This Is What I Think About 401K’s:

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currently are, but there is only one problem with that. Our country is over 30 TRILLION dollars in debt. With that number, do you really think that taxes won’t be raised on those accounts?Also, I am not a fan of any investment that does not provide any access or option for cash flow until I’m in the last part of my life statistically without a substantial penalty. In my opinion, this has been set up to keep people working longer so that way people who started around 18–20 cannot retire millionaires in their early 40s.Now on to the positives. In my opinion there are only about 2 advantages to having a 401K. First, is an employer match. This part is actually a good deal because they will ideally match dollar for dollar up to a certain percent.

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Let’s say you make 50,000 per year and your employer matches up to 5%. Assuming you did the 5%, since getting an employer match, instead of only having $2500 you would have$ 5,000 going into the 401K each year.The next advantage is being put in a lower tax bracket. Since it’s contributed to with pre-tax money, the government doesn’t know the difference so if your on the fence between brackets, you could put more in your 401K and pay less taxes on after tax money.This is only my personal opinion, but the only advantages I see to the 401k are the ones I previously mentioned. I don’t trust the tax benefit and would much rather put more money in a tax free growth Roth IRA, although the government might eventually tax that too.</article></body>

This Is What I Think About 401K’s:

Since about the late 1970s, employers have issued these pension replacing retirement accounts called 401Ks. The idea of this is that employees overtime contribute small to medium pre-taxed parts of their salary which will compound over time and ideally the employer would contribute too. Overall, 401Ks have small advantages, but overall I’m not a huge fan.

Let’s get the bad news out of the way first. The idea of having a pre-tax account is that at retirement age, employees will be taxed at a lower rate than they currently are, but there is only one problem with that. Our country is over 30 TRILLION dollars in debt. With that number, do you really think that taxes won’t be raised on those accounts?

Also, I am not a fan of any investment that does not provide any access or option for cash flow until I’m in the last part of my life statistically without a substantial penalty. In my opinion, this has been set up to keep people working longer so that way people who started around 18–20 cannot retire millionaires in their early 40s.

Now on to the positives. In my opinion there are only about 2 advantages to having a 401K. First, is an employer match. This part is actually a good deal because they will ideally match dollar for dollar up to a certain percent. Let’s say you make 50,000 per year and your employer matches up to 5%. Assuming you did the 5%, since getting an employer match, instead of only having $2500 you would have $5,000 going into the 401K each year.

The next advantage is being put in a lower tax bracket. Since it’s contributed to with pre-tax money, the government doesn’t know the difference so if your on the fence between brackets, you could put more in your 401K and pay less taxes on after tax money.

This is only my personal opinion, but the only advantages I see to the 401k are the ones I previously mentioned. I don’t trust the tax benefit and would much rather put more money in a tax free growth Roth IRA, although the government might eventually tax that too.