# Lifestyles & Discussion > Personal Prosperity >  Would you opt-in to a 401k?

## Free Moral Agent

The company I was just hired at is offering a 401k through Fidelity Investments.  They'll match 50% of my contribution that is up to 5% of my salary.  I'm 28 now, would it be wise to opt-in or stay the hell away from a 401k?

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## DamianTV

Opt-in?  Not only No but $#@! NO.

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## cubical

I would do it. The odds the government takes your 401k and gives you nothing is slim imo. Rewards outweigh the risk.

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## Danke

> The company I was just hired at is offering a 401k through Fidelity Investments.  They'll match 50% of my contribution that is up to 5% of my salary.  I'm 28 now, would it be wise to opt-in or stay the hell away from a 401k?



If you're a _taxpayer_, it is >than a 3% pay raise.   Are you willing to lock up 5% of your earnings for that?

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## brandon

You definitely want to contribute at least the 5% that they are going to match 50%. That's an instant 50% gain for you. If you want to contribute more or not is really up to you. Depends if you can afford it or not.

Play around with this calculator a bit to see how much your money will grow over the next 40 years. If you put in $5,000 a year for the next 40 years at an inflation adjusted return of 7%, your account will be worth over a million at retirement.

http://www.moneychimp.com/calculator...calculator.htm

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## Brian4Liberty

> You definitely want to contribute at least the 5% that they are going to match 50%. That's an instant 50% gain for you. If you want to contribute more or not is really up to you. Depends if you can afford it or not.


Agree with that. You also have the added benefit that you can buy and sell in the 401(k) and later a rollover IRA all you want without worrying about the tax ramifications every year.

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## Aden

> You definitely want to contribute at least the 5% that they are going to match 50%. That's an instant 50% gain for you. If you want to contribute more or not is really up to you. Depends if you can afford it or not.
> 
> Play around with this calculator a bit to see how much your money will grow over the next 40 years. If you put in $5,000 a year for the next 40 years at an inflation adjusted return of 7%, your account will be worth over a million at retirement.
> 
> http://www.moneychimp.com/calculator...calculator.htm


Calculators like those are figuring that the next 40-50 years will be as prosperous as the last 50.  I do not have faith that stocks will give a 7-8% return in the coming years.  If you believe that crap is going to hit the fan, that this depression will continue, or that America is in the beginning stages of decline, then there is a good chance you will lose money.  

My wife's employer just offered her a matching 401k.  She said thanks, but no thanks.  I took the tax hit and closed out my Roth IRA late 2007.  Personally, I am done with all those investment shenanigans.

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## muzzled dogg

Depends on match
My company doesn't match
No 401k here

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## brandon

> Calculators like those are figuring that the next 40-50 years will be as prosperous as the last 50.  I do not have faith that stocks will give a 7-8% return in the coming years.  If you believe that crap is going to hit the fan, that this depression will continue, or that America is in the beginning stages of decline, then there is a good chance you will lose money.  
> 
> My wife's employer just offered her a matching 401k.  She said thanks, but no thanks.  I took the tax hit and closed out my Roth IRA late 2007.  Personally, I am done with all those investment shenanigans.


You can put whatever return rate you want in the calculator, it doesn't have to be 7%. I agree there certainly is a chance that America is slipping into a decline and the next several decades won't be that prosperous. But I think it's still a chance worth taking. If we are wrong and America is prosperous, I'd hate to face my retirement having completely missed out on all the gains.

The important thing is to diversify. If you fund your 401k, buy some property, buy some metals, and keep some cash you should be reasonably protected.

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## musicmax

No.  A 401(k) puts your money into the "system".  You are given limited investment options, and the scum of Goldman/TIAA/BOA/Pimco get their cut.  Based on the combination of inflation, the likely tax rate when you withdraw, and the probability of .gov confiscation (in return for "safe" Treasury instruments) there is no way in hell that a liberty-minded individual can feed the beast by throwing their money into a 401(k).

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## Acala

> You definitely want to contribute at least the 5% that they are going to match 50%. That's an instant 50% gain for you.


Not true.  That "instant gain" is in the hands of bankers and untouchable for 30 years.  There is nothing instant about it.  It is also one of the riskiest investments in terms of the possiblility of government confiscation.  A stroke of a pen in Washington and it is gone, baby.

I was so anxious to get out of my IRAs that I willingly paid the penalty and am glad I did.

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## brandon

> Not true.  That "instant gain" is in the hands of bankers and untouchable for 30 years.


That's not true at all. You can pay a 10% penalty and get your money at any time, as you also pointed out.

