401(k)s are on of our favorite ways to invest for retirement. Here’s why they are so special and how your 401(k) could make you a millionaire!
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Why The Money Guy Show LOVES 401(k)s
The 401(k) retirement savings plan has gained immense popularity over the years, and for good reason. The Money Guy Show, a trusted source of financial knowledge and advice, enthusiastically embraces the concept of 401(k)s. Let’s explore why this show, featuring financial experts Brian Preston and Bo Hanson, loves 401(k)s and why you should too.
1. Tax Advantages: One of the major reasons 401(k)s are beloved by The Money Guy Show is the tax advantages they offer. Contributions to a traditional 401(k) are made with pre-tax dollars, reducing your taxable income in the present year. This results in immediate tax savings and allows your investments to grow tax-deferred until retirement when you withdraw the funds. Roth 401(k)s also exist, although the contributions are made with after-tax dollars, they offer the advantage of tax-free withdrawals during retirement. The tax benefits of 401(k)s are a powerful tool to maximize your savings potential.
2. Employer Match: Many employers offer a matching contribution when employees contribute to their 401(k) plans, and The Money Guy Show loves this perk. Employer matching is essentially free money that can significantly boost your retirement savings. Brian and Bo encourage their viewers to take full advantage of this benefit and contribute at least enough to receive the full match, as passing up employer contributions is like leaving money on the table.
3. Automatic Savings: The Money Guy Show recognizes the value of automation when it comes to building wealth. 401(k)s allow for automatic contributions deducted directly from your paycheck. This hands-off approach eliminates the need for discipline and actively saves money for retirement. By making regular contributions, you build a nest egg over time, taking advantage of the power of compound interest. The show emphasizes the importance of consistently saving, regardless of the market’s ups and downs, and 401(k)s provide an excellent avenue for this.
4. Investment Options: The Money Guy Show acknowledges that 401(k)s often offer a wide range of investment options. These can include mutual funds, index funds, target-date funds, or even individual stocks. This variety allows investors to tailor their portfolios according to their risk tolerance and investment goals. The flexibility of investment choices within 401(k)s enables individuals to construct a well-diversified and balanced retirement portfolio.
5. Portability: Changing jobs is common in today’s workforce, and 401(k)s offer portability. The Money Guy Show highlights how you can roll over your 401(k) account into another retirement savings vehicle, such as an IRA, when you switch employers. This consolidates your retirement savings, making it easier to manage and potentially reducing fees. Portability ensures that your retirement savings continue to grow even if you change jobs.
Ultimately, The Money Guy Show supports 401(k)s due to their numerous advantages. The tax benefits, employer matches, automatic savings, investment options, and portability make 401(k)s a powerful tool for building wealth and preparing for retirement. By actively participating in a 401(k) plan, individuals can harness these benefits and take a significant step towards achieving financial freedom.
I agree with Brian and Bo about ABB ( Always Be Buying ). I went through the 2008 Financial crisis and the last three years. No matter what the market was doing I continued to invest in the 401K. I am currently 41 and contributing to the Roth 401. My goal in five years is to have 90% of my investments in the Roth 401K.
My only problem with 401k's is if things just stagnate for me and I can keep grinding my 8-5 and investing the same amount with no promotions, my tax liability will be higher in retirement than it is now.
If I assume 7% returns on my 401k by the time I hit 72 my mandatory minimum distributions would be pushing me into the highest tax brackets assuming I have no other income from investments or rentals. If anything goes right the 401k just becomes more of a tax trap. I'm not rich or anything now but I started investing early and have time on my side.
For that reason, I'm planning on making other investments such as building homes every few years with my savings. First one starting spring 2026. If I end up retiring early from the 8-5 it will be because I completely offset my income with rentals or other investments.
Thoughts on a employer sponsored Simple IRA?
Interest rates are high so, paying down the mortgage makes sense. HOWEVER, if interest rates were “normal” people should invest while paying down their mortgage as the money guy had said. I think Dave Ramsey is at the point where he has to double down on his so called baby step 6 of paying off the mortgage before investing.
So then you can give like
no one else?!? So you basically won’t begin really building wealth until you’re 60 or 70. You won’t be able to give like nobody else; you won’t even be able to give. At least not until you’re 93 years old.
Anyone who hates or discounts employer matching 401k is a complete moron.
Our time had reached its zenith, and it is now over. Everything not just Banks, Stock including 401Ks, are suffering from the recession and crashes. My $750K retirement equity portfolio is losing money. Because of inflation, I keep losing. Similar to how Rome fell under its despotic emperors, this world will also. I apologise if you are considering retirement but are concerned that your pension won't cover the rising expense of living. There are terrible foreign policies worldwide, as well as disastrous regulatory, fiscal, and energy policies.
Here before some bot conversion, with OP commenting about their savings in the hundreds of thousands and the comments naming some scammer, shows up
“I’m a big fan of money. I like it. I use it. I have a little. I keep it in a jar on top of my refrigerator. I’d like to put more in that jar. That’s where you come in”
If they put the tax credits back almost everyone would have accounts, it stopped years ago and will probably never happen again
I’m 24 right now and have been contributing 30% the last 2 years, including employer match. I was going to just do 30% for a short period of time but after seeing my 401K grow so fast I don’t want to look back!
401k ❤ I own real estate but my employer provides so many benefits that I can't quit. I got a nice bonus today. Yay!!
I have done a lot wrong financially in my life and missed a lot of opportunities. One of the things I did right was contribute to my 401K and not touch it.
for all people seem to bash 401k due to choices and fees , Ive always thought the #1 reason they are successful is because you can't touch the money.
Perhaps viewers of this show are responsible with money, but for the masses the reason the 401k is such a success is because its FORCED savings with penalties.
the masses find too many ways to spend every dollar and cash in every account and wonder why they are broke. I know it shocks many the basic math behind the idea of if you invest money every month for 20-40 years and DONT Touch it the balance will be quite substantial.
401k third party administrator here, ask me anything. I'll answer what I can.
"Automatic for the People!" Anyone else think of REM when Brian said that? Stand up, GenX!
when did dollar cost averaging get relabeled as being ABB
The problem is that none of this advice pertains to being wealthy today. Okay, save into your pension, get the match, pay off your house, save into tax deferred accounts, etc. But what about generating more income today? Being a balance sheet millionaire is very unfulfilling, creating new sources of revenue for yourself whilst serving those around you is what people ACTUALLY want and we need content that pertains to this goal.
I have a 6% mortgage and decided to put extra money into my 401k instead of paying extra principal or an aftertax brokerage with the plan to write a check for the remaining mortgage balance once I retire. Gotta get that tax free growth.
The good and bad part of 401(k)s is that you're in charge of your retirement. You choose how much to put in. You choose the funds your money goes in (hopefully your 401k plan offers good choices). It stays with you even if you change jobs. However, you take all the risk. When the market goes bad, no guaranteed money for you. Lots of folks aren't able to handle that.
Wow money guys. That 2007-2012 chart you showed got me lol. Was beginning to get iffy on investing but now it’s full steam ahead.
Real Estate ia the most overhyped and overrated "investment". It's the one thing everyone tries to do. That in itself should be a red flag. Avoid what the masses are doing.
Invest in the marketa first and then focusnon Real Estate.
I've got pay, I do the K!
These guys still promoting 401ks lol
First