“Our 23-year old son just started a new job with a company that offers a 401k retirement program but no contribution match. He doesn’t feel he wants to participate if the company won’t match any of his own contributions. How should we advise him?”
Your son is making a big mistake. The fact that his company won’t match his 401k contribution must not influence his decision to maximize his own yearly allowable 401k contribution amounts. A company match is a bonus; starting his own 401k contributions now is absolutely the smartest thing he must do for himself. Failing to contribute to his own 401k plan means he will lose tax benefits and waste time that should be used for compounding his investment. For example, an investment of $200 per month in stock mutual funds over 35 years with an average 8 percent projected annual return would yield a respectable $428,573.52 by the time he is 58. The best course of action for your son begins with the decision to start his 401k retirement as early as possible in his working life.
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