Comments on: Ditching my 401(k)

By: Pete Mussoni

Pete Mussoni — Thu, 04 Mar 2010 19:12:53 +0000

You are on the right track. Please buy this book, you will be convinced that you are doing the right thing. Marginal tax rates in the future will NOT be lower and you will be paying a tax on the compounded growth.

http://www.amazon.com/Tax-Free-Retirement-Patrick-Kelly/dp/1425110827/ref=sr_1_1?ie=UTF8&s=books&qid=1267729793&sr=8-1

No matter what your politics, marginal tax rates WILL be higher, to say nothing about state and local taxes. That will be the biggest threat to financial security, bigger than a market drop. Drop me a line and let me know what you think of the book.

By: Robert

Robert — Thu, 04 Mar 2010 13:57:04 +0000

Daddy Paul,

I have cashed out five 401ks now and currently do not have one (well I do, just 0% goes into it) and yeah, I ate some taxes when cashed out each one. But let’s be realistic for a second, I am going to “retire”? Probably not. I am 35 now and I can see that never happening. I stash away for the kid’s college, which is 1 million percent MORE important since it is irresponsible for him to be hit with tens of thousands of dollars in interest fees because of America’s broken educational finance system. Not only that, I have these things called bills. And if I do not pay them, the people who send me these bills will do things like kick me out of my house, take my car away, turn off the power, things like that. I need every dollar I make to live. I do not feel like putting money is some scam “savings” account so some rich stock brokers can steal it and make themselves richer. It is trickle UP economics. Money NEVER trickles down.

By: Daddy Paul

Daddy Paul — Sun, 31 Jan 2010 00:50:25 +0000

I sure hope for your sake you do not stop contributing to your 401K. With the tax deduction and the employer match I does not cost you all that much.

By: Jake

Jake — Thu, 28 Jan 2010 06:01:38 +0000

the1chery: You’re kidding! How old are you now?

I.N., try work. Didn’t bother to take the day off. I’d rather make money than spend it, right?

By: Ronnie

Ronnie — Wed, 27 Jan 2010 23:59:01 +0000

Happy Bday! Not gonna argue, but makes me wish I had a 401k (or any other retirement vehicle at my firm), that I could choose not to contribute to.

By: Investing Newbie

Investing Newbie — Wed, 27 Jan 2010 17:16:40 +0000

Happy Bday Jake! Do something on the wild side. SPEND!!! Kidding…but not.

By: the1chery

the1chery — Wed, 27 Jan 2010 14:50:47 +0000

on a lighter note, happy birthday! mine is today too.

By: Jake

Jake — Wed, 27 Jan 2010 05:39:56 +0000

Dirac, a retirement fund does not harness the power of compound interest at all, hence it’s ability to go down, as well as up. As I only have $400 or so socked away in it, it’s not that big of a deal. If I do cash it out when I leave this job, it won’t kill me in terms of taxes and penalties, which is yet another reason to ditch it – I’d rather something that doesn’t carry penalties with it and such. A bit more liquid, if you will.

By: Dirac

Dirac — Tue, 26 Jan 2010 17:11:21 +0000

Wow. I cannot disagree more…I do not even get a company match but I invest in the 401K. Even with all of the drops in two years, I am still doing quite well. Plus, you do have control over what you buy in your investment election.

Yes you can do a Roth but the annual contribution rates are much lower and you are still doing the same thing in that you are selecting funds (like a 401k) and hoping they do well.

As for using the money elsewhere, I cannot imagine what else could be more important than to start working on the compounding of the interest over a lifetime? I am not saying you have to contribute the max % each week but you should be puttting something away. I prefer the 401k to the Roth because the 401k takes the money out before your taxes and helps with your federal tax rates.

I really think this is not a sound idea and before you abandone it totally, I would read up more on it.

By: Investing Newbie

Investing Newbie — Tue, 26 Jan 2010 15:25:04 +0000

That is the same kind of thinking that is preventing me from starting a 401K. The company match is so low and that money could go towards my Roth or debt or fun. I think I’m still going to fund it but it will be extremely low so that I don’t feel that big of a hit.