401k worth it if you never retire

Motorola NgQJ50
Sep 30, 2017 101 Comments

I got an offer at Amazon and I'm being told to start contributing to 401k as I am already 31. I have never contributed because I'm of the mindset that I want to work until I die or until my health allows. In this case when you are not looking for an early retirement or a retirement at all is 401k worth it? I know you get tax benefits and also employer matches, but you can only take this money out when you are 60, and you do have to pay taxes then.

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TOP 101 Comments
  • Uber Brkngbd
    If the employer matches, it is like refusing free money.
    Sep 30, 2017 27
    • Databricks / Eng
      datadicks

      Databricks Eng

      BIO
      I suck
      datadicksmore
      Dude what kinda whack math is that. He would have had to pay the taxes anyway on his salary if he didnt contribute. The penalty is 2.7k on 27k. Plus the 9k the employer puts in grows with the market too. You will be ahead even with the penalty. Cant believe how dumb engineers are about money
      Oct 1, 2017
    • Microsoft / Eng Harmar
      After-tax and backdoor aren't exactly the same. Backdoor is what you call it when you convert after-tax into Roth. Until the conversion, it's just after-tax.
      Oct 1, 2017
    • Microsoft / Eng Harmar
      +1, QNrQ72 can't math.
      Oct 1, 2017
    • IEEE / Eng uhu
      Sometimes you can take a loan out of your 401k without penalties.
      Oct 2, 2017
    • New / Mktg
      PVPk22

      New Mktg

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      I've worked in advertising for the last 16 years on global brands and digital campaigns. Now I run a small digital production team.
      PVPk22more
      145k base you can max at 18k reduces your taxable income so the 18k only costs you 9k plus company matches about 6k so you get 24k in exchange for 9k of income each year plus it compounds! You are gonna be 60 sooner than you realize and so mad at your 30 year old self that you were so short sighted. Why don't you make your own meals I bet that action alone would save you 9k a year. If not find some other thing you can give up.

      20years later you've got 5mil in your 401k and all you had to do was make some tiny sacrifices and give up 9k a year.

      Alternatively at 60 (or sooner) you are exhausted and broke all because you didn't want to give up your daily _______ activity. Smoke, drink, Starbucks whatever it is.
      Oct 2, 2017
  • Amazon / Eng Random Str
    You won't want to work until you die at Amazon
    Sep 30, 2017 1
    • Microsoft / Eng /throwaway
      But you'll work until you want to die
      Sep 30, 2017
  • Flagged by the community.

    • Motorola NgQJ50
      OP
      Looking for genuine advice. If you only have insults to share please don't kindly response. I'm not from the US so I'm new to 401k.
      Oct 1, 2017
    • Oracle Saw
      Genuine advice is don't be a moron and start putting money in your 401k. Period.
      Oct 1, 2017
    • Google raita
      Saw was impolite but the sentiment is correct. If you re making good money and have a burning need for the money right now such that you cannot invest (e.g. high interest loans, etc), you could consider not using the 401k.

      But your stated reason, not wanting to retire, is terrible and shows a complete lack of understanding and unwillingness to do easy web searches in 2017.
      Oct 1, 2017
  • Facebook / Eng instandidl
    What.
    Sep 30, 2017 0
  • This comment was deleted by original commenter.

    • Motorola NgQJ50
      OP
      What does this kind of thinking has anything to do with getting a job at Amazon? I interviewed for sde 2 not a financial consultant.
      Oct 1, 2017
    • Amazon 🦁 p
      Haha
      Oct 1, 2017
    • WalmartLabs truthy
      OP is seriously retarded
      Oct 1, 2017
  • Uber Y65iux
    I'd like my wealth to grow tax free. That's it. I hate paying taxes. And I hope to live well beyond 60. And do work that is fulfilling but not necessarily high paying. Usually these two don't go together. At 31 I felt like a king, at 45 I realize the fragility of life and would tell me 31 year old self to double down on saving in 401k.
    Oct 1, 2017 5
    • Amazon / Eng cDgs64
      My same opinion. I’m 22 and maxing out my Roth 401k my Roth IRA, my wife’s Roth IRA, and half of her Roth 401k. If you have excess money and want to invest, why not do it in the most tax advantageous way possible which is currently though Roth retirement accounts. I don’t think it matters if you want to retire or not. In my opinion, I just use it as a way of sheltering compounding investment growth from Uncle Sam
      Oct 1, 2017
    • Databricks / Eng
      datadicks

