I am certain that there are a lot of LL's on here who were employed with W-2 jobs and invested in a 401K as they were led to do, put into it for decades and have now retired.

Some employers that I worked for offered 401K and some even use to have people come in to convince us to put into a 401K and get a percentage company match. In fact, they kind of pushed it.

Thing is, it locks that money away for decades and/or you get penalized for early withdrawal. In the meantime, inflation is eating it away. When you do reach the age of retirement you get taxed on it and now those taxes are higher than they were years ago.

When someone "pushes" something the red flags go up. I would like to here the real truth about 401K's from those who put into it for decades and are now drawing it out after retirement. You folks are the only ones that will tell the truth, not those that pushed it.

Now that you are in this position, how do you feel about your 401K?

Was it actually worth it? If no, why not?

Could you have done something better with the money?

Do you think you were lied to about 401K's? How so?

Who truly benefits from 401K's.

Any other thoughts on them?

Thank you for your time.

Depending on the 401k type (Traditional or ROTH) there are different feelings.

ROTHs didn't exist when I was working, not until just before I quit for good. So a Trad was the only choice. But because we both had high-income jobs, a Trad401k did lower your tax burden that year and provided long-term tax-deferred growth. It was as good as anything I guess...

I finally moved my 401(k) into an IRA. I am letting someone else handle it. Wasn't much. I didn't do anything with it since 2012 when the W2 ended. Oops.

It is making me money now. I am not touching it. Not at retirement age yet, but close.

First place that I had one at offered a 1 to 1 match. Small construction biz. Owner had to get a certain amount of input before he could do it also. It was a great option and since it was taken out of the check pre-tax that helped as well.

If the company has a Roth component, fill as much of that as you can.

If the company has a 401 match, then just put in enough money to get a 100% match. If it is 4% then put in 4%. It's free money, so why wouldn't you?

I contributed the max amount into a 401K for about 25 years before I retired getting a 4% match. I have kept most of it invested in large cap mutual funds over all those years and the year over year returns are around 9% after the small management fee they take. If you figure the average inflation rate over those same years is between 2 and 2.5% it has grown significantly faster than inflation. Almost everyone who invests the max into a 401K with a company match will retire with well over $1M (probably over $2M) over a 30 year career if they stick with a market index fund or as I did a large cap fund. If you go very risk averse with your investments then inflation will eat most of it. It's a long-term investment, put it in and don't even consider playing with market timing or you will lose. Then pull it slowly in retirement.

Tax wise there are 2 types. Roth - you pay the taxes up front then then no taxes at retirement when you pull it. Or, traditional- you don't pay taxes up front so you are investing those $ that would have gone to taxes but then pay taxes when you pull it during retirement which in theory should be lower tax rate since you won't have your day job income.

So my thoughts: If you aren't putting in enough to get the company match then you are giving away money. Beyond that, as GKARL points out, it is the safest way to protect $ for retirement. This is especially important if all of the rest of your assets are invested in RE where there is always a risk of lawyers being successful in taking some or all of that side.

Just something interesting I recently learned.

I have a roth IRA that I plan to let my son inherit. Of course, no capital gains when he inherits. But a strange option is he can leave the IRA alone. And it will continue to be no capital gains to him for up to 10 years.

The one year that I worked a W2 job, I maxed out my 401K.

It has grown nicely over the years.

Like WMH says, though, mandatory withdrawals once you hit that age can increase your medicare costs, tax bracket, etc.

If I were going to do it again, I'd max out my lower tax bracket by doing back-door Roths, getting every penny of savings that I could into it.

I have had both a 401K and a Roth. I still have a Roth. The 401K was rolled over to an IRA.

The last time I worked my company matched 100% up to 6% and 50% of the next 3%. It would have made absolutely no sense to not use that so I put in 9%. When I switched to an IRA I could choose whatever options I wanted so my choices are very low in expenses.

Very happy with my Vangiard 401k. Extremely low fees. Has had a great annual return not even including the company match. I've borrowed 50k from it several times to use as down payment on properties. Super easy cash access and the interest I pay on the loan goes back to myself. Vanguard has a bunch of different guns that I can try to time the market if I want. It's saved me tons on Fed taxes from my FT W2 income. I'll have to pay Fed income tax when I pull it out. Which it great, as I plan to be in a low tax bracket.

Sorry autocorrect typo, guns should be funds.

...different FUNDS that I can try to time the market if I want.

Tying up money can cause lots of confusion and mixed feelings. When I was young and in the prime of my life, I didn't want benefits - I wanted cash. As I grew older, I saw how the government stole from us. If we would do what the government does, we would go to jail. But they package it as doing your duty as a citizen - pay more.

The other thing that I may be hearing is the risk of having to trust your employer with your money. When Hostess Bakery filed for bankruptcy about 10 years ago, more than 73% of what was owed was in the retirement benefits fund. That was a dirty shame and I am sure it made those poor retirees like "ding dongs" (sorry I just could help myself) for trusting their employer with their retirement plans.

So, for those of you who are anti-growth - the folks that are content with say under 5 to 6 rentals......you don't have a choice. But for those who do believe that stacking investments and growing might make sense, you should be able to trust your employer - if you make yourself the employer.

