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Employer-matched contributions to a 401k should be prioritized before an emergency fund. Otherwise you are leaving free money on the table. This applies to ma
by CompelTechnic 7y ago
Employer-matched contributions to a 401k should be prioritized before an emergency fund. Otherwise you are leaving free money on the table. This applies to many Americans.
- rekwah 7y agoDisagree. What happens if you have an emergency? Then you end up withdrawing from the 401k + penalty.
- marssaxman 7y agoHow often do you have emergencies? Seems to me that if your life is going sideways, paying the penalty to get money out of your 401k would be worthwhile; but I expect that my life generally won't go sideways, so the extra percentage of income is more likely to be a benefit than the potential penalty is to be a detriment.
- axaxs 7y agoEven with the penalty and tax, it will be less than 50 percent, making it financially beneficial since the employer is matching 100 percent.
- dragonwriter 7y agoSure, if it's 100% employer match. Even employers that do matching often do it below 100%.
- dragonwriter 7y ago> What happens if you have an emergency? You borrow from the 401K. If for some reason that's not an option, you take money out with a penalty, but with sufficient match you are still often ahead.