      Databricks Eng

      BIO
      I suck
      datadicksmore
      Roth 401k defeats the point
      Oct 1, 2017
    • Amazon / Eng cDgs64
      How so?
      Oct 1, 2017
    • Databricks / Eng
      datadicks

      Databricks Eng

      BIO
      I suck
      datadicksmore
      The point is to withdraw it later when your tax rate is lower and defer the taxes or eliminate the taxes all together. Look up roth ira laddering.
      Oct 1, 2017
    • Microsoft / Eng VvzF82
      But with Roth you can save more money effectively.
      Oct 17, 2017
  • Microsoft / Eng Ayrr11
    Stupidest thing I read today. Good luck getting a job at 60!
    Sep 30, 2017 2
    • Motorola NgQJ50
      OP
      Thanks for the good luck!
      Oct 1, 2017
    • Microsoft / Eng Ayrr11
      My pleasure. You’ll need it! You seem like a smart guy otherwise.
      Oct 1, 2017
  • Qualcomm jElO67
    Not true. You can still withdraw with a 10% penalty if you need to. Also let’s say you will only withdraw in times of hardship..for example ... no job.. your tax rate is already low or zero. If you get a match.. don’t refuse the free money!
    Sep 30, 2017 2
    • Motorola NgQJ50
      OP
      Thank you for your advice. But I know there is a penalty of 10%. Amazon matches 50% up to 4% of base pay. So if my base is 145k and I put in 4% of it that is 5.8k they will match 2.9k something. However I can put up to 18k total at Max in 401k. It's free money for sure, but isn't the penalty and taxes gonna compensate for most of the free money if I take it out in a few years
      Oct 1, 2017
    • Gen!x / Eng
      XPbr65

      Gen!x Eng

      PRE
      Bank of America Merrill Lynch, HPE, Northrop Grumman
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      mehy
      XPbr65more
      Early withdrawal penalty is 10%

      Your employer match covers that.

      You’ve never paid taxes on the money so that cancel out.

      Why will you take it out in a few years?
      Oct 2, 2017
  • Intuit HGoB21
    In the short term, you'll want to consider the immediate tax impact. If you are in CA you are being taxed at at least 38%. Investing $5.8k will reduce your taxes now by $2.2. You'll see that immediately, think of it as putting in $3.6 and getting out $8.7. What other investment option has low risk and this high of return.

    In the long term, put the money into a passively managed broad market fund and it will double every 10 years. Doing the minimum you will be looking at over $1 million. You don't have to retire. You can start a business, go on vacation, donate to charity... But just in case the other 95% of the people here are right, you will at least have the option to retire.
    Oct 1, 2017 0
  • GE JpCm22
    I'm 60. Been maxing 401k for entire career. It's worth about 2/3 of my gross lifetime earnings. I now can work at anything, anywhere I want. Maybe til I die. But I have CHOICES. Listen to everyone. Do it.
    Oct 4, 2017 0
  • Microsoft Airbdicisn
    401K gains will compound tax free. That's significant if you have 30 years to grow it. Plus match is free money you're leaving on the table as other people mentioned. Also it's generally better to pay taxes as late as possible so better to take 18K now out of your taxable income. Most likely when you pull the money out your tax rate will be lower.
    Oct 1, 2017 6
    • Microsoft Msft2016
      Just put 5.8k. You will lose money if you contribute more than that as your employer is not going to match.
      Oct 1, 2017
    • Motorola NgQJ50
      OP
      Thanks! Just wondering is the msft matching better? Also I think putting 18k has one benefit that your taxable income is gonna go down.
      Oct 1, 2017
    • Microsoft Airbdicisn
      Microsoft matches 50% without limit. So basically it doesn't depend on your base. You contribute $18K and they add $9K. You should contribute $18K anyway if you can for the tax benefit.
      Oct 1, 2017
    • Google raita
      Airbidicisn s post is wrong, gains do not compound tax free for pre tax. COnclusion is correct though
      Oct 1, 2017
    • Gen!x / Eng
      XPbr65

