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I am always shocked by the number of professionals I work with who either do not fund their 401k, or only to matching, instead of going for max. Yes I understan

I am always shocked by the number of professionals I work with who either do not fund their 401k, or only to matching, instead of going for max. Yes I understand hitting your maximum can be difficult, but it should come before frivolous expenditures. You are investing in yourself and if you have family, them. Yet while the excuses are legion the majority of these same people have no issue with car notes(s), cell phone contract(s), and buying breakfast/daily. Fortunately my company offered a pension when I joined, they have since converted to 401k and frozen pensions at the end of the year. Yet it is there and one more safety for me.

bradleyjg 13y ago
Depending on your alternative tax advantaged investment options, you may not want to max your 401k contribution. For various tawdry reasons most 401k plans have terrible investment options. You certainly want to take the free money (i.e. up to match) but if you have alternative tax advantaged options (e.g. IRA, HSA) with better fund options you may want to max those first before the 401k.
dmm 13y ago
What kind of politicians and policies will of these retired, former professionals vote for? Maybe it will be something like "Tax the idiots stupid enough to save and give it to the newly poor".
- mynewwork 13y ago
  This is a serious concern of mine. There already exist countries in Europe which tax savings. It wouldn't shock me if after 40 years of living below my means and saving diligently, that an act of congress makes my IRA/401k be taxed at a higher rate to give money to my non-saving contemporaries. I'm sure there are some on the far-left that could rationalize redistributing savings accounts.
- gaius 13y ago
  Already happening. In 1997, then-chancellor Gordon Brown raided the private pension funds. Seeking an alternate asset class to save for retirement, the middle classes piled into property causing a bubble. It will take decades to undo this mans legacy.
dingaling 13y ago
In the UK, we can never directly access our capital upon retirement ( even for a private, self-managed pension ). The best we can do is withdraw 25% as a lump sum and then buy an annuity with the remainder ( or draw-down a Government-controlled small % each year ). Not much of a safety net. So naturally people decide to use a different savings vehicle, one in which they can decide how to use the capital. Hence the headline 'underfunding' of our personal pensions.

bradleyjg 13y ago

Depending on your alternative tax advantaged investment options, you may not want to max your 401k contribution. For various tawdry reasons most 401k plans have terrible investment options. You certainly want to take the free money (i.e. up to match) but if you have alternative tax advantaged options (e.g. IRA, HSA) with better fund options you may want to max those first before the 401k.

dmm 13y ago

What kind of politicians and policies will of these retired, former professionals vote for? Maybe it will be something like "Tax the idiots stupid enough to save and give it to the newly poor".

mynewwork 13y ago
This is a serious concern of mine. There already exist countries in Europe which tax savings. It wouldn't shock me if after 40 years of living below my means and saving diligently, that an act of congress makes my IRA/401k be taxed at a higher rate to give money to my non-saving contemporaries. I'm sure there are some on the far-left that could rationalize redistributing savings accounts.
gaius 13y ago
Already happening. In 1997, then-chancellor Gordon Brown raided the private pension funds. Seeking an alternate asset class to save for retirement, the middle classes piled into property causing a bubble. It will take decades to undo this mans legacy.

dingaling 13y ago

In the UK, we can never directly access our capital upon retirement ( even for a private, self-managed pension ). The best we can do is withdraw 25% as a lump sum and then buy an annuity with the remainder ( or draw-down a Government-controlled small % each year ). Not much of a safety net. So naturally people decide to use a different savings vehicle, one in which they can decide how to use the capital. Hence the headline 'underfunding' of our personal pensions.