Should you really join your company‘s 401(k) program if you really don’t see yourself being there that many years?
So I have a fairly decent job that is offering a 401K. The job is somewhat OK definitely not the dream job. I don’t know if I would see myself being there for 10 or 20 years. Also I hate to think that some more money will be deducted from my paycheck.
- 1 month ago
Currently a 401k is a dual edged device.
1. a 401k is a very easy way to save for retirement which is a good thing. My only savings for example is in my 401k. It is doing pretty good but it is my only savings and I have it because it was easy and I do not have to think about it.
2. but a 401k is a trap in that you can't get the money out even when you need it. Sure there are loans but they are a PITA and distributions (current d19 situation aside) have penalties.
3. ONLY PUT INTO A 401K IF your company has matching and ONLY PUT IN ENOUGH TO GET THE MATCH. Without the match, there are better ways to save money.
4. BUT.. if you company does have a match then yes you should be contributing. You can move a 401k to any company you go work for so it can travel with you if, so it does not really matter that you might not be with the company for a long time.
- EastLv 41 month ago
Of course, join! It's a pre-tax deduction- money is taken from your paycheck but you (and anyone) should be saving that amount anyway, so it's not to be spent. It lowers taxes and forces you to save. No question except for what to invest in: a basket primarily of stocks or bonds?
- Raymond L.Lv 51 month ago
Yes, you get a tax deduction also.
BTw, when you leave that job u can do a rollover to the next companys plan or to IRA at a bank or Credit union,
PLUS, if they are offering some contributions to it, its a no brainer
- Christin KLv 71 month ago
Well, this is up to you--if you really are thinking about moving on in say, 3-5 years, then the 401K program is not that great a savings plan. Instead, open an IRA you can contribute to yourself no matter what job you have. That way your retirement plan will follow YOU from one job to another. And you can contribute to it when you need to--you don't have to count on a set deduction from your paycheck.
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- AmyLv 71 month ago
If they don't offer a match, and that includes if you're not going to be there long enough for the company match to vest, then you're better off putting your first $6000 of savings into a Roth IRA.
After you max out your annual IRA contribution, the 401(k) is still better than a taxable account.
And when you leave the company, you should roll over the account to an IRA.
In case you're misunderstanding what a 401(k) is: it's an investment account where you never owe any income tax on the gains. Both you and your employer can contribute money to the account, but it all belongs to you.
- John AldenLv 71 month ago
Most employers contribute additional money - FREE money. It also a great savings vehicle for retirement and may have tax advantages, there is no reason NOT to.
- EvaLv 71 month ago
The money you save early in your career will be the most important money you ever save. It has the longest time to grow. You need to save for retirement. If the company is matching any portion of your contribution, you should join the plan. It doesn't matter how long you stay with the company. That money is always yours. If you leave you may have to move it to another plan, but that's it. If you have to, start out small, say $25 a week. and increase it as your wages increase.
- Wayne ZLv 71 month ago
If there is some sort of match, yes, definitely. It is free money.
401k contributions are your money. You take it with you when you leave. I rolled over an old 401k into an IRA in 2006. That money is still in the IRA and continues to grow.
- dewcoonsLv 71 month ago
Yes. The money out into your 401K is yours. You get to take it with you if you leave the company. You will not lose the money by changing jobs.
The sooner you put money into the account, the more you will have at retirement. Because it is not just what you contribute, but also what your company contributes and any interest etc. that the account will hire. For most people, at 20 to 24 years, the interest they hire on the money will be MORE than what they contributed. You lose money big time every month you want to start the account. You will
It is true that they will take money out of your check every week. But that money is BEFORE taxes. Often the amount that is taken out for 401K and the amount hat is NOT taken out because it is not taxed are within a couple dollars of each other. Plus keep in mind that your employer will match whatever you put it. So that is more money for the future on which you do not pay taxes.
You can not lose money by contributing to a 401K. Whatever you put in is yours to keep. It is doubled by your employer. It reduces your taxes, and it grow as the stock market grows. Why would you NOT want to do that and get all that free money?
- MurzyLv 71 month ago
Join. You can always transfer the money to another account.