401k contribution - Yay or Nay

[clintbailey]

IMO, the lowest to put in is ALWAYS the amount to get the most employer match, i.e. "free money", in your case 6%. I put in 10% for 10 or more years, with a 6% match...then I moved the "extra" 4% to an outside Roth (bank debit every 2 weeks). I will say if you have a Roth option, I like that, saves tax money later very possibly...plus its more accessible with less penalties later if you need to withdraw for some reason. Get that free money for sure!

 

[HoLeChit]

https://www.bankrate.com/retirement/401-k-calculator/
Play around with this calculator. Pay attention to the difference between if you start now, vs if you put off the 401k for another 10 years.

For example:

Simply put, forget about the crappy economy. Making 6% of your income extra and the effects of compound interest far outweigh the economy. Also, if you’re aggressive with your 401k funds, you’ll see a healthy jump once the economy picks back up.

 

[Rez Exelon]

IMHO Dave Ramsey is in the same boat as "Dr. Phil" and Oprah and everyone of their kin.

Listen if the company is giving you a dollar for dollar match to 6% you put that in at a minimum. If you put $6 and they put $6 you now have $12 right? If the market goes down 25% then you now have $9 --- still more than you started with.

Unless you're going to retire soon, don't worry about the market --- it'll correct and go up. If there's one thing that's true, it's that rich people will always see a recovered market, so they rest of us can get some comfort from that with our measly 401k. They'll bounce back.

Now, the question of getting rid of debt is before investing gets more interesting and can vary greatly based on a personal situation. Consider this as a broad example: If you have a mortgage with a 5% loan, does it make sense to pay more there than it does to put funds in a retirement account? At a moderate risk level, a return rate of 8% on the retirement is not unheard of. So for the same dollars, they can return more in the 401k than paying the mortgage. But that assuming both are looked at with considerations for time.

End of the day, diversification is important. 401k's are just a tool, but let's say you get to the point where you hit the IRS cap for contributions, then it's good to know where to put the leftovers.

 

[Okieprepper]

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.

Absolutely take advantage of your employers matching amount. My 401k has taken some big hits since O'Biden took the Whitehouse, but you gotta stick with it for the long haul. Wished I would have started a 401k sooner and kept my total debt lower.

 

[Capm_Spaulding]

I say do as much as you can afford. It’ll be worth it!

 

[RangerRick]

Do the 6 % in most cases it is pre tax dollars, so you only pay taxes at the end on the amount you have at the end. and if you leave your job don't take it out directly, roll to a 401 or roth directly don't take a check or the taxes will be due then.

 

[xseler]

Yeah, if I put in 6% of my income they will match that dollar amount.

If I put in anymore than 6% they will only match the 6%

Since the 401K is pre-tax, you'll not even notice a difference in your paycheck. Like mentioned above, it's free money. Even if the market drops 20%, you were making a 100% return on the money --- which means you are still far ahead!! It's also beneficial that you're still young. Time in the market makes a very big difference in your end result.

Just do it!!

 

[Gideon]

Yeah, if I put in 6% of my income they will match that dollar amount.

If I put in anymore than 6% they will only match the 6%

My employer matches up to 5%, so I put in 5% no more, no less.
The remaining 10% of my income that I invest is after tax, going into a separate Roth IRA.

 

[THAT Gurl]

I'm in the put that 6% in to get the maximum matching contributions from your employer. When you are my age you will be glad you did.

 

[dlbleak]

The last time we went through this I got a little nervous. I was going to stop my contributions or at least cut back. But I got to thinking, I’m buying more shares for less money. I actually UPPED it by another $100. When the market came back, it doubled lightning fast.
IMO, this is a good time to get back in.