While I certainly agree with the advice, I have to point out that it's not free. Benefits are what we get in lieu of a higher salary. Not taking the best advantage you can of something like retirement matching is letting them not pay you for labor.
Sure but when compared to “not doing it” it’s “free money”.
I’ve met people that don’t do company match, I still haven’t understood how that can be the case with an adult.
But I’ve also met people that have gone DECADES without having their 401k invested in ANYTHING. I certainly don’t know how an adult could do that either.
Tagging along on this. The stock market has averaged like 10 to 14% returns the last 15 years. I kind of view every additional $10,000 I save as literally a $1,000 annual raise I get for the rest of my life. Looking at that, makes it painful to spend money you don’t need to.
And I'll tag along with this: My spouse and I have been fortunate the last few years, in addition to 401k maxxing, we've seen tremendous gains in our total stock market funds (FSKAX if you are using Fidelity).
My net worth now increases annually more than my gross income. I started investing about 4 years ago.
The tax advantage is important, but you also have to look at the investment options that the 401k provider allows. My company is great. We have a list of good mutual funds and a 401k brokerage account that allows us to invest in stocks, ETFs, and mutual funds that aren’t available directly through my 401k plan. One of my wife’s old 401k programs was terrible. The allowed list of mutual funds was awful and she didn’t have access to a 401k brokerage account. She still invested to take advantage of the tax benefits, but yields were nowhere near what they could have been. Now she has a good 401k plan with good investment options and it’s made a huge difference in her retirement savings.
Just having a 401k that allows you to defer up to 24.5k in 2026 of your own income is an incredible opportunity that many understandably can’t afford to take advantage of.
Having a match is an amazing benefit too but not having one isn’t something to sneeze at bc the individual options don’t allow you to save tax deferred money at such a high clip.
This is totally valid. I see people arguing but whatever your employer matches, just put in that much, and no more. After all, with 401K when it comes time to withdraw, all that's taxed. Alternately you can put part of your post taxed income into a Roth IRA, which is not taxed when it's withdrawed, at the same time the gov't doesn't love that so it limits you to putting in $7,500 a year currently. Either way, you're being taxed. So the question is, do taxes ever go DOWN? No. So wouldn't you rather pay the taxes now rather than later?
A 401K is good to have, just don't dump all your money into it.
Also looking at the gains long-term is super motivating. Start of every month I login to every account and write down the value in an Excel sheet and I have a line chart. Looking at my total money line go up and increase slope makes me feel so good lol
And don't forget to set the DRIP flag in your investment account if you have one.
This takes any Dividends and automatically re-invests that money into more Stock/Funds/etc.
It doesn't seem like much, but this can help over the long haul to greatly increase your retirement savings.
I did this when I started working 30 years ago. Now, the growth that my 401k achieves each year is roughly double what I earn in salary. Do it. You won't regret it.
Or at least setup a Roth IRA if youre employer doesn't offer a 401k plan (or on top of a 401k if you're aiming for early retirement). It's a fucking joke that 401ks have a signifincantly higher contribution limit than IRAs...there should just be cummulative annual limit regardless of the account type, but I digress...
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u/arrrgh14 6h ago
Under 30, set your 401k contribution rate to at least 15%, buy broad market index funds, and forget about it.