My 401k is now 404

Well, so much for retiring any time soon. Granted, in another 10 years or so, my 401k will almost certainly regain what it has lost in recent years, but any hopes of an early retirement have been dashed on the jagged rocks below.

I still think having a 401k is a good idea, and strongly suggest anyone with a full time job start one, and divert as much as your income to it as you can. If you start one at age 18, and put as little as 2% into it, you can pretty much assure a comfortable retirement.

There are a couple of strings attached, like early withdrawal penalties, so take my advice, don’t treat a 401k as a savings account. Use a regular bank for that. Only a percentage of “disposable” income should be put into a 401k

For those like me, that started their 401s later in life, you’ll need to invest a larger percentage, as close to the non-taxable max as you can, which is typically %15, but can vary based on your income.

The real beauty of a 401k is the income you put into it is not taxed, and you only pay taxes on your income after the 401 deposit has been subtracted. It’s like you are being paid to save money.

Add to that, the money you’ve invested in your 401k, is exactly that, an investment which can gain or lose money depending on the stock market. Whether you cash out at a profit or a loss is just a matter of timing.