# Are 401ks for suckers? **URL:** \ **Category:** Great Debates\ **Created:** [January 30, 2008, 2:55pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588 "2008-01-30T14:55:44Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [January 30, 2008, 4:45pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/21 "2008-01-30T16:45:03Z")
[QUOTE=Voyager] …or maybe she has a fantasy about marrying a rich guy. [/QUOTE] She’s a 26 year old Manhattan girl who works for a publisher. I’m sure that’s exactly what she has in mind. [QUOTE=spoke-] The grasshopper may suffer in old age, but its youth is a lot more fun than the ant’s. [/QUOTE] [Not always…](http://www.youtube.com/watch?v=EoChsKBZKf8) ---
**Author:** ![lieu](https://avatars.discourse-cdn.com/v4/letter/l/c2a13f/32.png) [@lieu](https://boards.straightdope.com/u/lieu)\ **Post date:** [January 30, 2008, 4:46pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/22 "2008-01-30T16:46:57Z")
[QUOTE=msmith537] I guess the moral is you shouldn’t ready TONY for financial advice any more than you should read Kiplingers for advice on the best sushi bar in the West Village. [/QUOTE] I hope most readers recognize that. It’s bad enough seeing the author with such a cavalier attitude herself but the notion she’d hold sway over others is downright disturbing. That tart needs to stick to culinary musings. ---
**Author:** ![wonky](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wonky/32/393_2.png) [@wonky](https://boards.straightdope.com/u/wonky)\ **Post date:** [January 30, 2008, 4:48pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/23 "2008-01-30T16:48:24Z")
I have a retirement account, but the truth is that I don’t plan to retire. Ever. I’m planning on dying at my desk. 😃 ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [January 30, 2008, 5:08pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/24 "2008-01-30T17:08:20Z")
This article is a just a sad list of rationalizations for her poor financial decision-making. Several of them are mutually contradictory and many others are pretty childish. > [@The Article](#): > > I also resent that more and more businesses are beefing up their 401k plans instead of offering living wages and bonuses. “That’s it! I’m taking my ball and going home.” This is like refusing to exercise at the company-provided gym, not because you don’t want exercise, but because you wish they provided another benefit. Surely her boycott will force the company to mend their meddling ways. > [@](#): > > school loans, credit-card debt, high rent, low pay and a minor addiction to eating out. > [@](#): > > Win-win until your kid gets sick or your mortgage shoots through the roof. Ah yes. A savings plan is terrible because you can’t get at the money in an emergency. But eating out and running up credit cards is totally defensible. > [@](#): > > So if I’m on the dole at 65, eating cat food out of a rusty hubcap, I’ll be content knowing As a 26-year-old, it is my impression that very few people of my age can accurately predict how they’ll feel at 65. But I can’t imagine feeling “content” eating cat food out of a hubcap at any age. ---
**Author:** ![Sarahfeena](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sarahfeena/32/519_2.png) [@Sarahfeena](https://boards.straightdope.com/u/Sarahfeena)\ **Post date:** [January 30, 2008, 5:12pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/25 "2008-01-30T17:12:51Z")
[QUOTE=Hampshire] She seems pretty ignorant of the whole 401K system and when she hears of exceptions in the plan she has a knee-jerk reaction. “Employer’s matching is discretionary” Well, yeah. But it’s not like after they’ve been matching you 50 cents on the dollar for 5 years they’re suddenly going to take that money back. All they can do is stop the contributions. [/QUOTE] Yeah, I don’t think she understands what “vesting” is, either, since she declares it “scary.” Yes, it is scary to think that instead of 100% of the free money they earmarked to you, you will only get 25%. Even though that 25% is still more than the nothing that they give to you if you don’t sign up in the first place. The vesting schedule only applies to the employer contributions, not to your personal contributions. Maybe she doesn’t get that part, or maybe she has no ability to understand logic. Maybe the drugs addled her brain. ---
**Author:** ![Southern\_Yankee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/southern_yankee/32/2800_2.png) [@Southern\_Yankee](https://boards.straightdope.com/u/Southern_Yankee)\ **Post date:** [January 30, 2008, 5:14pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/26 "2008-01-30T17:14:10Z")
Not to mention that 401(k) plans use _pre-tax_ dollars. When I was just starting out (also in NYC) I found out that my take home pay actually increased when I contributed a higher percentage of my pay to my 401(k) because of the tax amount decrease. I used a loan on my 401(k) to put a down payment on my first home. I probably wouldn’t have been able to do it with out that option. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [January 30, 2008, 5:30pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/27 "2008-01-30T17:30:52Z")
