Comments on: 401k … a means or an end?

By: 401kdummies

401kdummies — Wed, 19 Aug 2009 15:16:40 +0000

Just came and read, this is wow! I was seek from many blogs, but here is the best, I love it.

By: DRDOLLAZ

DRDOLLAZ — Thu, 19 Mar 2009 10:52:04 +0000

There would be no point to just contribute while you work and then take it out when you need it. That’s the problem with 401k plans – they have HORRIBLE exit strategies! 30 years from now, you wont remember the tax ‘deferral’ you got 30 years earlier. If you’re really planning on being truly successful w/ business & investing along the way, my vote is to keep more CONTROL over your money during the accumulation phase so that you have ACCESS to it to invest in more lucrative ventures – not your 401k!

Just my 2 cents thought

By: Adrian

Adrian — Thu, 19 Mar 2009 03:47:35 +0000

@ Brad – It depends on how soon you expect to make these other investments, what return you expect them to bring, and what benefits you get from ‘investing’ in your 401k (e.g. employer match PLUS tax benefit going in MINUS taxes/penalties taking money out PLUS/MINUS market appreciation/depreciation) in the meantime … not an easy equation to solve

By: brad

brad — Thu, 19 Mar 2009 01:13:54 +0000

So what if I contribute today while I work, and then just take it all our (paying income tax plus penalty) if a better investment comes along? Is that a good strategy?

By: Adrian

Adrian — Mon, 16 Mar 2009 20:24:49 +0000

@ Dana – … as fits the profile of most of our fellow readers, I hope, after all this blog is titled: How To Make $7 Million In 7 Years

Thanks for your comments, Dana and DrDollaz

By: Dana

Dana — Mon, 16 Mar 2009 14:55:21 +0000

True, the tax-deferred retirement savings system is set up for the life of someone that worked for 30 odd years and retires. If your life trajectory, career paths or aspirations strays from the majority of people employed, then one should definitely reconsider the merits of such systems.

By: DRDOLLAZ

DRDOLLAZ — Mon, 16 Mar 2009 11:25:06 +0000

A 401(k) is not as tax advantaged as people think it is! You are not truly getting a deduction – you are simply DEFERRING taxable income into the future. The thought that you will be in a lower tax bracket when you retire is esentially saying “I’m not going to hit my number and will be less successful in the future then I am now!” It’s really a big hoax. And you do NOT keep the earnings on the portion you would have paid in taxes now – that goes to Uncle Same upon withdrawal as well! People say how you get to earn interest on Uncle Sam’s money – well, that couldnt be farther from the truth. If you have to pay 30% on $10,000 today…. you are going to still have to pay 30% on $100,000 tomorrow – it’s all relative. Plus, with our new President’s spending spree, why defer taxes into what is almost certainly going to be a higher-tax era (ie. the future!)