you'll have a lower income than you do now, and therefore you'll be paying
taxes on the money in a lower tax bracket.
The amount you make really depends on the type of investments you do (or
can do) with your 401K. I thought the average returns were ~10% yearly for
stock market investment over the long term. I think 401K automatically
re-invests your earnings, so...
$100 this year
$110 next year
$121 next year
$133 next year
etc...
If your employer is matching contributions in some manner, I think it
would be foolish not to put money in at least up to the point where the
employer matches. Why would the employer match your
contributions? Employee retention! Often the employer can reclaim part of
the money they contribute if you leave the company before a certain period
of time.
At 10:04 AM 8/11/2004, you wrote:
>Subject: 401k question
>From: Won Lee <[EMAIL PROTECTED]>
>Date: Wed, 11 Aug 2004 08:56:10 -0400
>Thread:
>http://www.houseoffusion.com/cf_lists/index.cfm/method=messages&threadid=13723&forumid=5#124734
>
>401K Basics
>-------
>
>brob,
>
>The main advantage of investing in your 401K is that you lower your the
>taxable wages. So if you make 35K and you contribute a total of 2K to your
>401K plan - then essentially you will only pay income tax on 33K of your
>salary. You make an investment with the 2K and then when you withdraw, at
>59.5, you will pay tax on any gains. It's not tax free. The IRS always
>get's their share. If you don't kick up to the bosses then they send their
>goons after you and then you will go to jail and end up some bad man's
>girlfriend. But if you assume that what has happened forever will
>continue to happen, you should make at least 8% return on your
>investments. So it's like you get to borrow free money to make investment
>and then you just have to share some of the returns with the government.
--
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