[QUOTE=jsgoddess] I have a retirement account, but the truth is that I don’t plan to retire. Ever. I’m planning on dying at my desk. 😃 [/QUOTE] I think her retirement plan is to switch from blow to something that will do her in like heroin when the can of cat food looms. I don’t have any idea how - if social security doesn’t exist - she intends to pay for the can of cat food. At least I hope so. I hope we don’t manage to save social security so that my children can pay for the retirement of yahoos like her. (ETA: The SSA should start a blacklist now of “people who don’t deserve help in their old age.”) ---
**Author:** ![furryman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/furryman/32/99_2.png) [@furryman](https://boards.straightdope.com/u/furryman)\ **Post date:** [January 30, 2008, 5:36pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/28 "2008-01-30T17:36:55Z")
I just lost $1200 cheifly because my company decided that it didn’t want a 401K anymore. My advice is to put the money in a CD. Sure you pay more taxes but I bet it ain’t no $1200 worth. ---
**Author:** ![Sarahfeena](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sarahfeena/32/519_2.png) [@Sarahfeena](https://boards.straightdope.com/u/Sarahfeena)\ **Post date:** [January 30, 2008, 5:44pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/29 "2008-01-30T17:44:32Z")
[QUOTE=furryman] I just lost $1200 cheifly because my company decided that it didn’t want a 401K anymore. My advice is to put the money in a CD. Sure you pay more taxes but I bet it ain’t no $1200 worth. [/QUOTE] How did you lose it? You are supposed to be able to transfer all vested funds into another retirement account. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [January 30, 2008, 5:45pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/30 "2008-01-30T17:45:49Z")
[QUOTE=furryman] I just lost $1200 cheifly because my company decided that it didn’t want a 401K anymore. My advice is to put the money in a CD. Sure you pay more taxes but I bet it ain’t no $1200 worth. [/QUOTE] How exactly did you lose money? ---
**Author:** ![VinylTurnip](https://avatars.discourse-cdn.com/v4/letter/v/b2d939/32.png) [@VinylTurnip](https://boards.straightdope.com/u/VinylTurnip)\ **Post date:** [January 30, 2008, 5:47pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/31 "2008-01-30T17:47:22Z")
My 401(k) had a return of -13% in the past year. In retrospect, the mattress-stuffing seems like a pretty good alternative. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [January 30, 2008, 5:47pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/32 "2008-01-30T17:47:45Z")
[QUOTE=Sarahfeena] Maybe she doesn’t get that part, or maybe she has no ability to understand logic. Maybe the drugs addled her brain. [/QUOTE] She is typical of many 20-somethings with no understanding of financial matters. They live paycheck to paycheck wracking up huge amounts of debt because they have a vague idea that in the future they will be making a ton of money that they can use to pay it all back. ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [January 30, 2008, 5:53pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/33 "2008-01-30T17:53:30Z")
[QUOTE=jsgoddess] I have a retirement account, but the truth is that I don’t plan to retire. Ever. I’m planning on dying at my desk. [/QUOTE] I have you beat. I’m actually dying at my desk right now. OK, I’m just wishing I were actually dying at my desk right now, which would be a preferable alternative to work. That said, most of my age range peers opinion is that “I wish I had saved more in my 20s”. Many (not all, so don’t come telling me how _you_ are different) early 20-somethings just don’t realize how powerful the compounding of money invested is over 40 years. The difference in starting at 25 or at 30 is huge. Hindsight tells me I should have started invested in my retirement at 12. 🆒 **furryman** , I save much, much more that $1,200 a year in taxes on my 401(k) investments. That said, I suspect (but don’t know without more facts) that when your employer dissolved the 401(k) plan that there were other options available to you. There is NO comparison between tax-deferred retirement savings plans and investing in CDs. The problem is that many people are overwhelmed with choices and don’t know how diversify given their choices, nor how to change asset allocation over time - and some people are too stubborn to learn (this doesn’t sound like your situation from the one-liner, though). Many 401(k) providers are working hard to simplify the choices for potential investors who want more of a “set it and forget it” attitude towards retirement planning. ---