What does that mean? Part of what you do is passive income and reported on schedule Es) Then a second component, property management of the rentals is reported on a schedule C. You truly report the income and expenses of self-managing. Then if you set up a Roth Solo-401K for all your employees - YOURSELF, that 8% match comes from pre-tax dollars and comes off as an expense.

How will you know when you are at the place you should be filing a schedule E and a schedule C? If you are taking milage deductions and routinely find yourself not being able to take mileage on a real business trip because it isn't directly tied to a specific property.

This weekend for example I looked at three possible future purchases. Two of them are auction properties occurring the same day at the same time within five miles from one another. Where on a schedule E would you take that travel expense if you don't buy all three places? Truth is you can't without tossing them on an unrelated property (schedule Es with unusual expense patterns will be eyed differently by the IRS.) So, I place those expenses on that schedule C under portfolio management. It would be tough to justify considering under five houses as a portfolio - but that is an issue between the filer and the IRS. Stacking real estate for growth isn't for everyone - but there are considerable perks if you do it early.

I support the IRA, 401, Roth plan 100%.

If everyone maxed out the potential of the IRA, we would be the wealthiest country in the world. And we could eliminate most of the poverty in this country.

If my 25 year old section 8 tenant invested $100/month into a Roth IRA (invested in the S&P 500 no load index fund), she could have over $1m tax free money in her IRA account when she is 70 years old.

As a 71 year old, I think the Roth IRA is the best investment vehicle available. Growth is tax free, withdrawals are tax free, and the inherited Roth IRA grows tax free for 10 years after it is inherited. That is a better return than I get from real estate.

Ray, in a 401K your $ are not held by your employer. They are sent to a brokerage company and invested in the market. The real risk is that often an employer pushes investment in their own stock while still offering other market options. This confuses new investors and wanting to be a "company man" go with the company's recommendation. Investing your nest egg in one company's stock is not recommended.

Mike,

My 401K is self directed with ETC.

When you funding a self-directed 401 with your own business funds, the match comes off your own business tax bill. You do take a hit with self-employment tax, so I don't pay myself much......enough to fund the solo account. Any other compensation come from owner's draws.

My 401k has churned a nice chunk of change and given me some tax break during my W2. There is a rule of 55 that allows you to withdraw w/o penalty at 55, but still must pay taxes.

I'm not sure I agree that taxes are higher today than in the past. I'm assuming you're talking about FEDERAL income taxes. It's hard to compare due to several factors such as:

1) Changes in the tax code such as the increases in the standard deduction to the point where very few people itemize anymore

2) Flatter marginal brackets today versus in the '80s (there are still many brackets, but the middle class is largely captured today in only 3 brackets...MFJ 10% on income up to $24,800, 12% on income up to $100,800, and 14% on income up to $211,400.

In 1980, a typical household income of $19,200 would cause you to pay taxes of about $3,033, which is about 15.8% in taxes. Today, a typical household income of about $89,000 would cause you to pay taxes of about $6,400, which is only about 7.1% in federal income taxes.

The 401k is a retirement vehicle, so when you say your money is "locked up" for decades...that's what it's intended to do...your retirement is decades away and you need to leave that money alone for decades so that it's there for you when you retire. Also, there are legal ways to get to the money before you retire, but they require you meet certain rules.

When you say inflation eats it up, what do you think would happen if you simply saved the money in your bank? Inflation would still eat it up. The idea is supposed to be that you invest it in something that earns more than the rate of inflation, and therefore it outpaces inflation...if you don't invest it wisely, that's the individual's fault.

I think the 401k has been a great tool. I think it should have been offered more broadly to people who don't have large employers...some people can't get into a 401k. The match is a great benefit. The investment fees can be high, it depends on who the company selects as the administrator...my company had Vanguard, and Vanguard is famous for low fee funds.

My one other complaint is that the rules about taxes and retirement keep changing, and this makes it hard to plan. For example, there is an NIIT surcharge on some wealthy people of 3.8%, and that was non-existent many years ago. The RMD rules have changed twice in the past ten years. Tax brackets change, the senior bonus deduction is a recent change that affects us, and so much more. When you plan based on a set of rules, and then 10 years later all the rules change, it throws your plan into disarray.

In regards to gov't "pushing" 401k plans, the reason they do that is that most of the public is not disciplined enough to save on their own...which is evidenced by the fact that nearly half of Americans have ZERO retirement savings of their own. Although the numbers vary depending on the source, here is one quote ...

"Many more Americans are simply not saving enough. In a 2015 report, the U.S. Government Accountability Office (GAO) found that about half of households approaching retirement (age 55 or older) had no retirement savings in a defined contribution (DC) plan or an IRA, and half of households age 65 and older relied on Social Security for most of their retirement income. The median amount for the 48 percent of households 55 and older that had some retirement savings was $109,000. About 55 percent of households ages 55–64 had less than $25,000 in retirement savings and 41 percent had zero. While most households in this age group have some other resources or benefits from a DB plan, 27 percent had neither retirement savings nor a DB plan."