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## Cowlesy

> You definitely want to contribute at least the 5% that they are going to match 50%. That's an instant 50% gain for you. If you want to contribute more or not is really up to you. Depends if you can afford it or not.
> 
> Play around with this calculator a bit to see how much your money will grow over the next 40 years. If you put in $5,000 a year for the next 40 years at an inflation adjusted return of 7%, your account will be worth over a million at retirement.
> 
> http://www.moneychimp.com/calculator...calculator.htm


Agree.  Not only is your employer going to contribute cash to your retirement account that will grow tax free until retirement, but your contributions to the plan come out of your salary pre-tax, meaning you lower the amount of salary on which your taxes are calculated.  Obviously it's pretty challenging to contribute the maximum per year of $16,500 to the plan, but if you did and let's assume your tax rate including Fed Income Tax, SS, Medicare, SALT were 30% all-in, that'd be $5,000 less you'd remit to Uncle Sam per year, and it'd be an investment fund earning money (hopefully).

Look, if the entire world goes to pot in a worldwide collapse, well, we're all doomed.  But if we muddle along, and in the next 40 years we have some sort of breakthrough or right the ship, it'll be good to be invested.  You just can't watch it day to day or you'll go bonkers.

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## ctiger2

I would opt-out. I cashed out ROTH, 401K etc 3yrs ago.

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## Acala

> That's not true at all. You can pay a 10% penalty and get your money at any time, as you also pointed out.


I'll bet you can't withdraw the matching funds.  Otherwise you could put 5% of your salary in, get the matching money and then take it all out, pay the penalty, and be ahead.  I haven't looked but I'll bet you dinner that there is a rule the prevents it.

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## BrendenR

If the company matches, yes. I do.

If the company does not match, no, I wouldn't.

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## angelatc

> The company I was just hired at is offering a 401k through Fidelity Investments.  They'll match 50% of my contribution that is up to 5% of my salary.  I'm 28 now, would it be wise to opt-in or stay the hell away from a 401k?


It's a no brainer.  Where else are you going to get a guaranteed 50% return on your money?

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## angelatc

> I'll bet you can't withdraw the matching funds.  Otherwise you could put 5% of your salary in, get the matching money and then take it all out, pay the penalty, and be ahead.  I haven't looked but I'll bet you dinner that there is a rule the prevents it.


The rules are regulated by federal regulation. He is probably 100% vested after 5 years.

Taking the money out before he retires also incurs a penalty of 10% plus the regular income tax that he isn't paying.  

By biggest regret about leaving the workforce is my 401(k) contribution.  I would be a millionaire a couple of times over when I retired if I didn't have a husband that I now know can't $#@!ing hold a job.

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## PaulineDisciple

I would and do, but with one caveat, as soon as it gets built up enough to buy a vehicle, a good battle rifle or down payment on a house, I would borrow half of it out as soon as I could. Of course my 401K plan matches 100% up to 6% of my income so I stop at the 6%, so I am doubling my money right out of the chute. This way when I borrow half, I am basically getting all the money I invested and exchanging the FRN's for property of real value, if as rumors have it, in the event of an economic collapse, TPTB say sorry you lost all your money that you had invested in your 401K, I will laugh and tell them I already got mine. Right now I hear they are trying to pass legislation to keep people from doing what I keep doing because it really pisses them off when they see people getting their money back in this way and buying things that TPTB do not want you to buy.

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## Revolution9

I have worked alongside people who lost all their 401k during the .com bubble in their mid 50's. I would rather invest the money in my own way. I use tools...software, hardware, mechanical, electrical. They make me money. Firearms and fishing gear provide food where I am if I need to hit the wilds to procure protein and fats.. Mind you all my work is either for the company I own or for freelance clients. I would buy property and dwelling cash and no mortgage, then silver, then gold. (as has been done already) Then I would retire young and let my hobbies pay the bills when I need some spare spending cash. Live simply, work with joy, love abundantly and the rest takes care of itself.

Rev9

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## Brian4Liberty

> You are given limited investment options, and the scum of Goldman/TIAA/BOA/Pimco get their cut.


That is the one big caveat. Most big companies have 401(k) plans with good options, including a brokerage account where you can invest in almost anything. But not all companies are like that, and some 401(k) options are really lame, especially at smaller companies. That being said, I have signed up for 401(k)s at small companies with bad options with the knowledge that I wasn't going to stay long, and that I would soon be rolling the money into an IRA at my brokerage where I could then invest in anything I wanted. When that was the case, I just put my money into the 401(k)s cash equivalent option as a temporary holding spot until I rolled it out of there.