**Author:** ![Sarahfeena](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sarahfeena/32/519_2.png) [@Sarahfeena](https://boards.straightdope.com/u/Sarahfeena)\ **Post date:** [January 30, 2008, 5:58pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/34 "2008-01-30T17:58:10Z")
[QUOTE=msmith537] She is typical of many 20-somethings with no understanding of financial matters. [/QUOTE] Maybe, but if she really read the “fine print,” then she should have some rudimentary understanding of what matching and vesting mean. I remember being in my first HR meeting about this stuff, back in my 20s. I didn’t understand anything about investing or money management whatsoever, and I could still understand these simple concepts. And I’m no genius, believe me! 🙂 ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [January 30, 2008, 6:10pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/35 "2008-01-30T18:10:59Z")
[QUOTE=msmith537] She is typical of many 20-somethings with no understanding of financial matters. [/QUOTE] These are the type of life skills that should be included in middle and high school curricula. Drop one of those Shakespeare plays or Hemingway books, and teach about retirement planning, use of credit cards, how mortgages and leases work, insurance planning - and don’t let the curricula be written by the industries themselves. These are very daunting and complex subjects, and unless the parents have done their own homework in them, they are not qualified to teach their children these subjects. ---
**Author:** ![C\_K\_Dexter\_Haven](https://avatars.discourse-cdn.com/v4/letter/c/b2d939/32.png) [@C\_K\_Dexter\_Haven](https://boards.straightdope.com/u/C_K_Dexter_Haven)\ **Post date:** [January 30, 2008, 6:16pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/36 "2008-01-30T18:16:00Z")
Why stop at 401(k)? She could make the same argument about, say, health insurance, home/apartment insurance, auto insurance – why waste money now on that stuff when she’s healthy, takes care of her home/apartment, only drives safely, etc.? ---
**Author:** ![lieu](https://avatars.discourse-cdn.com/v4/letter/l/c2a13f/32.png) [@lieu](https://boards.straightdope.com/u/lieu)\ **Post date:** [January 30, 2008, 6:31pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/37 "2008-01-30T18:31:15Z")
[QUOTE=Vinyl Turnip] My 401(k) had a return of -13% in the past year. In retrospect, the mattress-stuffing seems like a pretty good alternative. [/QUOTE] Are you diversified enough? Even after the late downturn, an S&P indexed fund should have brought in around 5 or 6% last year. There’s some pretty good guidelines available online that can suggest percentages you should consider for divestiture into company stock, large and small caps, international equities, etc., depending on your time to retirement/ risk tolerance. Don’t forget you should be keeping a long-term view. ---
**Author:** ![TWDuke](https://avatars.discourse-cdn.com/v4/letter/t/e495f1/32.png) [@TWDuke](https://boards.straightdope.com/u/TWDuke)\ **Post date:** [January 30, 2008, 7:09pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/38 "2008-01-30T19:09:08Z")
Well, I’m currently underemployed and facing the prospect of cashing out my 401k, which forfeiting most of my previous employer’s contribution because I wasn’t fully vested, paying the originally deferred income tax, and shelling out an early withdrawal penalty, after which I will be left with substantially less money than I put in. Makes an ordinary savings account look good to me. Yeah, if I had been more responsible and planned better I wouldn’t be in this fix, but I am, so I will say a 401k is at least not for everyone at all times. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [January 30, 2008, 7:15pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/39 "2008-01-30T19:15:48Z")
[QUOTE=C K Dexter Haven] Why stop at 401(k)? She could make the same argument about, say, health insurance, home/apartment insurance, auto insurance – why waste money now on that stuff when she’s healthy, takes care of her home/apartment, only drives safely, etc.? [/QUOTE] Well, unlike health problems or an appartment fire that might happen, she WILL eventually get older . ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [January 30, 2008, 7:42pm UTC](https://boards.straightdope.com/t/are-401ks-for-suckers/435588/40 "2008-01-30T19:42:13Z")
I plan to turn my “On/Off” switch to “Off”. [Previous page](https://boards.straightdope.com/t/are-401ks-for-suckers/435588.md?page=1) [Next page](https://boards.straightdope.com/t/are-401ks-for-suckers/435588.md?page=3)