Timeline for Should one save up to purchase a house/condo or maximize their 401(k) first?
Current License: CC BY-SA 4.0
10 events
| when toggle format | what | by | license | comment | |
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| May 19, 2019 at 21:07 | vote | accept | JonathanReez | ||
| May 9, 2019 at 18:29 | comment | added | alexk | Yes, I think that’s rather obvious? Of course you can’t invest if you don’t have surplus income. And it doesn’t change the offer of free money, the money is free, it’s a match of your retirement savings, a benefit on top of your base pay. | |
| May 9, 2019 at 14:37 | comment | added | tparker | If the employer match were indeed "100% free money", then it would always make sense to max it out in any possible circumstance. But this is not the case. | |
| May 9, 2019 at 14:37 | comment | added | tparker | I'm not talking about vesting - my comment applies even to employer matches that are immediately fully vested. I'm just talking about the fact that 401(k) contributions are not accessible (without high penalties) until you retire, so you shouldn't contribute to them if doing so would leave you unable to meet your immediate necessities. I agree that in practice, matching percentages are usually low enough that this isn't an issue, but for people with very low income it could be. | |
| May 9, 2019 at 6:38 | comment | added | alexk | In addition to that, most matching percentages are really low. It isn’t hard to hit the 5% safe harbor match amount, and that barely affects your take home pay. | |
| May 9, 2019 at 6:32 | history | edited | alexk | CC BY-SA 4.0 |
Changed some really weird statements
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| May 9, 2019 at 6:31 | comment | added | alexk | @tparker I fully disagree with that unless your company has a completely crazy long vesting period. Even if they do, the worst that can happen is that you leave your company before the vesting period, and in that case you “accidentally” save too much tax advantaged income for retirement. Oh no! It absolutely is free money that you can rollover to your own IRA after you leave your company. I don’t know what you mean by “present consumption” - consumption of what? | |
| May 9, 2019 at 0:28 | comment | added | tparker | An employer's matching program is absolutely not "100% free money", and you should not always take full advantage it. It has the cost of rendering your contribution unavailable for many years, and you should not max out your matched contribution if doing so would bring your present consumption to unacceptably low levels. | |
| May 7, 2019 at 19:50 | review | First posts | |||
| May 7, 2019 at 19:53 | |||||
| May 7, 2019 at 19:49 | history | answered | alexk | CC BY-SA 4.0 |