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## angelatc

> I have worked alongside people who lost all their 401k during the .com bubble in their mid 50's.
> 
> Rev9


I wonder about that.  Nobody lost all their money in any of the stock market crashes, unless they were invested 100% in a company that went out of business. The Enron debacle ended those mandates - no company can insist that you only invest in their stock now. 

The dot-com bubble didn't even last that long - it was only about 5  - 7 years.  A guy in his 50's shouldn't have lost his life savings over a 5 year investment.


  I would still guarantee that those 50-somethings were still up about 100% over their initial investment if they had only been in 10 years.  If they had started in the 80's, then they're still up even more.

Not to mention that if they kept buying stocks through 2009 and 2010, they're making quite a bit of it back now.

And the truth of the matter is, people in their 50's shouldn't be in the stock market with all the money they can't afford to lose.  A loose rule of thumb is to subtract your age from the number 120, and have that percentage in the stock market.  So, a 50 year old should have already had 30% of his capital and capital gains locked in.  

I'm not saying that you should invest exclusively in the 401(k) but you're pretty much a fool if you aren't taking advantage of the company match.  Like it or not, 401(k) plans are the most viable solution to Social Security.

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## Free Moral Agent

> Not only is your employer going to contribute cash to your retirement account that will grow tax free until retirement, but your contributions to the plan come out of your salary pre-tax, meaning you lower the amount of salary on which your taxes are calculated.


Good point.  

Thanks everyone for the feedback, I'm going for the steady 5% w/ 50% matching.

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## nobody's_hero

> Calculators like those are figuring that the next 40-50 years will be as prosperous as the last 50.  I do not have faith that stocks will give a 7-8% return in the coming years.  If you believe that crap is going to hit the fan, that this depression will continue, or that America is in the beginning stages of decline, then there is a good chance you will lose money.


I don't even discuss retirement options for this reason. Just give me my paycheck so I can go to the coin shop and I'll bury some gold in the back-yard or something.

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## bwlibertyman

I think it depends on if they let you take it out.  I don't have a full time job, I'm still a student but I always envisioned that the company would match me and then I could take out those funds, maybe pay a small penalty and invest them wherever I want.  It almost seems like free money.  I know you'd probably be hit with a tax and an employer fee but besides that I think it'd be good, assuming those costs aren't too much.

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## JohnCrabtree

In addition to the tax protection and the generous match afforded by your company you also take advantage of dollar cost averaging.  Every week you are buying the same dollar amount of shares in whatever you are investing in be it bonds, individual stocks, or mutual funds.  When the market is down you buy more shares, when the market is up, you buy fewer shares, which tips your average cost downward. 


If a Roth 401K option is available I would take that over a traditional 401K. This is because your contributions are made with after tax dollars and gains will not be taxed at retirement.  You can also withdrawal all of your contributions, tax and penalty free at any time.

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## Zippyjuan

If they offer matching funds (and yours does) -go for it. That is extra money they are giving to you. But one caution- don't put all your 401k into your company stock.  If the company goes bust, you not only lose your job but also your retirement. But today most 401k's offer diverse options and are transferable when you leave the company.  Put in as much as they match and then invest any other money into other options. My company offers no matching funds so I do not participate in our 401k program.

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## psi2941

no one has asked the fundamental question what are your options within the 401k? its it like GM? lol. American companies?

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## erowe1

> The company I was just hired at is offering a 401k through Fidelity Investments.  They'll match 50% of my contribution that is up to 5% of my salary.  I'm 28 now, would it be wise to opt-in or stay the hell away from a 401k?


I would definitely opt in all the way up to that 5% level, but not beyond.

If you want to invest more than that, then you can get an IRA or Roth IRA (depending on your income IIRC), or buy PMs if you want. And whatever you do you'll have greater freedom than in that 401k.

But the matching is something I wouldn't want to pass up.

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## Zippyjuan

Just some quick random numbers. Say you get paid $40k a year. You put aside 5% of that and the company gives you 50% matching.  You saved $2000 and the company gave you another $1000. Without any return on your investment itself, you just made 50% off that money. That money is also not taxed- until you take it out later on. More info on the subject:  http://money.cnn.com/magazines/money...y101/lesson23/

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## justatrey

No! Many were hit hard when the market crashed in 08. A coworker of mine told me she lost about half of what she had put into her 401k over a few decades. This easily destroyed whatever she thought she was getting "for free" from her employers' matching contributions. 

Take that 5% you were going to contribute and buy physical gold and silver instead. The 50% matching contribution, if not destroyed by another market crash could easily be destroyed by inflation. Gold and silver are a great way of protecting yourself from being flat out *robbed*  by the Fed.  The same cannot be said about a 401K.

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## brandon

If someone loses half of what they put in, and their employer also matched half of what they put in, then they broke even. Just sayin....

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