rice and beans but I ain’t about that life.

So what say ye, OSA? Should I start contributing to 401k or put that money towards guns and ammo instead and bet on the odds I don’t even reach retirement age.

A lot to unpack. Depends on your age, when you want to retire, do you have a cash reserve, what you believe will happen with the economy. The Dave Ramsey thing is a populist argument, but valid in some situations. So, I will assume you are five years or more away from retirement, have a minimum amount of savings, not a ton of debt aside from your mortgage. If you have debt if it is at a low rate (auto loan under 5%) why pay it off quicker? Inflation is high right now, better off using someone else's money. If you feel good about your long term job prospects and have a good cash reserve, why not take advantage of free company money? Investing monthly in a stock fund means your dollar cost averaging, and if the market is fluctuating you are acquiring more shares with each purchase. The market typically rights itself over a 5 to 10 year period. Essentially, when the market's down your buying low, and when you use the money hopefully you will have a lot of shares of a fund(s) or stock and sell high.

Never forget too, the 401K gives you tax savings, but if you are in the 22% tax bracket you are only saving $220 for every $1000 you invest.

If you feel everything will go to heck then invest in Guns, MRE's, Survival food and Ammo.

 

[emapples]

Good ol enrollment came up at my work for everything. Last almost two years of being here I haven’t contributed to my 401k and I wish I would have but was worried about the election at the time of starting this new job and my fears were true that The Big Guy got the job, although a Democrat in that seat is good for oil and gas prices, and that means we are making a lot of money, all I’ve heard from everyone else in my office is that their 401k’s have taken a lot of damage this last year.

Is the time right to contribute if I haven’t been contributing or should I wait. Company matches up to 6%… I somewhat listen to Dave Ramsey on financial advice and he says don’t contribute to retirement until all debt is paid off.. He also says to sell everything and eat rice and beans but I ain’t about that life.

So what say ye, OSA? Should I start contributing to 401k or put that money towards guns and ammo instead and bet on the odds I don’t even reach retirement age.

Ignore Dave Ramsey here, ALWAYS contributed at least the company match. That’s free money, if you would have put in 6 they would have put in 6 (12% of your income saved pre tax) you’d still be ahead even if the stock market dropped 49%.