      Gen!x Eng

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      Bank of America Merrill Lynch, HPE, Northrop Grumman
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      XPbr65more
      @raita

      Splitting hairs

      Gains are not taxed yearly until you start making distributions at which point it’s counted as income.
      Oct 2, 2017
  • Google kWHx68
    I'd like to work until I die too, but I'd like to have 10+ million of FU money sitting around the whole time too :) you don't have to retire to use retirement savings
    Oct 2, 2017 1
    • Motorola NgQJ50
      OP
      Best response ever!
      Oct 2, 2017
  • Facebook Dios
    Despite what it seems like, there are actually quite a few ways to withdraw from a 401k without penalty, including 72(t) (scheduled and equal withdrawals), or converting to an IRA and withdrawing after 5 years.

    You definitely want to contribute up to the match, and probably up to the max.
    Oct 1, 2017 0
  • Tableau idontgitit
    Plans change. You might see yourself working until you die but there are so many factors outside of your control that could derail this plan.

    Also, you might think that you would not be in the U S for your retirement. Again, that could easily change. I know tons of people that moved to the US for (say) 5 years... including me. Well most of us are still here 17 years later with NO plans to move back to our original country.

    It would be a huge and almost catastrophic mistake to miss out on many years of tax free growth.

    Do what others said here. At the very very least, contribute up to the full match.
    Oct 1, 2017 0
  • Wells Fargo bpiS06
    LOL. Have you not heard of ageism? Once you turn 40 you'll find that you are no longer desirable. There would be thousands of 20-30 candidates in the market. Even if you want to work till you die there would be no job
    Oct 2, 2017 0
  • Spotify / Eng qbeforeu
    “Why should I save for a rainy day if I plan on never having a rainy day?”
    Oct 1, 2017 0
  • ServiceNow rand0muser
    You can do Roth conversion when unemployed or in a lower tax bracket. Alternatively 72(t) rule also let's u withdraw. Take the free money would be my advice.
    Sep 30, 2017 0
  • WalmartLabs truthy
    Guys this dumb are working as SDE.
    Oct 1, 2017 2
    • Motorola NgQJ50
      OP
      Yea sure as hell guys more smarter than this working at Walmart!
      Oct 2, 2017
    • Motorola NgQJ50
      OP
      How much Walmart pays their sde? 10$ per hour atleast I hope? You really need to save all for ur retirement while watch me get rich through Amazon stocks ;)
      Oct 2, 2017
  • Motorola NgQJ50
    OP
    All thank you so much for all the answers. Now I'm convinced not contributing is the stupidest thing a person can do especially if employer matches. I'm gonna be contributing 10k annually and Amazon will match 3k. I calculated that this 13k after 30 more years would have grown up to 226k. And this is only my first year 13k, I can easily imagine the compound at the age of 60 to be over 3 million
    Oct 1, 2017 2
    • Google rabiosa
      I have no idea where you found math that turns 13k into 226k in 30 years but good luck with that. Nonetheless investing in 401k is the right choice in most cases.
      Oct 1, 2017
    • Google kWHx68
      That's a 10% rate of return, which is pretty reasonable for a stock portfolio (however that's before adjusting for inflation, so minus a couple percent each year to get a more accurate prediction of purchasing power)
      Oct 2, 2017
  • Amazon walterwalt
    I'll be in USA for just 2 more years, is it advisable to start putting money in 401K now?
    Oct 2, 2017 1
    • Facebook / Eng instandidl
      The real questions
      Oct 2, 2017

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