Too Fast to Match? This 401(k) Misstep Could Hurt Retirement Savings | Hacker News Reader

Too Fast to Match? This 401(k) Misstep Could Hurt Retirement Savings

finra.org

19 pointsmbastress6 comments

On the flip side, if your employee will let you match as fast as possible, you can grab entire extra year's match by blasting away in January and quitting in February, etc.

In general, for job hopping tech workers, it’s smart to:

1. Start the year at the lowest contribution amount sufficient to get the highest possible match in each pay period.

2. Stop contributing once you hit your annual maximum match.

3. If you get a new job, return to #1.

4. Near the end of the year, increase your contribution to hit the annual contribution max.

You don’t want to lose out on your new employer’s match by maxing out contributions early in the year.

Agree, though readers need to parse that advice carefully.

(Also, be careful that you don't go over the IRS limits.)

Another take on this. If the market is going up at 10-12% and you get your money up front ASAP. You can stand to make more than ~$180. 10% of 18000 is $1800.

> If the market is

This assumes you can effectively time the market. Most people cannot. Conversely, if you dump $18000 in up front ASAP and the market goes down 10%, you've just 'lost' $1800.

If you are in for the long run (as most retirement accounts are), it's probably better to contribute more capital (i.e. take advice of this article) than to try and roll the market timing dice and rely on capital gains windfalls to increase the value of your retirement account.

The entire premise behind buy-and-hold investing is that you expect your investments to grow by ~7-11% per year, over the long run. If you're expecting your investments to stay flat over the long run, there's no reason to invest in the first place.

Given that you expect some growth every year on average, it makes sense to take into account the opportunity-costs of delaying your investments.

Or to put it in more obvious terms: Investing $18k today, is better than investing $18.2k in 2019, which is better than investing $20k in 2028.

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