Patrick.net

401Ks are a waste of money

By tovarichpeter   Follow   Mon, 26 Nov 2012, 6:26pm   1,559 views   18 comments
In South San Francisco CA 94080   Watch (0)   Share   Quote   Permalink   Like   Dislike  

http://www.theatlantic.com/business/archive/2012/11/the-401-k-is-a-240-billion-waste/265593/

Sent from my iPad

Viewing Comments 1-18 of 18     Last »     See most liked comments

1. Kevin Follow Befriend 40 threads 2,652 comments

   1   1:18am Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike   We don't necessarily need the tax benefits of the 401(k), but we do need employer-managed retirement. Most people are awful at planning for their retirement, and this country can't afford to have millions of people incapable of working relying on government aid.

2. Call it Crazy Follow Befriend 249 threads 2,915 comments

   2   7:43am Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike   Kevin says Most people are awful at planning for their retirement, and this country can't afford to have millions of people incapable of working relying on government aid. We already have that..... the 47%ers...

3. SFace Follow Befriend (2) 61 threads 1,336 comments Premium

   3   9:30am Tue 27 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike   401K is the most lucrative tax deduction. 34K bite off line 1 and decrease in taxable income if married and employed. The lower top line also soften the effect of phase outs so the benefit is even more enhanced. 50K limit if you are self employed. In my opinion, it is the best/safest way to save for retirement (especially if the employer matches as well which could be anywhere from 25%-200% up to a 17K cap). Pre-tax contirbution, pre-tax earnings accumulation is the fastest path to build a big number. The 401K statute makes it hard to withdraw which helps build the balance. The problem is it is great if you make a high income but 401K's are useless at low income level. Without tax deferred feacture, there is no way we put that much or any in retirement. We'll probably buy up more properties instead.

4. swebb Follow Befriend (3) 29 threads 505 comments Denver, CO

   4   10:36am Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike   Agreed. Even with one person working and no employer match it's a godsend. Without it you are left with $10k (married) IRA contribution -- with the 401K it adds $17k. I'm less sure about the advantage of putting in pre-tax vs post tax, though. I have contributed to both my Roth 401K and traditional 401K and it's not at all obvious to me that the traditional is the way to go, especially if you are trying to get as much value in and are otherwise hitting the contribution limits. -S

5. E-man Follow Befriend (31) 34 threads 2,612 comments San Jose, CA Premium

   5   7:54pm Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike   What SFace said. :) swebb says I'm less sure about the advantage of putting in pre-tax vs post tax, though. True. It might be most beneficial to contribute just enough to get the max match and put the rest of the money in a Roth IRA or Roth 401k. Just run an analysis on the spreadsheet. I'm done with IRA and 401k for a while.

6. Kevin Follow Befriend 40 threads 2,652 comments

   6   9:28pm Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike   SFace says The problem is it is great if you make a high income but 401K's are useless at low income level. Without tax deferred feacture, there is no way we put that much or any in retirement. We'll probably buy up more properties instead. People at low income levels can't buy investment properties.

7. BoomAndBustCycle Follow Befriend 28 threads 353 comments

   7   11:00pm Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike   Only the top 10% of earners could come close to being able to put $17k in a 401k. For the vast majority of married couples... $10k IRA contribution is plenty per year. Not to mention Roth IRA are better because taxes are gonna be a lot higher in the future.

8. ttsmyf Follow Befriend (1) 13 threads 92 comments ttsmyf's website Premium

   8   6:31am Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike   TIMING über alles http://patrick.net/forum/?p=1219038

9. fil Follow Befriend 6 threads 67 comments

   9   12:10pm Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike   BoomAndBustCycle says Only the top 10% of earners could come close to being able to put $17k in a 401k. For the vast majority of married couples... $10k IRA contribution is plenty per year. Not to mention Roth IRA are better because taxes are gonna be a lot higher in the future. It's not that hard to max your 401k unless you have a big mortgage tying up your money. With all the taxes here in CA your paychecks don't even go up that much when you lower your 401k contributions.

10. tatupu70 Follow Befriend (3) 15 threads 5,718 comments

    10   10:22am Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike   BoomAndBustCycle says $10k IRA contribution is plenty per year. Not to mention Roth IRA are better because taxes are gonna be a lot higher in the future At most companies, a $10K IRA becomes $15K in 401K. If you get a 50% company match, you really need to put in enough to get the full match. The value of a Roth IRA isn't as clear as you make it. Taxes probably will be higher in the future, but your income will be much less in retirement so I'm not sure it will be a winning strategy. I don't think anyone can really know at this point.

11. gbenson Follow Befriend 16 threads 409 comments

    11   12:48pm Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike   Just checked my 401k. This years rate of return is -1.5%, my 5 year return is around 3%. I'm making 8+% on my real estate investments (after taxes) Why am I doing this 401k thing again?

12. tatupu70 Follow Befriend (3) 15 threads 5,718 comments

    12   12:55pm Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike   gbenson says Just checked my 401k. This years rate of return is -1.5%, my 5 year return is around 3%. I'm making 8+% on my real estate investments (after taxes) Why am I doing this 401k thing again? 8% after taxes on real estate is darn good. I question whether that is sustainable over the long term. And I'd hope that your 401K should return more over a longer window. But the real reason is this: http://www.ehow.com/how-does_4600339_compound-interest-work.html

13. CL Follow Befriend (12) 141 threads 1,367 comments Emeryville, CA

    13   2:41pm Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike   gbenson says Why am I doing this 401k thing again? Of course, there are alternatives to retiring. :)

14. Ceffer Follow Befriend 6 threads 692 comments Pleasanton, CA

    14   3:39pm Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike   CL says gbenson says Why am I doing this 401k thing again? Of course, there are alternatives to retiring. :) You mean, like suicide?

15. CL Follow Befriend (12) 141 threads 1,367 comments Emeryville, CA

    15   3:46pm Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike   Ceffer says You mean, like suicide? Yeah, but if you invest wisely, you can pay someone to do it for you. :)

16. CL Follow Befriend (12) 141 threads 1,367 comments Emeryville, CA

    16   3:49pm Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike   gbenson says This years rate of return is -1.5% My one year is over 13%! Did Rove handle your money?

17. BoomAndBustCycle Follow Befriend 28 threads 353 comments

    17   10:13pm Sun 2 Dec 2012   Share   Quote   Permalink   Like   Dislike   tatupu70 says At most companies, a $10K IRA becomes $15K in 401K. If you get a 50% company match, you really need to put in enough to get the full match. The problem with company 401Ks is they usually choose the one that is cheapest for the company. Meaning high hidden fees and few crappy options for it's employers. I'd much rather have the smorgasbord of an IRA to choose what individual stocks and funds I want to invest in. I agree, if the company is matching your money in a 401K.. you gotta take advantage of that... it's free money. But honestly, unless you work for a large fortune 500 company.. most small businesses aren't matching your 401K contributions.

18. HEY YOU Follow Befriend (4) 357 threads 965 comments

    18   11:15pm Sun 2 Dec 2012   Share   Quote   Permalink   Like   Dislike   Whenever I see anyone mention a % return, have they taken into account inflation? Never trust the Gubberment figures? A different estimate: http://www.shadowstats.com/alternate_data/inflation-charts